What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-05-15 · 254 added, 110 removed, 522 unchanged (41% of the section changed)

3 unchanged sentences

(in thousands, except par value data)

March 31, 2023

June 30, 2023

December 31, 2022

1 unchanged sentence

Cash and cash equivalents

Restricted cash

$ 4,200  

2 unchanged sentences

Total current assets

14,310  

Intangible assets, net

Operating lease right-of-use assets

Other assets, net

9 unchanged sentences

Convertible notes, current portion

Operating lease liabilities

Total current liabilities

14 unchanged sentences

SHAREHOLDERS' DEFICIT:

Common stock, $ 0.01 par value, 175,000 shares authorized, 84,523 and 81,246 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Common stock, $ 0.01 par value, 175,000 shares authorized, 85,510 and 81,246 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

10 unchanged sentences

PARKERVISION, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

$ 25,000  

Cost of sales

( 63 )  

( 106 )  

( 63 )  

24,894  

Selling, general and administrative expenses

13,210  

Total operating expenses

13,210  

Interest expense

( 107 )  

( 72 )  

( 213 )  

Change in fair value of contingent payment obligations

( 2,699 )  

Total interest and other

( 2,743 )  

Provision for income taxes

Net income (loss)

( 4,398 )  

14,548  

Other comprehensive income, net of tax

Comprehensive income

Comprehensive income (loss)

$ 1,433  

$ ( 4,398 )  

$ 14,548  

Earnings per common share

$ 0.02  

$ ( 0.06 )  

$ 0.17  

$ 0.01  

$ ( 0.06 )  

$ 0.12  

Weighted average common shares outstanding

85,263  

77,970  

84,570  

77,763  

120,061  

77,970  

119,700  

77,763  

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

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Total shareholders' deficit, beginning balances

$ ( 36,877 )  

$ ( 43,553 )  

$ ( 50,689 )  

Beginning balances

1 unchanged sentence

Issuance of common stock upon exercise of options and warrants

Issuance of common stock, warrants, and options for services

Issuance of common stock and warrants for services

Issuance of common stock upon conversion and payment of interest-in-kind on convertible debt

3 unchanged sentences

Beginning balances

392,388  

388,749  

391,724  

387,865  

Issuance of common stock and warrants in private offerings, net of issuance costs

( 14 )  

Issuance of common stock upon exercise of options and warrants

3 unchanged sentences

Ending balances

392,618  

389,547  

392,618  

389,547  

Accumulated deficit

Beginning balances

Comprehensive income for the period

( 430,110 )  

( 433,080 )  

( 443,225 )  

Comprehensive income (loss) for the period

( 4,398 )  

14,548  

Ending balances

( 428,677 )  

( 437,478 )  

( 428,677 )  

Total shareholders' deficit, ending balances

$ ( 35,204 )  

$ ( 47,149 )  

$ ( 35,204 )  

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

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Net income (loss)

$ 14,548  

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

Share-based compensation

Gain on changes in fair value of contingent payment obligations

Loss on disposal/impairment of equipment and intangible assets

(Gain) loss on changes in fair value of contingent payment obligations

( 3,077 )  

Loss on disposal/impairment of equipment and other assets

Changes in operating assets and liabilities:

3 unchanged sentences

Total adjustments

( 2,282 )  

Net cash provided by (used in) operating activities

12,266  

CASH FLOWS FROM INVESTING ACTIVITIES:

5 unchanged sentences

Net proceeds from debt financings

Proceeds from contingent payment obligation

Repayment of contingent payment obligation

( 13,925 )  

Principal payments on long-term debt

Net cash provided by financing activities

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

( 74 )  

Net cash (used in) provided by financing activities

( 8,174 )  

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, beginning of period

CASH AND CASH EQUIVALENTS, end of period

$ 4,200  

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

12 unchanged sentences

Liquidity and Going Concern

For the three months ended March 31, 2023 , we recognized net income of approximately $ 13.1 million and cash flows from operations of approximately $ 13.2 million. 

At March 31, 2023 , we had cash and cash equivalents, excluding restricted cash, of approximately $ 0.1 million and an accumulated deficit of approximately $ 430.1 million. 

We had restricted cash of approximately $ 13.9 million at March 31, 2023, all of which was used to make a repayment on our secured contingent payment obligation in May 2023.   

For the three months ended March 31, 2023 , we received aggregate net proceeds from debt and equity financings of approximately $ 0.8 million. On May 4, 2023, we entered into a confidential letter agreement with Brickell whereby Brickell provided $ 5.0 million in new funding to us on substantially similar repayment terms as those set forth in our existing contingent payment agreement, but at a lower interest rate.  

For the six months ended June 30, 2023 , we recognized net income of approximately 

$ 14.5 million and cash flows from operations of approximately $ 12.3 million. 

The net income and related cash flows is a result of revenue from a patent license and settlement agreement, net of contingent legal fees. 

For the six months ended June 30, 2023 , we made repayments of 

$ 13.9 million on our secured contingent payment obligation and 

$ 0.07 million on a related party note. 

We received aggregate proceeds from new borrowings under our secured contingent payment obligation of $ 5.0 million and aggregate net proceeds from convertible debt and equity financings of approximately $ 0.8 million. 

These proceeds will be used to support our operations. 

We believe our current capital resources are sufficient to meet our liquidity needs for at least the next twelve months and we will not be required to seek additional capital.

At June 30, 2023 , we had cash and cash equivalents of approximately $ 4.2 million and an accumulated deficit of approximately $ 428.7 million. 

We believe our current capital resources are sufficient to meet our liquidity needs for at least the next twelve months and we will not be required to seek additional capital to support our current operating activities.

We expect to continue to invest in the support of our patent licensing and enforcement program. 

4 unchanged sentences

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements for the period ended March 31, 2023 were prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10 -Q and Rule 10 - 01 of Regulation S- X.

Operating results for the three months ended March 31, 2023 , are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 , or future years. 

The accompanying unaudited condensed consolidated financial statements for the period ended June 30, 2023 were prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10 -Q and Rule 10 - 01 of Regulation S- X.

Operating results for the six months ended June 30, 2023 , are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 , or future years. 

All normal and recurring adjustments which, in the opinion of management, are necessary for a fair statement of the consolidated financial condition and results of operations have been included.

2 unchanged sentences

These interim condensed consolidated financial statements should be read in conjunction with our latest Annual Report on Form 10 -K for the year ended December 31, 2022 (“

2022 Annual Report”).

Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

The condensed consolidated financial statements include the accounts of ParkerVision, Inc.

6 unchanged sentences

We recognize such payments as revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.”

We recognized $ 25.0 million of revenue during the three -month period ended March 31, 2023 from patent license and settlement agreements with third parties for their use of our technologies. 

We recognized $ 25.0 million of revenue during the six -month period ended June 30, 2023 from patent license and settlement agreements with third parties for their use of our technologies. 

Our performance obligations were satisfied, and therefore revenue recognized, upon transfer of the licensed rights and dismissal of all patent enforcement actions between the parties. 

No revenue was recognized during the three months ended March 31, 2022 . 

No revenue was recognized during the three months ended June 30, 2023 or the three and six months ended June 30, 2022 . 

Earnings per Common Share

3 unchanged sentences

The following table shows the computation of basic and diluted earnings per share for the 

three months ended March 31, 2023 and 2022 (net income and shares in thousands):

three and six months ended June 30, 2023 and 2022 (net income and shares in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Net income (loss)

$ 1,433  

$ ( 4,398 )  

$ 14,548  

Effect of dilutive securities

Net income adjusted for dilutive effect

Net income (loss) adjusted for dilutive effect

( 4,398 )  

14,750  

Weighted-average basic shares outstanding

1 unchanged sentence

77,970  

84,570  

77,763  

Effect of dilutive securities

4 unchanged sentences

77,970  

119,700  

77,763  

Basic earnings per share

1 unchanged sentence

$ ( 0.06 )  

$ 0.17  

Diluted earnings per share

1 unchanged sentence

$ ( 0.06 )  

$ 0.12  

Diluted earnings per common share for the 

three months ended March 31, 2023 and 2022 excludes options and warrants that are anti-dilutive. 

three and six months ended June 30, 2023 and 2022 excludes options and warrants that are anti-dilutive. 

The anti-dilutive common share equivalents at 

March 31, 2023 and 2022 were as follows (in thousands):

June 30, 2023 and 2022 were as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Options outstanding

25,534  

22,730  

17,519  

22,730  

Warrants outstanding

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash of $ 14.06 million as of March 31, 2023, consists of $ 0.135 million of cash and cash equivalents and $ 13.925 million in restricted cash. 

Restricted cash represents cash held in escrow by our attorneys designated for repayment of principal on our secured contingent debt obligation. 

These restricted funds were released from escrow and remitted to Brickell in May 2023.   

10,346  

Shares underlying convertible notes

30,753  

35,880  

63,829  

24,865  

63,829  

Prepaid Expenses

Prepaid expenses consist of the following (in thousands):

March 31, 2023

June 30, 2023

December 31, 2022

3 unchanged sentences

Other prepaid expenses

Prepaid services at March 31, 2023 and December 31, 2022 include approximately $ 0.2 million and $ 0.2 million, respectively of consulting services paid in shares of stock or warrants to purchase shares of stock in the future.

Prepaid services at June 30, 2023 and December 31, 2022 include approximately $ 0.02 million and $ 0.2 million, respectively of consulting services paid in shares of stock or warrants to purchase shares of stock in the future.

Intangible Assets

Intangible assets consist of the following (in thousands):

March 31, 2023

June 30, 2023

December 31, 2022

Patents and copyrights

$ 10,517  

$ 14,319  

Accumulated amortization

( 9,326 )  

$ 1,191  

$ 1,359  

Related Party Note Payable

We have an unsecured promissory note of approximately $ 0.5 million payable to Sterne, Kessler, Goldstein, & Fox, PLLC (“SKGF”), a related party, for outstanding unpaid fees for legal services. 

In 2022 , SKGF agreed to amend the note in order to change and extend the final balloon payment due under the note from April 2023 to April 2027. 

The SKGF note, as amended, will continue to accrue interest at a rate of 4 % per annum, requires monthly payments of principal and interest of $ 12,500 with a final balloon payment of approximately $ 0.02 million in 

The SKGF note, as amended from time to time, accrues interest at a rate of 4 % per annum, requires monthly payments of principal and interest of $ 12,500 with a final balloon payment of approximately $ 0.02 million in 

April 2027. 

14 unchanged sentences

12 % per annum and the outstanding principal balance of the notes plus all accrued interest due may be declared immediately payable by the holders of a majority of the then outstanding principal balance of the notes.

For the three months ended March 31, 2023 , convertible notes with a face value of $ 0.2 million were converted, at the option of the holder, into approximately 1.5 million shares of our common stock. 

For the three months ended March 31, 2023 , we recognized interest expense of approximately $ 0.1 million related to the contractual interest on our convertible notes which we elected to pay in shares of our common stock and issued approximately 428,000 shares of our common stock as interest-in-kind payments.

For the six months ended June 30, 2023 , convertible notes with a face value of $ 0.2 million were converted, at the option of the holder, into approximately 1.5 million shares of our common stock. 

For the six months ended June 30, 2023 , we recognized interest expense of approximately $ 0.2 million related to the contractual interest on our convertible notes which we elected to pay in shares of our common stock and issued approximately 1.2 million shares of our common stock as interest-in-kind payments.

In January 2023, we issued 5 -year convertible notes with an aggregate face value of $ 0.7 million to accredited investors. 

2 unchanged sentences

333 - 271351 ).

Convertible notes payable at March 31, 2023 and December 31, 2022 consist of the following (in thousands):

Convertible notes payable at June 30, 2023 and December 31, 2022 consist of the following (in thousands):

Principal Outstanding as of

June 30,  

December 31,  

Fixed Conversion Rate

Interest Rate

Maturity Date

Convertible notes dated September 10, 2018

$ 0.40  

8.0 % September 7, 2023

Convertible note dated September 19, 2018

$ 0.57  

8.0 % September 19, 2023

Convertible notes dated February/March 2019

$ 0.25  

8.0 % February 28, 2024 to March 13, 2024

Convertible notes dated June/July 2019

$ 0.10  

8.0 % June 7, 2024 to July 15, 2024

Convertible notes dated July 18, 2019

$ 0.08  

7.5 % July 18, 2024

Convertible notes dated September 13, 2019

$ 0.10  

8.0 % September 13, 2024

Convertible notes dated January 8, 2020

$ 0.13  

8.0 % January 8, 2025 1

Convertible notes dated May-August 2022

$ 0.13  

8.0 % May 10, 2027 to August 3, 2027

Convertible notes dated January 11, 2023

$ 0.16  

9.0 % January 1 1, 2028 1

Convertible notes dated January 13, 2023

$ 0.16  

9.0 % January 13, 2028

1 unchanged sentence

Less current portion

$ 3,418  

$ 3,913  

The maturity date may be extended by one -year increments for up to an additional ten years at the holders’ option at a reduced interest rate of 2 %.

At March 31, 2023 , we estimate our convertible notes have an aggregate fair value of approximately $ 3.8 million and would be categorized within Level 2 of the fair value hierarchy.

At June 30, 2023 , we estimate our convertible notes have an aggregate fair value of approximately $ 3.9 million and would be categorized within Level 2 of the fair value hierarchy.

Secured Contingent Payment Obligation

The following table provides a reconciliation of our secured contingent payment obligation, measured at estimated fair market value, for the 

three months ended March 31, 2023 and the year ended December 31, 2022 (in thousands):

Three Months Ended March 31, 2023

six months ended June 30, 2023 and the year ended December 31, 2022 (in thousands):

Six Months Ended June 30, 2023

Year Ended December 31, 2022

Secured contingent payment obligation, beginning of period

$ 40,708  

$ 37,372  

( 13,925 )  

Change in fair value

( 5,038 )  

Secured contingent payment obligation, end of period

$ 26,745  

$ 40,708  

Our secured contingent payment obligation represents the estimated fair value of our repayment obligation to Brickell Key Investments, LP (“Brickell”) under a February 2016 funding agreement, as amended. 

Brickell is entitled to priority payments of 100 % of proceeds received by us from all patent-related actions, after deduction of legal contingent fees, until such time that Brickell has been repaid its remaining principal. 

As of March 31, 2023, Brickell's remaining principal was approximately $ 14.7 million.

As of December 31, 2022 , Brickell's remaining principal was approximately $ 14.7 million.

In May 2023, we repaid approximately $ 13.9 million of principal and borrowed an additional $ 5.0 million under the agreement, leaving $ 5.8 million in remaining outstanding principal. 

1 unchanged sentence

The minimum return is determined as a multiple of the funded amount that increases over time. 

The estimated minimum return due to Brickell was approximately $ 59.3 million and $ 56.9 million as of March 31, 2023 and December 31, 2022 , respectively. 

The estimated minimum return due to Brickell was approximately $ 46.8 million and $ 56.9 million as of June 30, 2023 and December 31, 2022 , respectively. 

In addition, Brickell may be entitled to a pro rata portion of proceeds from specified legal actions to the extent aggregate proceeds from those actions exceed the minimum return. 

The range of potential proceeds payable to Brickell is discussed more fully in Note 10.

As of March 31, 2023 , we are in compliance with our obligations under this agreement.

As of June 30, 2023 , we are in compliance with our obligations under this agreement.

On August 14, 2023, our funding agreement with Brickell was replaced with a secured, non-recourse note and a prepaid forward purchase agreement (see Note 16 ). 

The economics of the new agreements are substantively the same as the prior funding agreement, but for a lower simple interest rate.

We have elected to measure our secured contingent payment obligation at its estimated fair value based on probability-weighted estimated cash outflows, discounted back to present value using a discount rate determined in accordance with accepted valuation methods (see Note 10 ). 

The secured contingent payment obligation is remeasured to fair value at each reporting period with changes recorded in the condensed consolidated statements of comprehensive loss until the contingency is resolved.

Unsecured Contingent Payment Obligations

The following table provides a reconciliation of our unsecured contingent payment obligations, measured at estimated fair market value, for the 

three months ended March 31, 2023 and the year ended December 31, 2022 (in thousands):

Three Months Ended March 31, 2023

Year Ended December 31, 2022

six months ended June 30, 2023 and the year ended December 31, 2022 (in thousands):

Six Months Ended June 30, 2023  

Year Ended December 31, 2022  

Unsecured contingent payment obligations, beginning of period

$ 5,089  

$ 5,691  

Change in fair value

Unsecured contingent payment obligations, end of period

$ 7,050  

$ 5,089  

Our unsecured contingent payment obligations represent amounts payable to others from future patent-related proceeds including (i) a termination fee due to a litigation funder and (ii) contingent payment rights issued to accredited investors in connection with equity financings (“CPRs”). 

2 unchanged sentences

Fair Value Measurements

The following tables summarize the fair value of our contingent payment obligations measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 (in thousands):

The following tables summarize the fair value of our contingent payment obligations measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 (in thousands):

Fair Value Measurements

3 unchanged sentences

Significant Unobservable Inputs (Level 3)

March 31, 2023:

June 30, 2023:

Secured contingent payment obligation

$ 26,745  

Unsecured contingent payment obligations

6 unchanged sentences

Secured contingent payment obligation

$ 40,708  

Unsecured contingent payment obligations

1 unchanged sentence

We used a risk-adjusted discount rate of 

17.94 % at March 31, 2023 , based on a risk-free rate of 

3.94 % as adjusted by 

18.68 % at June 30, 2023 , based on a risk-free rate of 4.68 % as adjusted by 

8 % for credit risk and 

6 % for litigation inherent risk.

The following table provides quantitative information about the significant unobservable inputs used in the measurement of fair value for both the secured and unsecured contingent payment obligations at March 31, 2023 , including the lowest and highest undiscounted payout scenarios as well as a weighted average payout scenario based on relative undiscounted fair value of each cash flow scenario.

The following table provides quantitative information about the significant unobservable inputs used in the measurement of fair value for both the secured and unsecured contingent payment obligations at June 30, 2023 , including the lowest and highest undiscounted payout scenarios as well as a weighted average payout scenario based on relative undiscounted fair value of each cash flow scenario.

Secured Contingent Payment Obligation

4 unchanged sentences

Estimated undiscounted cash outflows (in millions)

$ 42.4  

$ 80.5  

$ 10.8  

Duration (in years)

47 unchanged sentences

On April 20, 2022, we filed a notice of appeal to the United States Court of Appeals for the Federal Circuit. 

As a result of the court’s summary judgment motion in favor of Qualcomm, Qualcomm has the right to petition the court for its fees and costs.

The court has granted a Qualcomm motion to delay such a petition until 30 days following the appellate court’s decision. 

90 unchanged sentences

The PTAB ruled against us with respect to the single challenged claim of the ’444 Patent and ruled in our favor with respect to the seven challenged claims of the ‘474 Patent. 

The ‘444 Patent has subsequently been excluded from the narrowed claims asserted in ParkerVision v.

The ‘444 Patent was subsequently been excluded from the narrowed claims asserted in ParkerVision v.

Intel . 

In July 2022, we appealed the PTAB decision on the '444 Patent to the Federal Circuit. 

In July 2022, we appealed the PTAB decision on the '444 Patent to the Federal Circuit. Following the parties' resolution of outstanding disputes (see ParkerVision v.

Intel above), Intel withdrew as a party to these appeals.

Patent and Trademark Office ("USPTO") exercised its right to intervene following Intel's withdrawal and defend the PTAB's decisions. 

A hearing was held on August 9, 2023, although a decision has not yet been issued by the Federal Circuit.

In July 2021, the PTAB issued its decision to institute IPR proceedings for the ‘108 Patent. 

18 unchanged sentences

(collectively, "MediaTek") for infringement of four U.S.

patents that are included in other Texas cases.

In June 2023, patent infringement actions were filed against Texas Instruments and NXP Semiconductors in the Western District of Texas, each for infringement of three U.S.

We dismissed the actions against Buffalo and Zyxel in 2021 following satisfaction of the parties' obligations under patent license and settlement agreements. 

16 unchanged sentences

Stock Authorization and Issuance

Stock Issuances –

Equity Based Financings

Stock Issuances

Private Placements with Accredited Investors

2 unchanged sentences

333 - 271351 ).

Payment for Services

In April 2023, we issued 250,000 shares of our common stock, valued at approximately $ 30,000 under a short-term advisory services agreement. 

We have no obligation to register the shares.

Common Stock Warrants

As of March 31, 2023 , we had outstanding warrants for the purchase of up to 10.3 million shares of our common stock. 

The estimated grant date fair value of these warrants of $ 3.2 million is included in additional paid-in capital in our condensed consolidated balance sheets.

As of March 31, 2023 , our outstanding warrants have an average exercise price of $ 0.75 per share and a weighted average remaining life of approximately 1.9 years. 

As of June 30, 2023 , we had outstanding warrants for the purchase of up to 10.3 million shares of our common stock. 

The estimated grant date fair value of these warrants of $ 3.2 million is included in additional paid-in capital in our condensed consolidated balance sheets. 

As of June 30, 2023 , our outstanding warrants have an average exercise price of $ 0.75 per share and a weighted average remaining life of approximately 1.6 years. 

Share-Based Compensation

There has been no material change in the assumptions used to compute the fair value of our equity awards, nor in the method used to account for share-based compensation from those stated in our 2022 Annual Report.

For the three months ended March 31, 2023 and 2022 , we recognized share-based compensation expense of approximately $ 0.2 million and $ 0.75 million, respectively. 

Share-based compensation is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of comprehensive income. 

As of March 31, 2023 , there was $ 0.4 million of total unrecognized compensation cost related to all non-vested share-based compensation awards. 

The cost is expected to be recognized over a weighted-average remaining life of approximately 0.9 years.

The Company's effective income tax rate was 0.0 % for each of the three months ended March 31, 2023 and 2022 . 

For the six months ended June 30, 2023 and 2022 , we recognized share-based compensation expense of approximately $ 0.3 million and $ 1.5 million, respectively. 

Share-based compensation is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of comprehensive income (loss). 

As of June 30, 2023 , there was $ 0.2 million of total unrecognized compensation cost related to all non-vested share-based compensation awards. 

The cost is expected to be recognized over a weighted-average remaining life of approximately 1 year.

The Company's effective income tax rate was 0.0 % for each of the three and six months ended June 30, 2023 and 2022 . 

The 0.0 % effective rate for 2023 is due to NOL carryforwards not previously recognized as a tax benefit that we expect to be able to utilize in the current year to offset income tax expense related to current period income.

2 unchanged sentences

Subsequent Events

On May 4, 2023, we entered into a confidential letter agreement with Brickell whereby Brickell provided $ 5.0 million in new funding to us on substantially similar repayment terms as those set forth in our existing contingent payment agreement with Brickell, but at a lower interest rate. 

We will use the proceeds for working capital purposes.  

On August 14, 2023, we entered into a secured, non-recourse promissory note (the "Note") and a prepaid forward purchase agreement ("PPFPA") with Brickell. 

The Note, together with the PPFPA, supersedes and replaces the prior Claims Proceeds Investment Agreement dated February 24, 2016, and related amendments and letter agreements thereto, between the parties.

The Note has a face value of $ 45.5 million, accrues simple interest, and matures on August 14, 2028. 

Payments under the Note will be made solely from proceeds form our patent assets, net of contingent fees payable to attorneys ("Distributions"). 

We are obligated to pay one hundred percent ( 100 %) of the first $ 5.8 million in Distributions to Brickell, and thereafter will pay a percentage of Distributions, which vary depending upon the origin of the Distributions, until the Note and accrued interest thereon has been repaid in full. 

If the amounts payable to Brickell from Distributions are insufficient to repay the face value and interest accrued on the Note by the matruity date, our remaining repayment obligations under the Note will be reduced to zero.

The Note is secured by our patent assets and related proceeds and contains standard and customary representations, warranties and covenants. 

The Note contains events of default including, but not limited to, (a) failure to pay principal or interest on the Note when due;

(b) breach of representations or covenants, (c) impairment in the perfection or priority of Brickell's security interests in the collateral, and (d) bankruptcy or dissolution of the Company. 

In the event of a default, the outstanding principal and accrued interest on the Note will become immediately due and payable.

The PPFPA extends beyond the maturity date of the Note and provides that Brickell is entitled to a specified percentage of monetary recoveries resulting from our patent-related actions to the extent not already paid to Brickell under the Note or otherwise prior to the inception of the Note. 

The PPFPA also contains standard and customary respresentations, warranties and covenants. 

Management ’

24 unchanged sentences

In February 2023, we entered into a confidential patent license and settlement agreement and in March 2023, we received a payment of $25 million with respect thereto. 

These proceeds were f ully utilized for repayment of contingent legal fees and expenses and outstanding principal on our contingent payment obligation with Brickell repaid in May 2023 (see “Brickell Agreement”

In February 2023, we dismissed our two patent enforcement actions against Intel Corporation.

Refer to Note 12 to our consolidated financial statements included elsewhere in this prospectus for a complete discussion of our patent enforcement proceedings.

These proceeds were f ully utilized for repayment of contingent legal fees and expenses and outstanding principal on our contingent payment obligation with Brickell (see “Brickell Agreement”

In February 2023, we dismissed our two patent enforcement actions against Intel Corporation. 

Refer to Note 11 to our unaudited condensed consolidated financial statements included in this quarterly report for a complete discussion of our patent enforcement proceedings.

Brickell Agreement

1 unchanged sentence

On May 4, 2023, we entered into a confidential letter agreement with Brickell whereby Brickell provided $5.0 million in new funding to us on substantially similar repayment terms as those set forth in our existing contingent payment agreement, but at a lower interest rate. 

The new funding will be used for operations.  

Other Debt and Equity Financings

In January 2023, we received proceeds of approximately $0.7 million from the sale of five-year convertible notes to accredited investors. 

The notes are convertible, at the holders' option, into shares of our common stock at a fixed conversion price of $0.16 per shares and bear interest at a stated rate of 9% per annum. 

Interest is payable quarterly, and we may elect, subject to certain equity conditions, to pay interest in cash, shares of our common stock, or a combination thereof. 

In addition, in January 2023, we received aggregate proceeds of approximately $0.14 million from the sale of common stock to accredited investors, including 62,500 shares to Sanford Litvack, a member of our Board of Directors, at a price of $0.16 per share. 

The shares were registered for resale on a registration statement that was declared effective on May 11, 2023 (File No.

The new funding will be used for operations.  On August 14, 2023, our funding agreement with Brickell was replaced with a secured, non-recourse note and a prepaid forward purchase agreement. 

The economics of the new agreements are substantively the same as the prior funding agreement, but for a lower simple interest rate.

Liquidity and Capital Resources

We generated cash and restricted cash from operations of approximately $13.2 million for the three months ended March 31, 2023 and used cash for operations of $0.9 million for the three months ended March 31, 2022. 

We generated cash from operations of approximately $12.3 million for the six months ended June 30, 2023 and used cash for operations of $1.6 million for the six months ended June 30, 2022. 

The increase in cash generated from operations from 2022 to 2023 is primarily due to proceeds received from the patent license and settlement agreement entered into in February 2023, net of contingent legal fees and expenses paid. 

At March 31, 2023, we had cash and cash equivalents of approximately $0.1 million and restricted cash of approximately $13.9 million. 

The restricted cash was used to make a $13.9 million repayment of principal on our secured contingent payment obligation in May 2023.    

For the three months ended March 31, 2023, we received aggregate net proceeds from the sale of debt and equity securities, including the exercise of outstanding options and warrants, of approximately $0.8 million compared to approximately $0.1 million in proceeds received for the three months ended March 31, 2022. 

We repaid approximately $0.04 million and $0.02 in debt obligations during the three months ended March 31, 2023 and 2022, respectively. 

In May 2023, we repaid $13.9 million on our secured contingent payment obligation and received $5.0 million in new funding under that agreement (see Note 17). 

We believe our current capital resources are sufficient to meet our liquidity needs for at least the next twelve months and we will not be required to seek additional capital.

We made repayments of 

$13.9 million on our secured contingent payment obligation during the six months ended June 30, 2023, 

and repaid approximately $0.07 million and $0.05 in related party debt obligations during the six months ended June 30, 2023 and 2022, respectively.

For the six months ended June 30, 2023, we received aggregate proceeds from new borrowings under our secured contingent payment obligation of $5.0 million and aggregate net proceeds from issuance of convertible debt, equity financings and option exercises of approximately $0.8 million, compared to approximately $1.5 million in proceeds from issuance of convertible debt, equity financings and option exercises for the six months ended June 30, 2022. 

At June 30, 2023, we had cash and cash equivalents of approximately $4.2 million.

We expect to continue to invest in the support of our patent licensing and enforcement program.

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Financial Condition

Our working capital increased approximately $13.3 million from December 31, 2022 to March 31, 2023. 

This increase in working capital is primarily the result of our restricted cash balance of $13.9 million, which is partially offset by an increase in current liabilities from the reclassification of an additional $0.8 million of convertible notes due in February and March 2024 from long-term to current liabilities.

Our long-term liabilities decreased $0.6 million from December 31, 2022 to March 31, 2023, primarily due to a $0.3 million decrease in the fair value of our contingent payment obligations, the reclassification of an additional $0.8 million of convertible notes due in February and March 2024 from long-term to current liabilities, and the conversion of $0.2 million in convertible notes by the holder, offset by the issuance of $0.7 million of new five-year convertible notes.

Results of Operations for the three months ended March 31, 2023 and 2022

Our working capital increased approximately $3.1 million from December 31, 2022 to June 30, 2023. 

This increase in working capital is primarily the result of a $4.1 million increase in cash and cash equivalents resulting from new borrowings under our secured contingent payment obligation, 

partially offset by an increase in current liabilities from the reclassification of an additional $1.0 million of convertible notes that mature in the first six months of 2024 from long-term to current liabilities.

Our long-term liabilities decreased $12.6 million from December 31, 2022 to June 30, 2023, primarily due to a $13.9 million repayment on our secured contingent payment obligation, a $3.1 million decrease in the fair value of our contingent payment obligations, the reclassification of an additional $1.0 million of convertible notes due in February, March and June 2024 from long-term to current liabilities, and the conversion of $0.2 million in convertible notes by the holder, offset by $5.0 million of new borrowings under our secured contingent payment obligation and the issuance of $0.7 million of new five-year convertible notes.

Results of Operations for the Three and Six Months Ended June 30, 2023 and 2022 

Revenue and Cost of Sales

We reported no licensing revenue for the three months ended March 31, 2022. 

Licensing revenue was $25.0 million for the three months ended March 31, 2023, resulting from a patent license and settlement agreement entered into in February 2023. 

We reported no licensing revenue for the three and six months ended June 30, 2022 and the three months ended June 30, 2023.

Licensing revenue was $25.0 million for the six months ended June 30, 2023, resulting from a patent license and settlement agreement entered into in February 2023. 

The parties' performance obligations were met in February 2023 and we recognized revenue at that time. 

Cost of sales for the three months ended March 31, 2023 and 2022 consists of amortization expense related to the patents covered under license agreements. 

Cost of sales for the three and six months ended June 30, 2023 and 2022 consists of amortization expense related to the patents covered under license agreements. 

Although we anticipate additional revenue to result in 2023 and beyond from our patent enforcement actions, the amount and timing is highly unpredictable and there can be no assurance that we will achieve our anticipated results.

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Selling, general and administrative expenses consist primarily of litigation fees and expenses, personnel and related costs, including share-based compensation, for executive, Board, finance and accounting and technical support personnel for our patent enforcement program, and costs incurred for insurance and outside professional fees for accounting, legal and business consulting services.

Our selling, general and administrative expenses increased by approximately $10.2 million, or 525.2%, during the three months ended March 31, 2023 when compared to the same period in 2022. 

This is primarily the result of an $10.7 million increase in litigation fees and expenses and is partially offset by a $0.6 million decrease in share-based compensation.

Our selling, general and administrative expenses decreased by approximately $0.5 million, or 31.9%, during the three months ended June 30, 2023 when compared to the same period in 2022. 

This is primarily the result of a $0.6 million decrease in share-based compensation.

Our selling, general and administrative expenses increased by approximately $9.6 million, or 268.5%, during the six months ended June 30, 2023 when compared to the same period in 2022. 

This is primarily the result of a $10.7 million increase in litigation fees and expenses and is partially offset by a $1.2 million decrease in share-based compensation.

The decrease in our share-based compensation for the three and six months ended June 30, 2023 is the result of share-based compensation expense attributed to restricted stock units and nonqualified stock options awarded to executives, key employees and non-employee directors in 2020 and 2021 being fully recognized as of December 31, 2022. 

As of June 30, 2023, we had $0.2 million of total unrecognized compensation cost related to all non-vested share-based compensation awards that is expected to be recognized over a period of approximately one year.

The increase in litigation fees and expenses is the result of contingent legal fees and expenses recognized in 2023 in conjunction with the confidential patent license and settlement agreement reached in February 2023.

The decrease in our share-based compensation for the three-month period ended March 31, 2023 is the result of share-based compensation expense attributed to restricted stock units and nonqualified stock options awarded to executives, key employees and nonemployee directors in 2020 and 2021 being fully recognized as of December 31, 2022. 

As of March 31, 2023, we had $0.4 million of total unrecognized compensation cost related to all non-vested share-based compensation awards that is expected to be recognized over a period of approximately 0.9 years.

Change in Fair Value of Contingent Payment Obligations

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Generally, changes in fair value are a result of changes in estimated amounts and timing of projected future cash flows due to increases in funded amounts, passage of time, and changes in the probabilities based on the status of the funded actions.

For the three months ended March 31, 2023 and 2022, we recorded an aggregate decrease in the fair value of our secured and unsecured contingent payment obligations of approximately $0.3 million and $2.3 million, respectively. 

The change in fair value for the three months ended March 31, 2023 was primarily the result of changes in the estimated amounts and timing of projected future cash flows due to changes in probabilities and time frames based on the status of various patent infringement actions.

For the three and six months ended June 30, 2023, we recorded an aggregate decrease in the fair value of our secured and unsecured contingent payment obligations of approximately $2.7 million and $3.1 million, respectively, compared to an aggregate increase in the fair value of our secured and unsecured contingent payment obligations of $2.7 million and $0.4 million, respectively for the three and six months ended June 30, 2022. 

The change in fair value for the three and six months ended June 30, 2023 was primarily the result of changes in the estimated amounts and timing of projected future cash flows due to changes in probabilities and time frames based on the status of various patent infringement actions.

The increase in fair value for the three and six months ended June 30, 2022 was primarily the result of decreasing interest rates.

Off-Balance Sheet Transactions, Arrangements and Other Relationships

As of March 31, 2023, we had outstanding warrants to purchase approximately 10.3 million shares of our common stock.

As of June 30, 2023, we had outstanding warrants to purchase approximately 10.3 million shares of our common stock.

The estimated grant date fair value of these warrants of approximately $3.2 million is included in shareholders’

deficit in our condensed consolidated balance sheets.

The outstanding warrants have a weighted average exercise price of $0.75 per share and a weighted average remaining life of approximately 1.6 years.

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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-Q

Item 1. Financial Statements