What changed in this filing

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Item 1A. Risk Factors

2021-03-29 compared with 2020-03-16 · 737 added, 607 removed, 43 unchanged (97% of the section changed)

An investment in our common stock involves

You should carefully consider the risks described below, together with all of the other information included in this annual

report, as well as in our other filings with the SEC, in evaluating our business.

The risks described below are not the only risks

Additional risks that we do not yet know of or that we currently believe are immaterial may also impair our business operations.

If any of the following risks actually occur, our business, financial condition and results of operations could be materially adversely

affected, and the trading price of our common stock could decline significantly.

Certain statements below may be considered forward-looking

For additional information, see “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Business

We have a history of losses and may incur additional losses

in the future .

reported a net loss of $17.1 million (includes $9.9 million of unrealized equity investment gains), and a net loss of $105.0 million

(including $59.1 million of unrealized equity investment losses) for the years ended December 31, 2019 and 2018, respectively,

and on a cumulative basis, we have sustained substantial losses since our inception.

As of December 31, 2019, our accumulated

deficit was $439.7 million.

As of December 31, 2019, we had approximately $168.3 million in cash and cash equivalents and

trading securities and working capital of $160.1 million.

Although we believe that our current cash and cash equivalents and investments

will be sufficient to finance our anticipated capital and operating requirements for at least the next twelve months, we expect

to continue incurring significant legal, general and administrative expenses in connection with our operations.

As a result, we

anticipate that we may incur losses in the future.

Additional increases in our expenses without commensurate increases in revenues

could significantly increase our operating losses.

Any additional operating losses may have a material adverse effect on our stockholders’

An investment

in our common stock involves risks.

You should carefully consider the risks described below, together with all of the other information

included in this annual report, as well as in our other filings with the SEC, in evaluating our business.

The risks described

below are not the only risks we face.

Additional risks that we do not yet know of or that we currently believe are immaterial

may also impair our business operations.

If any of the following risks actually occur, our business, financial condition and results

of operations could be materially adversely affected, and the trading price of our common stock could decline significantly.

statements below may be considered forward-looking statements.

For additional information, see “Cautionary Note Regarding

Forward-Looking Statements.”

Risks Related

to Our Business

We have a history of losses

and may incur additional losses in the future .

a net income of $113.4 million (includes $176.2 million of unrealized gain from trading securities and investment securities and

$5.5 million unrealized equity investment gains), and a net loss of $17.1 million (including $9.9 million of unrealized equity

investment gains) for the years ended December 31, 2020 and 2019, respectively, and on a cumulative basis, we have sustained substantial

losses since our inception.

As of December 31, 2020, our accumulated deficit was $326.7 million.

As of December 31, 2020, we had

approximately $274.6 million in cash and cash equivalents and trading securities and working capital of $332.9 million.

we believe that our current cash and cash equivalents and investments will be sufficient to finance our anticipated capital and

operating requirements for at least the next twelve months, we expect to continue incurring significant legal, general and administrative

expenses in connection with our operations.

As a result, we anticipate that we may incur losses in the future.

Additional increases

in our expenses without commensurate increases in revenues could significantly increase our operating losses.

Any additional operating

losses may have a material adverse effect on our stockholders’

equity and overall financial condition.

tax legislation may adversely affect

our financial condition, results of operations and cash flows, including the ability to use net operating losses and certain other

tax attributes.

Our ability to use our federal and state

net operating losses to offset potential future taxable income and related income taxes that would otherwise be due is dependent

upon our generation of future taxable income before the expiration dates of the net operating losses, and we cannot predict with

certainty when, or whether, we will generate sufficient taxable income to use all or any portion of our net operating losses.

In addition, utilization of net operating losses to offset potential future taxable income and related income taxes that would

otherwise be due is subject to annual limitations under the “ownership change”

provisions of Sections 382 and 383

of the Internal Revenue Code of 1986, as amended, or the Code, and similar state provisions, which may result in the expiration

of net operating losses before future utilization.

In general, under the Code, if a corporation undergoes an “ownership

change,”

generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the

corporation’s ability to use its pre-change net operating losses and other pre-change tax attributes (such as research and

development credit carryforwards) to offset its post-change taxable income or taxes may be limited.

Changes in our stock ownership,

some of which may be outside of our control, could in the future result in an ownership change.

Although we have adopted a Tax

Benefits Preservation Plan and a provision in our certificate of incorporation, each of which are designed to

discourage investors from acquiring ownership of our common stock in a manner that could trigger an ownership change, and

we have completed studies to provide reasonable assurance that an ownership change limitation would not apply, we cannot be certain

that a taxing authority would reach the same conclusion.

If, after a review or audit, an ownership change limitation were to apply,

utilization of our domestic net operating losses and tax credit carryforwards could be limited in future periods and a portion

of the carryforwards could expire before being available to reduce future income tax liabilities.

If we encounter unforeseen difficulties with our business

or operations in the future that require us to obtain additional working capital, and we cannot obtain additional working capital

on favorable terms, or at all, our business may suffer .

Our consolidated cash and cash equivalents

and trading securities totaled $168.3 million and $165.5 million at December 31, 2019 and 2018, respectively.

To date, we have

relied primarily upon net cash flows from our operations and from the public and private sale of equity securities to generate

the working capital needed to finance our operations.

We may encounter unforeseen difficulties with our business or operations

in the future that may deplete our capital resources more rapidly than anticipated.

As a result, we may be required to obtain

additional working capital in the future through bank credit facilities, public or private debt or equity financings, or otherwise.

If we are required to raise additional working capital in the future, such financing may be unavailable to us on favorable terms,

if at all, or may be dilutive to our existing stockholders.

If we fail to obtain additional working capital, as and when needed,

such failure could have a material adverse impact on our business, results of operations and financial condition.

Failure to effectively manage our operational changes

could strain our managerial, operational and financial resources and could adversely affect our business and operating results.

Operational changes primarily relate to

changes in our board of directors and senior management.

During 2018, we announced various changes to our board of directors

and senior management, including a reconstituted board of directors and the terminations of our President, our Chief Financial

Officer, Senior Vice President of Finance and Treasurer and our Executive Vice President, General Counsel and Secretary.

announced in 2018 the appointment of our new Chief Intellectual Property Officer Marc W.

In 2019 we appointed Clifford

Press as our new Chief Executive Officer, and Alfred V.

as our new President and Chief Investment Officer.

in leadership and key management positions have inherent risks, and there are no assurances that any of our recent changes will

not affect our financial condition.

If we fail to manage our operational changes

effectively or to develop, expand or otherwise modify our managerial, operational and financial resources and systems, our business

and financial results will be materially harmed.

Patent portfolio investments may present risks, and we

may be unable to achieve the financial or other goals intended at the time of any potential investment.

Our licensing and enforcement business has

depended, in part, on our ability to invest in patented technologies, patent portfolios, or companies holding such patented technologies

and patent portfolios.

Accordingly, historically we have engaged in patent portfolio investments in an effort to expand our patent

portfolio assets.

Such investments and potential investments are subject to numerous risks, including the following:

our inability to enter into a definitive agreement with respect to any potential patent portfolio investment, or if we are able to enter into such agreement, our inability to consummate the potential investment transaction;

difficulty integrating the operations, technology and personnel of the acquired entity;

our inability to achieve the anticipated financial and other benefits of the specific patent portfolio investment;

our inability to retain key personnel from the acquired company, if necessary;

difficulty in maintaining controls, procedures and policies during the transition and integration process;

diversion of our management’s attention from other business concerns;

failure of our due diligence process to identify significant issues, including issues with respect to patented technologies and patent portfolios, and other legal and financial contingencies.

If we are unable to manage these risks effectively

as part of any patent portfolio investment, our business could be adversely affected.

Our revenues are unpredictable, and this may harm our

financial condition .

Due to the nature of our licensing business

and uncertainties regarding the amount and timing of the receipt of license and other fees from potential infringers, stemming

primarily from uncertainties regarding the outcome of enforcement actions, rates of adoption of our patented technologies, the

growth rates of our existing licensees and certain other factors, our revenues may vary significantly from quarter to quarter and

period to period, which could make our business difficult to manage, adversely affect our business and operating results, cause

our quarterly and periodic results to fall below market expectations and adversely affect the market price of our common stock.

Our operating subsidiaries depend upon relationships with

others to provide technology-based opportunities that can develop into profitable royalty-bearing licenses, and if they are unable

to maintain and generate new relationships, then they may not be able to sustain existing levels of revenue or increase revenue .

Neither we nor our operating subsidiaries

invent new technologies or products;

rather, we depend upon the identification and investment in patents, inventions and companies

that own IP through our relationships with inventors, universities, research institutions, technology companies and others.

our operating subsidiaries are unable to maintain those relationships and identify and grow new relationships, then we may not

be able to identify new technology-based patent opportunities for sustainable revenue and /or revenue growth.

Our current or future relationships may

not provide the volume or quality of technologies necessary to sustain our licensing, enforcement and overall business.

unable to maintain current relationships and sources of technology or to secure new relationships and sources of technology, such

inability may have a material adverse effect on our revenues, operating results, financial condition and ability to maintain our

licensing and enforcement business.

The success of our operating subsidiaries depends in part

upon their ability to retain the best legal counsel to represent them in patent enforcement litigation in order to achieve favorable

outcomes from such litigation.

The outcome of such litigation is uncertain, and any unfavorable outcomes may harm our financial

The success of our licensing business depends

upon our operating subsidiaries’

ability to retain the best legal counsel to prosecute patent infringement litigation.

our operations evolve and industry conditions increase in complexity, it will become more difficult to find the best legal counsel

to handle all of our cases.

This is due in part to many of the best law firms having conflicts of interest that prevents their

representation of our subsidiaries.

We spend a significant amount of our financial

and management resources to pursue our current litigation matters.

We believe that these litigation matters and others that we

may in the future determine to pursue could continue for years and continue to consume significant financial and management resources.

The counterparties to our litigation are sometimes large, well-financed companies with substantially greater resources than us.

We cannot assure you that any of our current or future litigation matters will result in a favorable outcome for us.

in part due to the appeals process and other legal processes, even if we obtain favorable interim rulings or verdicts in particular

litigation matters, they may not be predictive of the ultimate resolution of the dispute.

Also, we cannot assure you that we will

not be exposed to claims or sanctions against us which may be costly or impossible for us to defend.

The inability to retain the

best legal counsel to represent our operating subsidiaries in infringement actions may result in unfavorable or adverse outcomes,

which may result in losses, exhaustion of financial resources or other adverse effects which could encumber our ability to effectively

operate our business or execute our business strategy.

Our operating subsidiaries, in certain circumstances,

rely on representations, warranties and opinions made by third-parties that, if determined to be false or inaccurate, may expose

us and our operating subsidiaries to certain material liabilities .

From time to time, our operating subsidiaries

may rely upon representations and warranties made by third-parties from whom our operating subsidiaries acquired patents or the

exclusive rights to license and enforce patents.

tax legislation

may adversely affect our financial condition, results of operations and cash flows, including the ability to use net operating

losses and certain other tax attributes.

to use our federal and state net operating losses to offset potential future taxable income and related income taxes that would

otherwise be due is dependent upon our generation of future taxable income before the expiration dates of the net operating losses,

and we cannot predict with certainty when, or whether, we will generate sufficient taxable income to use all or any portion of

our net operating losses.

In addition, utilization of net operating losses to offset potential future taxable income and related

income taxes that would otherwise be due is subject to annual limitations under the “ownership change”

of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, and similar state provisions, which may

result in the expiration of net operating losses before future utilization.

In general, under the Code, if a corporation undergoes

an “ownership change,”

generally defined as a greater than 50% change (by value) in its equity ownership over a three-year

period, the corporation’s ability to use its pre-change net operating losses and other pre-change tax attributes (such as

research and development credit carryforwards) to offset its post-change taxable income or taxes may be limited.

Changes in our

stock ownership, some of which may be outside of our control, could in the future result in an ownership change.

Although we have

adopted a Tax Benefits Preservation Plan and a provision in our certificate of incorporation, each of which are designed to discourage

investors from acquiring ownership of our common stock in a manner that could trigger an ownership change, and we have completed

studies to provide reasonable assurance that an ownership change limitation would not apply, we cannot be certain that a taxing

authority would reach the same conclusion.

If, after a review or audit, an ownership change limitation were to apply, utilization

of our domestic net operating losses and tax credit carryforwards could be limited in future periods and a portion of the carryforwards

could expire before being available to reduce future income tax liabilities.

If we encounter unforeseen

difficulties with our business or operations in the future that require us to obtain additional working capital, and we cannot

obtain additional working capital on favorable terms, or at all, our business may suffer .

Our consolidated

cash and cash equivalents and trading securities totaled $274.6 million and $168.3 million at December 31, 2020 and 2019, respectively.

To date, we have relied primarily upon net cash flows from our operations and from the public and private sale of equity securities

to generate the working capital needed to finance our operations.

We may encounter unforeseen difficulties with our business or

operations in the future that may deplete our capital resources more rapidly than anticipated.

As a result, we may be required

to obtain additional working capital in the future through bank credit facilities, public or private debt or equity financings,

or otherwise.

If we are required to raise additional working capital in the future, such financing may be unavailable to us on

favorable terms, if at all, or may be dilutive to our existing stockholders.

If we fail to obtain additional working capital,

as and when needed, such failure could have a material adverse impact on our business, results of operations and financial condition.

Failure to effectively manage

our operational changes could strain our managerial, operational and financial resources and could adversely affect our business

and operating results.

changes primarily relate to changes in our board of directors and senior management.

During 2018, we announced various changes

to our board of directors and senior management, including a reconstituted board of directors and the terminations of our President,

our Chief Financial Officer, Senior Vice President of Finance and Treasurer and our Executive Vice President, General Counsel

and Secretary.

We also announced in 2018 the appointment of our new Chief Intellectual Property Officer Marc W.

we appointed Clifford Press as our new Chief Executive Officer, and Alfred V.

as our new President and Chief Investment

In 2020 we appointed Richard Rosenstein as our new Chief Financial Officer.

Changes in leadership and key management

positions have inherent risks, and there are no assurances that any of our recent changes will not affect our financial condition.

If we fail to

manage our operational changes effectively or to develop, expand or otherwise modify our managerial, operational and financial

resources and systems, our business and financial results will be materially harmed.

Patent portfolio investments

may present risks, and we may be unable to achieve the financial or other goals intended at the time of any potential investment.

Our licensing

and enforcement business has depended, in part, on our ability to invest in patented technologies, patent portfolios, or companies

holding such patented technologies and patent portfolios.

Accordingly, historically we have engaged in patent portfolio investments

in an effort to expand our patent portfolio assets.

Such investments and potential investments are subject to numerous risks,

including the following:

our inability to enter into a

definitive agreement with respect to any potential patent portfolio investment, or if we are able to enter into such agreement,

our inability to consummate the potential investment transaction;

difficulty integrating the operations,

technology and personnel of the acquired entity;

our inability to achieve the anticipated

financial and other benefits of the specific patent portfolio investment;

our inability to retain key personnel

from the acquired company, if necessary;

difficulty in maintaining controls,

procedures and policies during the transition and integration process;

diversion of our management’s

attention from other business concerns;

failure of our due diligence process

to identify significant issues, including issues with respect to patented technologies and patent portfolios, and other legal

and financial contingencies.

If we are unable

to manage these risks effectively as part of any patent portfolio investment, our business could be adversely affected.

Our revenues are unpredictable,

and this may harm our financial condition .

Due to the nature

of our licensing business and uncertainties regarding the amount and timing of the receipt of license and other fees from potential

infringers, stemming primarily from uncertainties regarding the outcome of enforcement actions, rates of adoption of our patented

technologies, the growth rates of our existing licensees and certain other factors, our revenues may vary significantly from quarter

to quarter and period to period, which could make our business difficult to manage, adversely affect our business and operating

results, cause our quarterly and periodic results to fall below market expectations and adversely affect the market price of our

common stock.

Our operating subsidiaries

depend upon relationships with others to provide technology-based opportunities that can develop into profitable royalty-bearing

licenses, and if they are unable to maintain and generate new relationships, then they may not be able to sustain existing levels

of revenue or increase revenue .

Neither we nor

our operating subsidiaries invent new technologies or products;

rather, we depend upon the identification and investment in patents,

inventions and companies that own IP through our relationships with inventors, universities, research institutions, technology

companies and others.

If our operating subsidiaries are unable to maintain those relationships and identify and grow new relationships,

then we may not be able to identify new technology-based patent opportunities for sustainable revenue and /or revenue growth.

or future relationships may not provide the volume or quality of technologies necessary to sustain our licensing, enforcement

and overall business.

If we are unable to maintain current relationships and sources of technology or to secure new relationships

and sources of technology, such inability may have a material adverse effect on our revenues, operating results, financial condition

and ability to maintain our licensing and enforcement business.

The success of our operating

subsidiaries depends in part upon their ability to retain the best legal counsel to represent them in patent enforcement litigation

in order to achieve favorable outcomes from such litigation.

The outcome of such litigation is uncertain, and any unfavorable

outcomes may harm our financial condition.

of our licensing business depends upon our operating subsidiaries’

ability to retain the best legal counsel to prosecute

patent infringement litigation.

As our operations evolve and industry conditions increase in complexity, it will become more difficult

to find the best legal counsel to handle all of our cases.

This is due in part to many of the best law firms having conflicts

of interest that prevents their representation of our subsidiaries.

We spend a significant

amount of our financial and management resources to pursue our current litigation matters.

We believe that these litigation matters

and others that we may in the future determine to pursue could continue for years and continue to consume significant financial

and management resources.

The counterparties to our litigation are sometimes large, well-financed companies with substantially

greater resources than us.

We cannot assure you that any of our current or future litigation matters will result in a favorable

outcome for us.

In addition, in part due to the appeals process and other legal processes, even if we obtain favorable interim

rulings or verdicts in particular litigation matters, they may not be predictive of the ultimate resolution of the dispute.

we cannot assure you that we will not be exposed to claims or sanctions against us which may be costly or impossible for us to

The inability to retain the best legal counsel to represent our operating subsidiaries in infringement actions may result

in unfavorable or adverse outcomes, which may result in losses, exhaustion of financial resources or other adverse effects which

could encumber our ability to effectively operate our business or execute our business strategy.

Our operating subsidiaries,

in certain circumstances, rely on representations, warranties and opinions made by third-parties that, if determined to be false

or inaccurate, may expose us and our operating subsidiaries to certain material liabilities .

time, our operating subsidiaries may rely upon representations and warranties made by third-parties from whom our operating subsidiaries

acquired patents or the exclusive rights to license and enforce patents.

We also may rely upon the opinions of purported experts.

In certain instances,

we may not have the opportunity to independently investigate and verify the facts upon which such representations, warranties,

and opinions are made.

By relying on these representations, warranties and opinions, our operating subsidiaries may be exposed

to liabilities in connection with the licensing and enforcement of certain patents and patent rights which could have a material

In certain instances, we may not have the opportunity to independently investigate and verify the facts upon which such representations,

warranties, and opinions are made.

By relying on these representations, warranties and opinions, our operating subsidiaries may

be exposed to liabilities in connection with the licensing and enforcement of certain patents and patent rights which could have

a material adverse effect on our operating results and financial condition.

In connection with patent

enforcement actions conducted by certain of our subsidiaries, a court may rule that we or our subsidiaries have violated certain

statutory, regulatory, federal, local or governing rules or standards, which may expose us and our operating subsidiaries to certain

material liabilities .

In connection

with any of our patent enforcement actions, it is possible that a defendant may request and/or a court may rule that we have violated

statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive

or procedural aspects of such enforcement actions.

In such event, a court may issue monetary sanctions against us or our operating

subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material, and if we or our operating

subsidiaries are required to pay such monetary sanctions, attorneys’

fees and/or expenses, such payment could materially

harm our operating results and our financial position.

In connection with patent

enforcement actions conducted by certain of our subsidiaries, a court may find the patents invalid, not infringed or unenforceable

and/or the U.S.

Patent and Trademark Office, or the USPTO, or other relevant patent office, may either invalidate the patents

or materially narrow the scope of their claims during the course of a reexamination, opposition or other such proceeding.

Patent litigation

is inherently risky and the outcome is uncertain.

Some of the parties that we believe infringe on our patents are large and well-financed

companies with substantially greater resources than ours.

We believe that these parties would devote a substantial amount of resources

in an attempt to avoid or limit a finding that they are liable for infringing on our patents or, in the event liability is found,

to avoid or limit the amount of associated damages.

In addition, there is a risk that these parties may file inter-partes reviews,

reexaminations or other proceedings with the USPTO or other government agencies in the United States or abroad in an attempt to

invalidate, narrow the scope or render unenforceable the patents we own or control.

If this were to occur, it may have a material

adverse effect on our operations.

it is difficult to predict the outcome of patent enforcement litigation at any level.

In the United States, there is a higher

rate of appeals in patent enforcement litigation than standard business litigation.

The defendant to any case we bring, may file

as many appeals as allowed by right, including to the first, second and/or final courts of appeal (in the United States those

courts would be the Federal Circuit and Supreme Court, respectively).

Such appeals are expensive and time-consuming, and the outcomes

of such appeals are sometimes unpredictable, resulting in increased costs and reduced or delayed revenue which could have a material

adverse effect on our operating results and financial condition.

In connection with patent enforcement actions conducted

by certain of our subsidiaries, a court may rule that we or our subsidiaries have violated certain statutory, regulatory, federal,

local or governing rules or standards, which may expose us and our operating subsidiaries to certain material liabilities .

In connection with any of our patent enforcement

actions, it is possible that a defendant may request and/or a court may rule that we have violated statutory authority, regulatory

authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement

In such event, a court may issue monetary sanctions against us or our operating subsidiaries or award attorney’s

fees and/or expenses to a defendant(s), which could be material, and if we or our operating subsidiaries are required to pay such

monetary sanctions, attorneys’

fees and/or expenses, such payment could materially harm our operating results and our financial

In connection with patent enforcement actions conducted

by certain of our subsidiaries, a court may find the patents invalid, not infringed or unenforceable and/or the U.S.

Trademark Office, or the USPTO, or other relevant patent office, may either invalidate the patents or materially narrow the scope

of their claims during the course of a reexamination, opposition or other such proceeding.

Patent litigation is inherently risky and

the outcome is uncertain.

Some of the parties that we believe infringe on our patents are large and well-financed companies with

substantially greater resources than ours.

We believe that these parties would devote a substantial amount of resources in an attempt

to avoid or limit a finding that they are liable for infringing on our patents or, in the event liability is found, to avoid or

limit the amount of associated damages.

In addition, there is a risk that these parties may file inter-partes reviews, reexaminations

or other proceedings with the USPTO or other government agencies in the United States or abroad in an attempt to invalidate, narrow

the scope or render unenforceable the patents we own or control.

If this were to occur, it may have a material adverse effect on

our operations.

In addition, it is difficult to predict

the outcome of patent enforcement litigation at any level.

In the United States, there is a higher rate of appeals in patent enforcement

litigation than standard business litigation.

The defendant to any case we bring, may file as many appeals as allowed by right,

including to the first, second and/or final courts of appeal (in the United States those courts would be the Federal Circuit and

Supreme Court, respectively).

Such appeals are expensive and time-consuming, and the outcomes of such appeals are sometimes unpredictable,

resulting in increased costs and reduced or delayed revenue which could have a material adverse effect on our operating results

and financial condition.

Our licensing cycle is lengthy and costly, and our legal

and sales efforts may be unsuccessful.

We expect our operating subsidiaries to

incur significant general and administrative and legal expenses prior to entering into license agreements and generating license

We also spend considerable resources educating prospective licensees on the benefits of a license arrangement with us.

Our licensing cycle is lengthy

and costly, and our legal and sales efforts may be unsuccessful.

We expect our

operating subsidiaries to incur significant general and administrative and legal expenses prior to entering into license agreements

and generating license revenues.

We also spend considerable resources educating prospective licensees on the benefits of a license

arrangement with us.

As such, we may incur significant losses in any particular period before any associated revenue stream begins.

If our efforts to educate prospective licensees

on the benefits of a license arrangement are unsuccessful, we may need to pursue litigation or other enforcement action to protect

our patent rights.

We may also need to litigate to enforce the terms of our existing license agreements, protect our trade secrets,

or determine the validity and scope of the proprietary rights of others.

Enforcement proceedings are typically protracted and complex.

If our efforts

to educate prospective licensees on the benefits of a license arrangement are unsuccessful, we may need to pursue litigation or

other enforcement action to protect our patent rights.

We may also need to litigate to enforce the terms of our existing license

agreements, protect our trade secrets, or determine the validity and scope of the proprietary rights of others.

Enforcement proceedings

are typically protracted and complex.

The costs are typically substantial, and the outcomes are unpredictable.

Enforcement actions will divert our managerial, technical,

legal and financial resources from business operations and there are no assurances that such enforcement actions will result in

favorable results for us.

Failure to maintain effective internal control over our

financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could cause our financial reports to be inaccurate.

We are required pursuant to Section 404

of the Sarbanes-Oxley Act of 2002, or Section 404, to maintain internal control over financial reporting and to assess and report

on the effectiveness of those controls.

This assessment includes disclosure of any material weaknesses identified by our management

in our internal control over financial reporting.

Our management concluded that our internal

control over financial reporting was effective as of December 31, 2019.

However, there are inherent limitations on effectiveness

Our management, including our Chief Executive Officer and Corporate Controller, does not expect that our disclosure

controls or our internal control over financial reporting will prevent or detect all errors and all fraud.

A control system, no

matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives

The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls

must be considered relative to their costs.

Further, because of the inherent limitations in all control systems, no evaluation

of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues

and instances of fraud, if any, have been detected.

The design of any system of controls is based in part on certain assumptions

about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals

under all potential future conditions.

Projections of any evaluation of the effectiveness of controls to future periods are subject

Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance

with policies or procedures.

If we are not able to maintain effective

internal control over financial reporting, our financial statements, including related disclosures, may be inaccurate, which could

have a material adverse effect on our business.

Refer to Item 9A.

“Controls and Procedures”

for additional information

related to the current period.

Our equity investments are subject to risks and we may

experience significant financial losses.

Our equity investments are subject to a

high degree of risk and could diminish our financial condition.

The overall sustained economic uncertainty, as well as financial,

operational and other difficulties encountered by certain companies in which we have equity investments increases the risk that

the actual amounts realized in the future on our debt and equity investments will differ significantly from the fair values currently

assigned to them.

In addition, the companies in which we have equity investments may not be able to compete effectively or there

may be insufficient demand for the services and products offered by these companies.

These investments could also expose us to

significant financial losses and may limit alternative uses of our capital resources.

If our investees suffer losses, our financial

condition could be materially adversely affected.

In addition, applicable securities law restrictions and other factors may result

in an inability to liquidate any equity components of our equity investments.

Risks Related to Our Industry

Our exposure to uncontrollable outside influences, including

new legislation, court rulings or actions by the USPTO, could adversely affect our licensing and enforcement business and results

of operations .

Our licensing and enforcement business is

subject to numerous risks from outside influences, including the following:

New legislation, regulations or rules

related to obtaining patents or enforcing patents could significantly increase our operating costs and decrease our revenue.

Our operating subsidiaries invest in patents

with enforcement opportunities and spend a significant amount of resources to enforce those patents.

If new legislation, regulations

or rules are implemented by Congress, the USPTO or the courts that impact the patent application process, the patent enforcement

process or the rights of patent holders, such changes could negatively affect our business.

United States patent laws were amended

with the enactment of the Leahy-Smith America Invents Act, or the America Invents Act, which took effect on March 16, 2013.

America Invents Act includes a number of significant changes to U.S.

In general, the legislation attempts to address

issues surrounding the enforceability of patents and the increase in patent litigation by, among other things, establishing new

procedures for patent litigation.

For example, the America Invents Act changes the way that parties may be joined in patent infringement

actions, increasing the likelihood that such actions will need to be brought against individual allegedly-infringing parties by

their respective individual actions or activities.

In addition, the America Invents Act enacted a new inter-partes review process,

or IPR process, at the USPTO which can be, and often is, used by defendants, and other individuals and entities, to separately

challenge the validity of any patent.

The IPR process of the America Invents Act has in many instances increased costs for licensing

and litigation and has resulted in the loss of certain portfolio patents which, in some cases, may have negatively impacted the

value of those portfolios.

The America Invents Act and its implementation has increased the uncertainties and costs surrounding

the enforcement of our patented technologies, which in certain circumstances could have a material adverse effect on our business

and financial condition.

Finally, new rules regarding the burden

of proof in patent enforcement actions could significantly increase the cost of our enforcement actions, and new standards or limitations

on liability for patent infringement could negatively impact our revenue derived from such enforcement actions.

In addition, recent

federal court decisions have lowered the threshold for obtaining attorneys’

fees in patent infringement cases and increased

the level of deference given to a district court’s fee-shifting determination.

These decisions may make it easier for district

courts to shift a prevailing party’s attorneys’

fees to a non-prevailing party if the district court believes that

the case was weak or conducted in an abusive manner.

As a result, defendants in patent infringement actions brought by non-practicing

entities may elect not to settle because these decisions make it much easier for defendants to get attorneys’

Changes in patent law could adversely

impact our business.

Patent laws may continue to change, and

may alter the historically consistent protections afforded to owners of patent rights.

Such changes may not be advantageous for

us and may make it more difficult to obtain adequate patent protection to enforce our patents against infringing parties.

focus on the growing number of patent-related lawsuits may result in legislative changes which increase our costs and related risks

of asserting patent enforcement actions.

For instance, the United States Congress has considered a bill that would require, among

other things, non-practicing entities that bring patent infringement lawsuits to pay legal costs of the defendants, if the lawsuits

are unsuccessful and certain standards are not met.

Trial judges and juries often find it

difficult to understand complex patent enforcement litigation, and as a result, we may need to appeal adverse decisions by lower

courts in order to successfully enforce our patents.

It is difficult to predict the outcome of

patent enforcement litigation at the trial level.

It is often difficult for juries and trial judges to understand complex, patented

technologies, and as a result, there is a higher rate of successful appeals in patent enforcement litigation than more standard

business litigation.

Such appeals are expensive and time consuming, resulting in increased costs and delayed revenue.

we diligently pursue enforcement litigation, we cannot predict with significant reliability the decisions made by juries and trial

More patent applications are filed each

year resulting in longer delays in getting patents issued by the USPTO.

Certain of our operating subsidiaries hold

and continue to invest in pending patents.

We have identified a trend of increasing patent applications each year, which we believe

is resulting in longer delays in obtaining approval of pending patent applications.

The application delays could cause delays in

recognizing revenue from these patents and could cause us to miss opportunities to license patents before other competing technologies

are developed or introduced into the market.

Federal courts are becoming more crowded,

and as a result, patent enforcement litigation is taking longer.

Our patent enforcement actions are almost

exclusively prosecuted in federal court.

Federal trial courts that hear our patent enforcement actions also hear criminal cases.

Enforcement actions

will divert our managerial, technical, legal and financial resources from business operations and there are no assurances that

such enforcement actions will result in favorable results for us.

We expect patent-related legal

expenses to continue to fluctuate from period to period.

Our patent-related

legal expenses may fluctuate based on the factors summarized herein, in connection with future trial dates, international enforcement,

strategic patent portfolio prosecution and our current and future patent portfolio investment, prosecution, licensing and enforcement

The pursuit of enforcement actions in connection with our licensing and enforcement programs can involve certain risks

and uncertainties, including the following:

Increases in patent-related legal

expenses associated with patent infringement litigation, including, but not limited to, increases in costs billed by outside

legal counsel for discovery, depositions, economic analyses, damages assessments, expert witnesses and other consultants,

re-exam and inter partes review costs, case-related audio/video presentations and other litigation support and administrative

costs could increase our operating costs and decrease our profit generating opportunities;

Our patented technologies and

enforcement actions are complex and, as a result, we may be required to appeal adverse decisions by trial courts in order

to successfully enforce our patents.

Moreover, such appeals may not be successful;

New legislation, regulations or

rules related to enforcement actions, including any fee or cost shifting provisions, could significantly increase our operating

costs and decrease our profit generating opportunities.

Increased focus on the growing number of patent-related lawsuits may

result in legislative changes which increase our costs and related risks of asserting patent enforcement actions;

Courts may rule that our subsidiaries

have violated certain statutory, regulatory, federal, local or governing rules or standards by pursuing such enforcement actions,

which may expose us and our operating subsidiaries to material liabilities, which could harm our operating results and our

financial position;

The complexity of negotiations

and potential magnitude of exposure for potential infringers associated with higher quality patent portfolios may lead to

increased intervals of time between the filing of litigation and potential revenue events (i.e., markman dates, trial dates),

which may lead to increased legal expenses, consistent with the higher revenue potential of such portfolios;

Fluctuations in overall patent

portfolio related enforcement activities which are impacted by the portfolio intake challenges discussed above could harm

our operating results and our financial position.

Our equity investments are

subject to risks and we may experience significant financial losses.

Our equity investments

are subject to a high degree of risk and could diminish our financial condition.

The overall sustained economic uncertainty, as

well as financial, operational and other difficulties encountered by certain companies in which we have equity investments increases

the risk that the actual amounts realized in the future on our debt and equity investments will differ significantly from the

fair values currently assigned to them.

In addition, the companies in which we have equity investments may not be able to compete

effectively or there may be insufficient demand for the services and products offered by these companies.

These investments could

also expose us to significant financial losses and may limit alternative uses of our capital resources.

If our investees suffer

losses, our financial condition could be materially adversely affected.

In addition, applicable securities law restrictions and

other factors may result in an inability to liquidate any equity components of our equity investments.

may engage in strategic acquisitions of certain assets or businesses that could affect our business, results of

operations, financial condition and liquidity.

We intend to execute strategic acquisitions

of businesses with a focus on mature technology, healthcare, industrial and certain financial segments.

We intend to leverage our

investment and operations experience to identify and pursue such targets.

These may include acquisitions of entire companies, business

divisions or operating segments of companies or other operating assets, which may at times begin with an initial acquisition of

interests in companies.

We intend to operate such businesses independently of our IP business.

acquisitions inherently involve a number of risks and presents financial, managerial and operational challenges, including:

disruption of our ongoing business and distraction of management;

with integration of personnel and financial and other systems;

additional management and other critical personnel;

the scope, geographic diversity and complexity of our operations.

addition, we may encounter unforeseen obstacles or costs in the integration of acquired businesses.

For example, the presence

of one or more material liabilities of an acquired company that are unknown to us at the time of acquisition may have a material

adverse effect on our business.

We may also opportunistically pursue dispositions of certain assets and businesses, which may

involve material amounts of assets or lines of business, which could adversely affect our results of operations, financial condition

and liquidity.

addition, our strategic acquisitions and dispositions may also affect the diversity of our assets and our capital structure.

a result, our acquisitions and dispositions could affect our business, results of operations, financial condition, and liquidity.

Further, all the risks associated with our acquisitions and dispositions may not be immediately known to us, and the anticipated

benefits of such acquisition or disposition may not be fully realized.

could recognize losses on our equity securities, including equity securities in the Portfolio Companies.

beyond our control can significantly influence the value of our equity securities, including equity securities in the Portfolio

Companies, and can cause potential adverse changes to the value of these securities.

Relevant factors include, but are not limited

to, fluctuations in market price, changes in our own analysis of the value of the security or instability in the financial markets.

Any of the foregoing factors could cause other-than-temporary impairment in future periods and result in realized losses.

process for determining whether impairment is other-than-temporary usually requires difficult, subjective judgments about the

future financial performance of the issuer.

Because of changing economic and market conditions and the financial condition of

issuers of the securities, we may recognize realized and/or unrealized losses in future periods, which could have an adverse effect

on our financial condition and results of operations.

may be subject to the risk of becoming an investment company under the Investment Company Act.

may be subject to the risk of inadvertently meeting the definition of an investment company, which could require us to register

as such under the Investment Company Act of 1940, as amended, or the Investment Company Act.

Registered investment companies are

subject to extensive, restrictive and potentially adverse regulations that impose, among other things, (i)

limitations on capital structure, including the incurrence of indebtedness or the issuance of senior securities;

(ii) restrictions

on specified investments;

(iii) prohibitions on transactions with affiliates;

and (iv) compliance with reporting, record keeping,

voting, proxy disclosure and other rules and regulations that would significantly change our operations .

Registered investment companies are not permitted to operate their business in the manner in which we currently operate and plan

to operate our business in the future.

plan to monitor the value of our investments and structure our operations and transactions to qualify for exclusions under the

Investment Company Act or to remain outside of the definition of an investment company .

Accordingly, we may structure transactions in a less advantageous manner than if we did not have Investment Company Act concerns,

or we may avoid otherwise economically desirable transactions due to those concerns.

In addition, adverse developments with respect

to our ownership of our operating subsidiaries, including significant appreciation or depreciation in the market value of certain

of our publicly traded holdings, could result in our inadvertently becoming an investment company.

If it were established that

we were required to register as an investment company and failed to do

so , there would be a risk, among other material adverse consequences, that we could

become subject to monetary penalties or injunctive relief, or both, in an action brought by the SEC and that we would be

prohibited from engaging in our business activities.

In addition, any contracts that we entered into during the period in which

we were deemed to be operating as an unregistered investment company would be

unenforceable unless a court were to require enforcement, and a court could appoint a receiver to take control of us and liquidate

our business.

Our being deemed to be required to register as an investment company could also be an event of default under the

terms of Notes that we have issued or may issue in the future or other material contracts .

Risks Related

to Our Industry

Our exposure to uncontrollable

outside influences, including new legislation, court rulings or actions by the USPTO, could adversely affect our licensing and

enforcement business and results of operations .

Our licensing

and enforcement business is subject to numerous risks from outside influences, including the following:

New legislation,

regulations or rules related to obtaining patents or enforcing patents could significantly increase our operating costs and decrease

Our operating

subsidiaries invest in patents with enforcement opportunities and spend a significant amount of resources to enforce those patents.

If new legislation, regulations or rules are implemented by Congress, the USPTO or the courts that impact the patent application

process, the patent enforcement process or the rights of patent holders, such changes could negatively affect our business.

States patent laws were amended with the enactment of the Leahy-Smith America Invents Act, or the America Invents Act, which took

effect on March 16, 2013.

The America Invents Act includes a number of significant changes to U.S.

In general, the

legislation attempts to address issues surrounding the enforceability of patents and the increase in patent litigation by, among

other things, establishing new procedures for patent litigation.

For example, the America Invents Act changes the way that parties

may be joined in patent infringement actions, increasing the likelihood that such actions will need to be brought against individual

allegedly-infringing parties by their respective individual actions or activities.

In addition, the America Invents Act enacted

a new inter-partes review process, or IPR process, at the USPTO which can be, and often is, used by defendants, and other individuals

and entities, to separately challenge the validity of any patent.

The IPR process of the America Invents Act has in many instances

increased costs for licensing and litigation and has resulted in the loss of certain portfolio patents which, in some cases, may

have negatively impacted the value of those portfolios.

The America Invents Act and its implementation has increased the uncertainties

and costs surrounding the enforcement of our patented technologies, which in certain circumstances could have a material adverse

effect on our business and financial condition.

rules regarding the burden of proof in patent enforcement actions could significantly increase the cost of our enforcement actions,

and new standards or limitations on liability for patent infringement could negatively impact our revenue derived from such enforcement

In addition, recent federal court decisions have lowered the threshold for obtaining attorneys’

fees in patent

infringement cases and increased the level of deference given to a district court’s fee-shifting determination.

These decisions

may make it easier for district courts to shift a prevailing party’s attorneys’

fees to a non-prevailing party if

the district court believes that the case was weak or conducted in an abusive manner.

As a result, defendants in patent infringement

actions brought by non-practicing entities may elect not to settle because these decisions make it much easier for defendants

to get attorneys’

patent law could adversely impact our business.

may continue to change, and may alter the historically consistent protections afforded to owners of patent rights.

may not be advantageous for us and may make it more difficult to obtain adequate patent protection to enforce our patents against

infringing parties.

Increased focus on the growing number of patent-related lawsuits may result in legislative changes which increase

our costs and related risks of asserting patent enforcement actions.

For instance, the United States Congress has considered a

bill that would require, among other things, non-practicing entities that bring patent infringement lawsuits to pay legal costs

of the defendants, if the lawsuits are unsuccessful and certain standards are not met.

and juries often find it difficult to understand complex patent enforcement litigation, and as a result, we may need to appeal

adverse decisions by lower courts in order to successfully enforce our patents.

It is difficult

to predict the outcome of patent enforcement litigation at the trial level.

It is often difficult for juries and trial judges

to understand complex, patented technologies, and as a result, there is a higher rate of successful appeals in patent enforcement

litigation than more standard business litigation.

Such appeals are expensive and time consuming, resulting in increased costs

and delayed revenue.

Although we diligently pursue enforcement litigation, we cannot predict with significant reliability the

decisions made by juries and trial courts.

applications are filed each year resulting in longer delays in getting patents issued by the USPTO.

Certain of our

operating subsidiaries hold and continue to invest in pending patents.

We have identified a trend of increasing patent applications

each year, which we believe is resulting in longer delays in obtaining approval of pending patent applications.

The application

delays could cause delays in recognizing revenue from these patents and could cause us to miss opportunities to license patents

before other competing technologies are developed or introduced into the market.

Federal courts

are becoming more crowded, and as a result, patent enforcement litigation is taking longer.

Our patent enforcement

actions are almost exclusively prosecuted in federal court.

Federal trial courts that hear our patent enforcement actions also

hear criminal cases.

Criminal cases always take priority over our actions.

As a result, it is difficult to predict the length of time it will take to

complete an enforcement action.

Moreover, we believe there is a trend in increasing numbers of civil lawsuits and criminal proceedings

before federal judges and, as a result, we believe that the risk of delays in our patent enforcement actions will have a greater

negative effect on our business in the future unless this trend changes.

Any reductions in the funding of the

USPTO could have an adverse impact on the cost of processing pending patent applications and the value of those pending patent

applications.

The assets of our operating subsidiaries

consist of patent portfolios, including pending patent applications before the USPTO.

The value of our patent portfolios is dependent

upon the issuance of patents in a timely manner, and any reductions in the funding of the USPTO could negatively impact the value

of our assets.

Further, reductions in funding from Congress could result in higher patent application filing and maintenance fees

charged by the USPTO, causing an increase in our expenses.

Competition is intense in the industries

in which our subsidiaries do business and as a result, we may not be able to grow or maintain our market share for our technologies

We expect to encounter competition in the

area of patent portfolio investments and enforcement.

This includes competitors seeking to invest in the same or similar patents

and technologies that we may seek to invest in.

As new technological advances occur, many of our patented technologies may become

obsolete before they are completely monetized.

If we are unable to replace obsolete technologies with more technologically advanced

patented technologies, then this obsolescence could have a negative effect on our ability to generate future revenues.

Our licensing business also competes with

venture capital firms and various industry leaders for patent licensing opportunities.

Many of these competitors may have more

financial and human resources than we do.

As we become more successful, we may find more companies entering the market for similar

technology opportunities, which may reduce our market share in one or more technology industries that we currently rely upon to

generate future revenue.

Our patented technologies face uncertain

market value.

Our operating subsidiaries have invested

in patents and technologies that may be in the early stages of adoption in the commercial and consumer markets.

Demand for some

of these technologies is untested and is subject to fluctuation based upon the rate at which our licensees will adopt our patents

and technologies in their products and services.

Further, significant judgment is required

in connection with estimates of the recoverability of the carrying value of our intangible patent assets, including estimates of

market values, estimates of the amount and timing of future cash flows, and estimates of other factors that are used to determine

the fair value and recoverability of the respective patent asset values.

Developments with respect to ongoing patent litigation,

patent challenges and re-exams, legislative and judicial decisions and other factors outside of our control, may unfavorably impact

the validity, applicability, and enforceability of our patent assets, and therefore, negatively impact the future value of our

patent portfolios.

If certain of these unfavorable events occur, our estimates or related projections may change materially in

future periods, and future intangible asset impairment tests may result in material charges to earnings.

Patent litigation trials and scheduled

trial dates are subject to routine delay, and any such delays could adversely impact our business, results of operations and financial

Patent infringement trials are components

of our overall patent licensing process and are one of many factors that contribute to the existence of possible future revenue

opportunities for us.

Patent litigation schedules in general, and in particular trial dates, are subject to routine adjustment,

and in most cases delay, as courts adjust their calendars or respond to requests from one or more parties.

Trial dates often are

rescheduled by the court for various reasons that are often unrelated to the underlying patent assets and typically for reasons

that are beyond our control.

As a result, to the extent such events are an indicator of possible future revenue opportunities for

us, or other outcome determinative events, they may and often do change which can result in delay of the expected scheduled event.

Any such delay could be significant and could affect the corresponding future revenue opportunities, thus adversely impacting our

business, results of operations and financial condition.

The markets served by our operating subsidiaries are subject

to rapid technological change, and if our operating subsidiaries are unable to develop and invest in new technologies and patents,

our ability to generate revenues could be substantially impaired .

The markets served by our operating subsidiaries

and their licensees frequently undergo transitions in which products rapidly incorporate new features and performance standards

on an industry-wide basis.

Products for communications applications and high-speed computing applications, as well as other applications

covered by our operating subsidiaries’

IP, are based on continually evolving industry standards.

In addition, the communications

industry is intensely competitive and has been impacted by price erosion, rapid technological change, short product life cycles,

cyclical market patterns and increasing foreign and domestic competition.

Our ability to compete in the future will depend on our

ability to identify and ensure compliance with evolving industry standards.

This will require our continued efforts and success

in acquiring new patent portfolios with licensing and enforcement opportunities.

If we are unable to invest in new patented

technologies and patent portfolios, or to identify and ensure compliance with evolving industry standards, our ability to generate

revenues could be substantially impaired and our business and financial condition could be materially harmed.

Uncertainty in global economic conditions could negatively

affect our business, results of operations and financial condition .

Our revenue-generating opportunities depend

on the use of our patented technologies by existing and prospective licensees, the overall demand for the products and services

of our licensees, and on the overall economic and financial health of our licensees.

If economic conditions do not continue to

improve, or if they deteriorate, many of our licensees’

customers, which may rely on credit financing, may delay or reduce

their purchases of our licensees’

As a result, it is difficult to predict the length

of time it will take to complete an enforcement action.

Moreover, we believe there is a trend in increasing numbers of civil lawsuits

and criminal proceedings before federal judges and, as a result, we believe that the risk of delays in our patent enforcement

actions will have a greater negative effect on our business in the future unless this trend changes.

Any reductions

in the funding of the USPTO could have an adverse impact on the cost of processing pending patent applications and the value of

those pending patent applications.

The assets of

our operating subsidiaries consist of patent portfolios, including pending patent applications before the USPTO.

our patent portfolios is dependent upon the issuance of patents in a timely manner, and any reductions in the funding of the USPTO

could negatively impact the value of our assets.

Further, reductions in funding from Congress could result in higher patent application

filing and maintenance fees charged by the USPTO, causing an increase in our expenses.

is intense in the industries in which our subsidiaries do business and as a result, we may not be able to grow or maintain our

market share for our technologies and patents.

encounter competition in the area of patent portfolio investments and enforcement.

This includes competitors seeking to invest

in the same or similar patents and technologies that we may seek to invest in.

As new technological advances occur, many of our

patented technologies may become obsolete before they are completely monetized.

If we are unable to replace obsolete technologies

with more technologically advanced patented technologies, then this obsolescence could have a negative effect on our ability to

generate future revenues.

Our licensing

business also competes with venture capital firms and various industry leaders for patent licensing opportunities.

Many of these

competitors may have more financial and human resources than we do.

As we become more successful, we may find more companies entering

the market for similar technology opportunities, which may reduce our market share in one or more technology industries that we

currently rely upon to generate future revenue.

technologies face uncertain market value.

Our operating

subsidiaries have invested in patents and technologies that may be in the early stages of adoption in the commercial and consumer

Demand for some of these technologies is untested and is subject to fluctuation based upon the rate at which our licensees

will adopt our patents and technologies in their products and services.

Further, significant

judgment is required in connection with estimates of the recoverability of the carrying value of our intangible patent assets,

including estimates of market values, estimates of the amount and timing of future cash flows, and estimates of other factors

that are used to determine the fair value and recoverability of the respective patent asset values.

Developments with respect

to ongoing patent litigation, patent challenges and re-exams, legislative and judicial decisions and other factors outside of

our control, may unfavorably impact the validity, applicability, and enforceability of our patent assets, and therefore, negatively

impact the future value of our patent portfolios.

If certain of these unfavorable events occur, our estimates or related projections

may change materially in future periods, and future intangible asset impairment tests may result in material charges to earnings.

Patent litigation

trials and scheduled trial dates are subject to routine delay, and any such delays could adversely impact our business, results

of operations and financial condition.

Patent infringement

trials are components of our overall patent licensing process and are one of many factors that contribute to the existence of

possible future revenue opportunities for us.

Patent litigation schedules in general, and in particular trial dates, are subject

to routine adjustment, and in most cases delay, as courts adjust their calendars or respond to requests from one or more parties.

Trial dates often are rescheduled by the court for various reasons that are often unrelated to the underlying patent assets and

typically for reasons that are beyond our control.

As a result, to the extent such events are an indicator of possible future

revenue opportunities for us, or other outcome determinative events, they may and often do change which can result in delay of

the expected scheduled event.

Any such delay could be significant and could affect the corresponding future revenue opportunities,

thus adversely impacting our business, results of operations and financial condition.

The markets served by our

operating subsidiaries are subject to rapid technological change, and if our operating subsidiaries are unable to develop and

invest in new technologies and patents, our ability to generate revenues could be substantially impaired .

served by our operating subsidiaries and their licensees frequently undergo transitions in which products rapidly incorporate

new features and performance standards on an industry-wide basis.

Products for communications applications and high-speed computing

applications, as well as other applications covered by our operating subsidiaries’

IP, are based on continually evolving

industry standards.

In addition, the communications industry is intensely competitive and has been impacted by price erosion,

rapid technological change, short product life cycles, cyclical market patterns and increasing foreign and domestic competition.

Our ability to compete in the future will depend on our ability to identify and ensure compliance with evolving industry standards.

This will require our continued efforts and success in acquiring new patent portfolios with licensing and enforcement opportunities.

If we are unable to invest in new patented technologies and patent portfolios, or to identify and ensure compliance with evolving

industry standards, our ability to generate revenues could be substantially impaired and our business and financial condition

could be materially harmed.

Uncertainty in global economic

conditions could negatively affect our business, results of operations and financial condition .

Our revenue-generating

opportunities depend on the use of our patented technologies by existing and prospective licensees, the overall demand for the

products and services of our licensees, and on the overall economic and financial health of our licensees.

If economic conditions

do not continue to improve, or if they deteriorate, many of our licensees’

customers, which may rely on credit financing,

may delay or reduce their purchases of our licensees’

products and services.

In addition, the use or adoption of our patented technologies is

often based on current and forecasted demand for our licensees’

products and services in the marketplace and may require

companies to make significant initial commitments of capital and other resources.

If negative conditions in the global credit markets

delay or prevent our licensees’

In addition, the use or adoption of our patented

technologies is often based on current and forecasted demand for our licensees’

products and services in the marketplace

and may require companies to make significant initial commitments of capital and other resources.

If negative conditions in the

global credit markets delay or prevent our licensees’

and their customers’

access to credit, overall consumer spending on the products and

services of our licensees may decrease and the adoption or use of our patented technologies may slow, respectively.

the markets in which our licensees’

participate do not continue to improve, or deteriorate further, this could negatively

impact our licensees’

long-term sales and revenue generation, margins and operating expenses, which could in turn have an

adverse effect on our business, results of operations and financial condition.

Public health threats such as COVID-19 could have a material

adverse effect on our operations, the operations of our business partners, and the global economy as a whole.

Public health threats and other highly communicable

diseases, outbreaks of which have already occurred in various parts of the world, could adversely impact our operations, as well

as the operations of our licensees and other business partners.

For example, the outbreak in December 2019 of a novel coronavirus

(COVID-19) has resulted in decreased economic activity in China, as well as a number of other countries, and the scope of the outbreak

and its impacts is continuing to expand.

We have taken precautions in the operation of our

own business and maintain an up-to-date disaster recovery and business continuity policy as well as have the systems and support

to have our workforce work remotely for an indefinite period of time.

any further spread of the COVID-19 outbreak, or the occurrence of other similar outbreaks or epidemics, could have a material

adverse effect on our business, operations and financial results.

Risks Related to Our Common Stock

The availability of shares for sale in the future could

reduce the market price of our common stock .

In the future, we may issue securities to

raise cash for operations and patent portfolio investments.

We may also pay for interests in additional subsidiary companies by

using shares of our common stock or a combination of cash and shares of our common stock.

We may also issue securities convertible

into our common stock.

access to credit, overall consumer spending

on the products and services of our licensees may decrease and the adoption or use of our patented technologies may slow, respectively.

Further, if the markets in which our licensees’

participate do not continue to improve, or deteriorate further, this could

negatively impact our licensees’

long-term sales and revenue generation, margins and operating expenses, which could in

turn have an adverse effect on our business, results of operations and financial condition.

Public health threats such

as COVID-19 could have a material adverse effect on our operations, the operations of our business partners, and the global economy

Public health

threats and other highly communicable diseases, outbreaks of which have already occurred in various parts of the world, could

adversely impact our operations, as well as the operations of our licensees and other business partners.

For example, the outbreak

in December 2019 of a novel coronavirus (COVID-19) has resulted in decreased economic activity in China, as well as a number of

other countries, and the scope of the outbreak and its impacts is continuing to expand.

We have taken precautions in the operation

of our own business and maintain an up-to-date disaster recovery and business continuity policy as well as have the systems and

support to have our workforce work remotely for an indefinite period of time.

However, any further spread of the COVID-19 outbreak,

or the occurrence of other similar outbreaks or epidemics, could have a material adverse effect on our business, operations and

financial results.

date, COVID-19 has not had a material effect on our licensing efforts or litigation schedules.

Teleconferencing has effectively

replaced in-person meetings and, in most cases, courtroom proceedings.

Risks Related

to Our Common Stock

The availability of shares

for sale in the future could reduce the market price of our common stock .

In the future,

we may issue securities to raise cash for operations and patent portfolio investments.

We may also pay for interests in additional

subsidiary companies by using shares of our common stock or a combination of cash and shares of our common stock.

issue securities convertible into our common stock.

Any of these events may dilute stockholders’

ownership interests in our company and have an adverse

impact on the price of our common stock.

In addition, sales of a substantial amount

of our common stock in the public market, or the perception that these sales may occur, could reduce the market price of our common

ownership interests in

our company and have an adverse impact on the price of our common stock.

sales of a substantial amount of our common stock in the public market, or the perception that these sales may occur, could reduce

the market price of our common stock.

This could also impair our ability to raise additional capital through the sale of our securities.

Delaware law and our charter documents contain provisions

that could discourage or prevent a potential takeover of our company that might otherwise result in our stockholders receiving

a premium over the market price of their shares .

Provisions of Delaware law and our certificate

of incorporation and bylaws could make the acquisition of our company by means of a tender offer, proxy contest or otherwise,

and the removal of incumbent officers and directors, more difficult.

Delaware law and our charter

documents contain provisions that could discourage or prevent a potential takeover of our company that might otherwise result

in our stockholders receiving a premium over the market price of their shares .

Provisions of

Delaware law and our certificate of incorporation and bylaws could make the acquisition of our company by means of a tender offer,

proxy contest or otherwise, and the removal of incumbent officers and directors, more difficult.

These provisions include:

Section 203 of the Delaware General Corporation Law, which prohibits a merger with a 15%-or-greater stockholder, such as a party that has completed a successful tender offer, until three years after that party became a 15%-or-greater stockholder;

amendment of our bylaws by the stockholders requires a two-thirds approval of the outstanding shares;

the authorization in our certificate of incorporation of undesignated preferred stock, which could be issued without stockholder approval in a manner designed to prevent or discourage a takeover;

the general restriction in our certificate of incorporation on any direct or indirect transfers of our common stock if the effect would be to (i) increase the direct or indirect ownership of our common stock by any person or group from less than 4.899% to 4.899% or more of our common stock;

or (ii) increase the percentage of our common stock owned directly or indirectly by a person or group owning or deemed to own 4.899% or more of our common stock.

Together, these provisions may make the

removal of management more difficult and may discourage transactions that could otherwise involve payment of a premium over prevailing

market prices for our common stock.

Our Tax Benefits Preservation Plan

could inhibit a change in our control that may otherwise be favorable to our stockholders.

In March 2019, our

board of directors approved the adoption of a Tax Benefits Preservation Plan in order to protect our ability to utilize potential

Section 203 of the Delaware General

Corporation Law, which prohibits a merger with a 15%-or-greater stockholder, such as a party that has completed a successful

tender offer, until three years after that party became a 15%-or-greater stockholder;

amendment of our bylaws by the

stockholders requires a two-thirds approval of the outstanding shares;

the authorization in our certificate

of incorporation of undesignated preferred stock, which could be issued without stockholder approval in a manner designed

to prevent or discourage a takeover;

the general restriction in our

certificate of incorporation on any direct or indirect transfers of our common stock if the effect would be to (i) increase

the direct or indirect ownership of our common stock by any person or group from less than 4.899% to 4.899% or more of our

common stock;

or (ii) increase the percentage of our common stock owned directly or indirectly by a person or group owning

or deemed to own 4.899% or more of our common stock.

Together, these

provisions may make the removal of management more difficult and may discourage transactions that could otherwise involve payment

of a premium over prevailing market prices for our common stock.

Benefits Preservation Plan could inhibit a change in our control that may otherwise be favorable to our stockholders.

In March 2019,

our board of directors approved the adoption of a Tax Benefits Preservation Plan in order to protect our ability to utilize potential

tax assets, such as net operating loss carryforwards and tax credits, to offset potential future taxable income by discouraging

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Our stockholders ratified the adoption of the Tax Benefits Preservation Plan in July 2019.

Under the terms of

the Tax Benefits Preservation Plan, in general, if a person or group acquires beneficial ownership of 4.9% or more of the outstanding

Under the terms

of the Tax Benefits Preservation Plan, in general, if a person or group acquires beneficial ownership of 4.9% or more of the outstanding

shares of our Common Stock without prior approval of our board of directors or without meeting certain exceptions, the rights

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382 of the Code, in which case we may lose all or most of the anticipated tax benefits associated with our prior losses.

We may fail to meet market expectations because of fluctuations

in quarterly operating results, which could cause the price of our common stock to decline .

Our reported revenues and operating results

have fluctuated in the past and may continue to fluctuate significantly from quarter to quarter in the future.

It is possible that

in future periods, revenues could fall below the expectations of securities analysts or investors, which could cause the market

price of our common stock to decline.

The following are among the factors that could cause our operating results to fluctuate significantly

from period to period:

the dollar amount of agreements executed in each period, which is primarily driven by the nature and characteristics of the technology being licensed and the magnitude of infringement associated with a specific licensee;

the specific terms and conditions of agreements executed in each period and the periods of infringement contemplated by the respective payments;

fluctuations in the total number of agreements executed;

fluctuations in the sales results or other royalty-per-unit activities of our licensees that impact the calculation of license fees due;

the timing of the receipt of periodic license fee payments and/or reports from licensees;

fluctuations in the net number of active licensees period to period;

costs related to investments, alliances, licenses and other efforts to expand our operations;

the timing of payments under the terms of any customer or license agreements into which our operating subsidiaries may enter;

we may elect to account for equity investments in companies where our investment gives us the ability to exercise significant influence over the operating and financial policies of the investee at fair value, which may result in significant fluctuations in operating results (unrealized gains and losses) each period based on fluctuations in the stock price of our investments and the requirement to mark such investments to market at each balance sheet date;

expenses related to, and the timing and results of, patent filings and other enforcement proceedings relating to IP rights, as more fully described in this section;

new litigation or developments in current litigation and the unpredictability of litigation results or settlements or appeals.

Technology company stock prices are especially volatile,

and this volatility may depress the price of our common stock .

The stock market has experienced significant

price and volume fluctuations, and the market prices of technology companies have been highly volatile.

We believe that various

factors may cause the market price of our common stock to fluctuate, perhaps substantially, including, among others, the following:

announcements of developments in our patent enforcement actions;

developments or disputes concerning our patents;

We may fail to meet market

expectations because of fluctuations in quarterly operating results, which could cause the price of our common stock to decline .

revenues and operating results have fluctuated in the past and may continue to fluctuate significantly from quarter to quarter

in the future.

It is possible that in future periods, revenues could fall below the expectations of securities analysts or investors,

which could cause the market price of our common stock to decline.

The following are among the factors that could cause our operating

results to fluctuate significantly from period to period:

the dollar amount of agreements

executed in each period, which is primarily driven by the nature and characteristics of the technology being licensed and

the magnitude of infringement associated with a specific licensee;

the specific terms and conditions

of agreements executed in each period and the periods of infringement contemplated by the respective payments;

fluctuations in the total number

of agreements executed;

fluctuations in the sales results

or other royalty-per-unit activities of our licensees that impact the calculation of license fees due;

the timing of the receipt of periodic

license fee payments and/or reports from licensees;

fluctuations in the net number

of active licensees period to period;

costs related to investments,

alliances, licenses and other efforts to expand our operations;

the timing of payments under the

terms of any customer or license agreements into which our operating subsidiaries may enter;

we may elect to account for equity

investments in companies where our investment gives us the ability to exercise significant influence over the operating and

financial policies of the investee at fair value, which may result in significant fluctuations in operating results (unrealized

gains and losses) each period based on fluctuations in the stock price of our investments and the requirement to mark such

investments to market at each balance sheet date;

expenses related to, and the timing

and results of, patent filings and other enforcement proceedings relating to IP rights, as more fully described in this section;

new litigation or developments

in current litigation and the unpredictability of litigation results or settlements or appeals.

Technology company stock prices

are especially volatile, and this volatility may depress the price of our common stock .

The stock market

has experienced significant price and volume fluctuations, and the market prices of technology companies have been highly volatile.

We believe that various factors may cause the market price of our common stock to fluctuate, perhaps substantially, including,

among others, the following:

announcements of developments

in our patent enforcement actions;

developments or disputes concerning

our or our competitors’

technological innovations;

developments in relationships with licensees;

variations in our quarterly operating results;

our failure to meet or exceed securities analysts’

developments in relationships

with licensees;

variations in our quarterly operating

our failure to meet or exceed

securities analysts’

expectations of our financial results;

a change in financial estimates or securities analysts’

a change in financial estimates

or securities analysts’

recommendations;

changes in management’s or securities analysts’

changes in management’s

or securities analysts’

estimates of our financial performance;

changes in market valuations of similar companies;

concerns about sovereign debt of the United States and the European Union;

announcements by us or our competitors of significant contracts, investments, partnerships, joint ventures, capital commitments, new technologies, or patents;

failure to complete significant transactions.

For example, the NASDAQ-100 Technology

Sector Index (NDXT) had a range of $3,547.57 - $5,492.35 during the 52 weeks ended December 31, 2019 and the NASDAQ

Composite Index (IXIC) had a range of $6,463.50- $9,022.39 over the same period.

Over the same period, our common stock

fluctuated within a range of $2.46 - $3.29.

As noted above, our stock price, like many

others, has fluctuated significantly in recent periods and if investors have concerns that our business, operating results and

financial condition will be negatively impacted by industry, global economic or other negative conditions, our stock price could

continue to fluctuate significantly in future periods.

In addition, we believe that fluctuations

in our stock price during applicable periods can also be impacted by court rulings and/or other developments in our patent licensing

and enforcement actions.

Court rulings in patent enforcement actions are often difficult to understand, even when favorable or

neutral to the value of our patents and our overall business, and we believe that investors in the market may overreact, causing

fluctuations in our stock prices that may not accurately reflect the impact of court rulings on our business operations and assets.

In the past, companies that have experienced

volatility in the market price of their stock have been the objects of securities class action litigation.

If our common stock

was the object of securities class action litigation, it could result in substantial costs and a diversion of management’s

attention and resources, which could materially harm our business and financial results.

We do not currently intend to pay dividends on our common

stock in the foreseeable future, and consequently, your ability to achieve a return on your investment will depend on appreciation

in the price of our common stock.

On February 23, 2016, our board of directors

eliminated our dividend policy that provided for the discretionary payment of a total annual cash dividend of $0.50 per share to

holders of our common stock, payable in the amount of $0.125 per share per quarter, effective as of February 23, 2016.

we do not anticipate paying any cash dividends to holders of our common stock in the foreseeable future.

Consequently, investors

must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future

gains on their investments.

There is no guarantee that shares of our common stock will appreciate in value or even maintain the

price at which our stockholders have purchased their shares.

issuance of the Starboard Securities to Starboard and its permitted transferees dilutes the ownership and relative voting power

of holders of our common stock and may adversely affect the market price of our common stock.

to the Securities Purchase Agreement, the Company sold to Starboard (i) 350,000 shares of our newly designated Series A Preferred

Stock and Series A Warrants to purchase up to 5,000,000 shares of common stock in 2019, and (ii) Series B Warrants to purchase

up to 100,000,000 shares of common stock in 2020.

of December 31, 2019, the Series A Preferred Stock held by Starboard represents approximately 16% of our outstanding common

stock on an as-converted.

Because holders of our Series A Preferred Stock are entitled to vote, on an as-converted

basis, together with holders of our common stock on all matters submitted to a vote of the holders of our common stock, the

issuance of the Series A Preferred Stock to Starboard effectively reduces the relative voting power of the holders of our

common stock.

addition, the conversion and/or exercise of the Starboard Securities into common stock would dilute the ownership interest of existing

holders of our common stock.

Furthermore, any sales in the public market of the common stock issuable upon conversion or exercise

of the Starboard Securities could adversely affect prevailing market prices of our common stock.

Pursuant to a customary Registration

Rights Agreement with Starboard, we have agreed to provide certain registration rights with respect to the Starboard Securities

and the shares of common stock issued upon the conversion or exercise of the Starboard Securities, as applicable.

Any such registration

may facilitate the resale of such securities into the public market, and any such resale would increase the number of shares of

our common stock available for public trading.

Sales by Starboard of a substantial number of shares of our common stock in the

public market, or the perception that such sales might occur, could have a material adverse effect on the price of our common stock.

Series A Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of, our

common stockholders, which could adversely affect our liquidity and financial condition, result in the interests of holders of

our Series A Preferred Stock differing from those of our common stockholders and delay or prevent an attempt to take over the Company.

and the other holders of our Series A Preferred Stock have a liquidation preference entitling them to be paid, before any payment

changes in market valuations of

similar companies;

concerns about sovereign debt

of the United States and the European Union;

announcements by us or our competitors

of significant contracts, investments, partnerships, joint ventures, capital commitments, new technologies, or patents;

failure to complete significant

transactions.

the NASDAQ-100 Technology Sector Index (NDXT) had a range of $4,030.77 - $7,563.77 during the 52 weeks ended December 31, 2020

and the NASDAQ Composite Index (IXIC) had a range of $6,860.67 - $12,899.42 over the same period.

Over the same period, our common

stock fluctuated within a range of $2.01 - $4.25.

As noted above,

our stock price, like many others, has fluctuated significantly in recent periods and if investors have concerns that our business,

operating results and financial condition will be negatively impacted by industry, global economic or other negative conditions,

our stock price could continue to fluctuate significantly in future periods.

we believe that fluctuations in our stock price during applicable periods can also be impacted by court rulings and/or other developments

in our patent licensing and enforcement actions.

Court rulings in patent enforcement actions are often difficult to understand,

even when favorable or neutral to the value of our patents and our overall business, and we believe that investors in the market

may overreact, causing fluctuations in our stock prices that may not accurately reflect the impact of court rulings on our business

operations and assets.

companies that have experienced volatility in the market price of their stock have been the objects of securities class action

If our common stock was the object of securities class action litigation, it could result in substantial costs and

a diversion of management’s attention and resources, which could materially harm our business and financial results.

We do not currently intend

to pay dividends on our common stock in the foreseeable future, and consequently, your ability to achieve a return on your investment

will depend on appreciation in the price of our common stock.

23, 2016, our board of directors eliminated our dividend policy that provided for the discretionary payment of a total annual

cash dividend of $0.50 per share to holders of our common stock, payable in the amount of $0.125 per share per quarter, effective

as of February 23, 2016.

As a result, we do not anticipate paying any cash dividends to holders of our common stock in the foreseeable

Consequently, investors must rely on sales of their common stock after price appreciation, which may never occur, as the

only way to realize any future gains on their investments.

There is no guarantee that shares of our common stock will appreciate

in value or even maintain the price at which our stockholders have purchased their shares.

issuance of the Starboard Securities (defined below) to Starboard Value

LP, or Starboard, and its permitted transferees dilutes the ownership and relative voting power of holders of our common

stock and may adversely affect the market price of our common stock.

to a Securities Purchase Agreement with

Starboard, dated November 18, 2019, the Company sold to Starboard (i) 350,000 shares of its

newly designated Series A Preferred Stock and Series A Warrants to purchase up to 5,000,000 shares of common stock in 2019,

and (ii) Series B Warrants to purchase up to 100,000,000 shares of common stock in 2020.

investment by Starboard is referred to herein as the “Starboard Investment,”

and the Series A Preferred Stock, Series

A Warrants and Series B Warrants are referred to herein as, collectively, the “Starboard Securities.”

of December 31, 2020, the Series A Preferred Stock held by Starboard represents approximately 16% of our outstanding common stock

on an as-converted basis.

Because holders of our Series A Preferred Stock are entitled to vote, on an as-converted basis, together

with holders of our common stock on all matters submitted to a vote of the holders of our common stock, the issuance of the Series

A Preferred Stock to Starboard effectively reduces the relative voting power of the holders of our common stock.

addition, the conversion and/or exercise of the Starboard Securities into common stock would dilute the ownership interest of

existing holders of our common stock.

Furthermore, any sales in the public market of the common stock issuable upon conversion

or exercise of the Starboard Securities could adversely affect prevailing market prices of our common stock.

Pursuant to a customary

Registration Rights Agreement with Starboard, we have registered for resale under the

Securities Act of 1933 of 130% of the shares of common stock underlying Starboard Securities outstanding as of November 9, 2020.

In addition, we have agreed to provide (i) certain demand

registration rights with respect to the Starboard Securities and (ii) additional

registration rights with respect to the shares of common stock issued upon the conversion or exercise of the Starboard

Securities, to the extent not included in previous registration statements.

These registrations may facilitate the resale of such securities into the public market, and any such resale would increase

the number of shares of our common stock available for public trading.

Sales by Starboard of a substantial number of shares of

our common stock in the public market, or the perception that such sales might occur, could have a material adverse effect on

the price of our common stock.

Series A Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of,

our common stockholders, which could adversely affect our liquidity and financial condition, result in the interests of holders

of our Series A Preferred Stock differing from those of our common stockholders and delay or prevent an attempt to take over the

Starboard and

the other holders of our Series A Preferred Stock have a liquidation preference entitling them to be paid, before any payment

may be made to holders of our common stock in connection with a liquidation event, an amount per share of Series A Preferred Stock

equal to the greater of (i) the stated value thereof plus accrued and unpaid dividends, and (ii) the amount that would

have been received had such share of Series A Preferred Stock been converted into common stock immediately prior to such liquidation

of Series A Preferred Stock are entitled to a preferential cumulative dividend at the rate of 3.0% per annum, payable quarterly

Upon the consummation of a suitable investment or acquisition by the Company, such investment to be identified and

approved by each of the Company and Starboard, the dividend rate will increase to 8.0% per annum.

holders of our Series A Preferred Stock also have certain redemption rights, including the right to require us to repurchase all

or any portion of the Series A Preferred Stock during certain specified periods and subject to certain conditions set forth in

the Certificate of Designations, Preferences, and Rights of Series A Convertible Preferred Stock, or the Certificate of Designations.

Holders of the Series A Preferred Stock also have the right, subject to certain exceptions, to require us to repurchase all or

any portion of the Series A Preferred Stock upon certain change of control events.

dividend and share repurchase obligations could impact our liquidity and reduce the amount of cash flows available for working

capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.

The preferential rights

could also result in divergent interests between Starboard and holders of our common stock.

Furthermore, a sale of our Company,

as a change of control event, may require us to repurchase Series A Preferred Stock, which could have the effect of making an acquisition

equal to the greater of (i) the stated value thereof plus accrued and unpaid dividends, and (ii) the amount that would have been

received had such share of Series A Preferred Stock been converted into common stock immediately prior to such liquidation event.

Holders of Series

A Preferred Stock are entitled to a preferential cumulative dividend at the rate of 3.0% per annum, payable quarterly in arrears.

Upon the consummation of a suitable investment or acquisition by the Company, such investment to be identified and approved by

each of the Company and Starboard, the dividend rate will increase to 8.0% per annum.

of our Series A Preferred Stock also have certain redemption rights, including the right to require us to repurchase all or any

portion of the Series A Preferred Stock during certain specified periods and subject to certain conditions set forth in the Certificate

of Designations, Preferences, and Rights of Series A Convertible Preferred Stock, or the Certificate of Designations.

of the Series A Preferred Stock also have the right, subject to certain exceptions, to require us to repurchase all or any portion

of the Series A Preferred Stock upon certain change of control events.

These dividend

and share repurchase obligations could impact our liquidity and reduce the amount of cash flows available for working capital,

capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.

The preferential rights could

also result in divergent interests between Starboard and holders of our common stock.

Furthermore, a sale of our Company, as a

change of control event, may require us to repurchase Series A Preferred Stock, which could have the effect of making an acquisition

of the Company more expensive and potentially deterring proposed transactions that may otherwise be beneficial to our stockholders.

has certain rights, including the ability to designate up to three members of our board of directors.

transaction documents entered into in connection with the Starboard Investment grant to Starboard consent rights with respect to

certain actions by us, including:

amending our organizational documents in a manner that would have an adverse effect on the Series A Preferred Stock;

increasing the maximum number of directors on our board to more than seven persons, subject to the terms of the Governance

Agreement entered into in connection with the Securities Purchase Agreement, or the Governance Agreement.

The transaction

documents entered into in connection with the Starboard Investment grant to Starboard consent rights with respect to certain actions

by us, including:

amending our organizational documents

in a manner that would have an adverse effect on the Series A Preferred Stock;

increasing the maximum number

of directors on our board to more than seven persons, subject to the terms of the Governance Agreement entered into in connection

with the Securities Purchase Agreement, or the Governance Agreement.

Securities Purchase Agreement also imposes a number of affirmative and negative covenants on us.

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For so long as certain criteria set forth in the Governance Agreement are satisfied, including

that Starboard beneficially own, in the aggregate, at least 4.0% of the Company’s then-outstanding common stock (on

an as-converted basis, if applicable), Starboard has the right to designate up to three directors for election to our Board.

that Starboard beneficially own, in the aggregate, at least 4.0% of the Company’s then-outstanding common stock (on an as-converted

basis, if applicable), Starboard has the right to designate up to three directors for election to our Board.

directors designated by Starboard also are entitled to serve on committees of our Board, subject to applicable law and stock exchange

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors