What changed in this filing

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Item 1. Financial Statements

2023-11-14 compared with 2023-08-14 · 149 added, 146 removed, 630 unchanged (32% of the section changed)

3 unchanged sentences

(in thousands, except par value data)

June 30, 2023

September 30, 2023

December 31, 2022

33 unchanged sentences

SHAREHOLDERS' DEFICIT:

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

Common stock, $ 0.01 par value, 175,000 shares authorized, 86,761 and 81,246 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

12 unchanged sentences

(in thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

$ 25,000  

16 unchanged sentences

( 2,958 )  

( 94 )  

Provision for income taxes

Net income (loss)

Net (loss) income

( 3,923 )  

( 402 )  

10,625  

Other comprehensive income, net of tax

Comprehensive income (loss)

Comprehensive (loss) income

$ ( 3,923 )  

1 unchanged sentence

$ 10,625  

Earnings per common share

(Loss) earnings per common share

$ ( 0.05 )  

17 unchanged sentences

(in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Total shareholders' deficit, beginning balances

16 unchanged sentences

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

( 14 )  

Issuance of common stock upon exercise of options and warrants

12 unchanged sentences

( 443,225 )  

Comprehensive income (loss) for the period

Comprehensive (loss) income for the period

( 3,923 )  

( 402 )  

10,625  

Ending balances

10 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

4 unchanged sentences

Share-based compensation

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

Gain on changes in fair value of contingent payment obligations

( 197 )  

Loss on disposal/impairment of equipment and other assets

Loss on disposal/impairment of equipment and intangible assets

Changes in operating assets and liabilities:

1 unchanged sentence

Accounts payable and accrued expenses

Operating lease liabilities

Total adjustments

( 2,282 )  

Net cash provided by (used in) operating activities

32 unchanged sentences

Liquidity and Going Concern

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

For the nine months ended September 30, 2023 , we recognized net income of approximately 

$ 10.6 million and cash flows from operations of approximately $ 11.5 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. 

For the nine months ended September 30, 2023 , we made payments of $ 13.9 million on our secured contingent payment obligation, $ 0.1 million on a related party note, and $ 0.2 million upon the maturity of convertible notes. 

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 $ 0.9 million. 

These proceeds will be used to support our operations. 

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.

At September 30, 2023 , we had cash and cash equivalents of approximately $ 3.3 million and an accumulated deficit of approximately $ 432.6 million. 

A significant amount of future proceeds that we may receive from our patent enforcement and licensing programs will first be utilized to repay borrowings and legal fees and expenses under our contingent funding arrangements. 

In addition, we have approximately $ 1.05 million in convertible debt that matures over the next twelve months. 

These circumstances raise substantial doubt about our ability to continue to operate as a going concern for a period of one year following the issue date of these condensed consolidated financial statements. 

Our current capital resources are not sufficient to meet our liquidity needs for the next twelve months and we may be required to seek additional capital. 

Our ability to meet our liquidity needs for the next twelve months is dependent upon (i) our ability to successfully negotiate licensing agreements and/or settlements relating to the use of our technologies by others in excess of our contingent payment obligations, (ii) our ability to control operating costs, (iii) our ability to successfully negotiate extensions to the maturity date for certain convertible notes, and/or (iv) our ability to obtain additional debt or equity financing. 

We expect that proceeds received by us from patent enforcement actions and technology licenses over the next twelve months may not alone be sufficient to cover our working capital requirements.

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

A significant amount of future proceeds that we may receive from our patent licensing and enforcement program will be first utilized to repay borrowings and legal fees and expenses under our contingent funding arrangements. 

The long-term continuation of our business plan is dependent upon the generation of sufficient cash flows from our technologies and/or products to offset expenses and debt obligations. 

In the event that we do not generate sufficient cash flows, we will be required to obtain additional funding through public or private debt or equity financing or contingent fee arrangements and/or reduce operating costs. 

Failure to generate sufficient cash flows, raise additional capital through debt or equity financings or contingent fee arrangements, and/or reduce operating costs will have a material adverse effect on our ability to meet our long-term liquidity needs and achieve our intended long-term business objectives.

Basis of Presentation

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. 

The accompanying unaudited condensed consolidated financial statements for the period ended September 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 nine months ended September 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.

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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 six -month period ended June 30, 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 nine -month period ended September 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 June 30, 2023 or the three and six months ended June 30, 2022 . 

No revenue was recognized during the three months ended 

September 30, 2023 or the three and nine months ended September 30, 2022 . 

Earnings per Common Share

Basic earnings per common share is determined based on the weighted-average number of common shares outstanding during each period. 

Diluted loss per common share is the same as basic loss per common share for the three months ended September 30, 2023 and the three and nine months ended September 30, 2022, as all common share equivalents are excluded from the calculation, as their effect is anti-dilutive. 

The dilutive effect of outstanding options and warrants is calculated using the treasury stock method. 

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

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,

nine months ended September 30, 2023 and 2022 (net income (loss) and shares in thousands):

Nine Months Ended September 30,

Net income (loss)

$ 10,625  

$ ( 4,398 )  

$ 14,548  

Effect of dilutive securities

1 unchanged sentence

10,927  

14,750  

Weighted-average basic shares outstanding

1 unchanged sentence

78,025  

84,570  

77,763  

Effect of dilutive securities

34,395  

35,130  

Weighted-average diluted shares

1 unchanged sentence

78,025  

119,700  

77,763  

Basic earnings per share

$ 0.02  

$ ( 0.06 )  

$ 0.17  

Diluted earnings per share

$ 0.01  

Basic earnings (loss) per share

$ 0.12  

Diluted earnings (loss) per share

$ 0.09  

Diluted earnings per common share for the 

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

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

The anti-dilutive common share equivalents at 

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

Three Months Ended June 30,

Six Months Ended June 30,

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

Three Months Ended September 30,

Nine Months Ended September 30,

Options outstanding

7 unchanged sentences

10,346  

Shares underlying convertible notes

5 unchanged sentences

35,880  

66,660  

Prepaid Expenses

Prepaid expenses consist of the following (in thousands):

June 30, 2023

September 30, 2023

December 31, 2022

3 unchanged sentences

Other prepaid expenses

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.

Prepaid services at September 30, 2023 and December 31, 2022 include approximately $ 0.01 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):

June 30, 2023

September 30, 2023

December 31, 2022

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We are currently in compliance with all the terms of the note.

At September 30, 2023 , we estimate the note has an aggregate fair value of approximately $ 0.4 million and would be categorized within Level 2 of the fair value hierarchy.

Convertible Notes

Our convertible notes represent 5 -year promissory notes that are convertible, at the holders’

option, into shares of our common stock at fixed conversion prices. 

From September 2018 to January 2023, we issued 5 -year convertible promissory notes that are convertible, at the holders’

option, into shares of our common stock at fixed conversion prices, including notes with an aggregate face value of $ 0.7 million and a conversion price of $ 0.16 per share issued to accredited investors in January 2023. 

On September 15, 2023, we issued a 2.5 -year, $ 0.1 million convertible note to Paul Rosenbaum, a Company director, with a conversion price of $ 0.25 per share. 

On September 15, 2023, we also amended convertible notes dated September 18, 2018, with an aggregate face value of $ 0.43 million. 

The conversion price of the notes was $ 0.57 per share and the original maturity date of the notes was September 18, 2023. 

The notes were amended to reduce the conversion price to $ 0.25 per share and extend the maturity date by 2.5 years, or until March 18, 2026. 

All other terms of the notes remain unchanged. 

Additionally, on September 15, 2023, we amended convertible promissory notes dated February 28, 2019 and March 13, 2019 with an aggregate face value of $ 0.75 million to extend the maturity dates from February 28, 2024 and March 13, 2024 to February 28, 2026 and March 13, 2026, respectively. 

All other terms of the notes remain unchanged. 

As a result of these modifications, the notes were considered to be modified under a troubled debt restructuring in accordance with ASC 470 - 60.

No gain or loss was recognized as a result of the restructurings.

Interest payments are made on a quarterly basis and are payable, at our option, subject to certain equity conditions, in either cash, shares of our common stock, or a combination thereof. 

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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 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. 

The notes have a conversion price of $ 0.16 per share. 

The shares underlying the notes, as well as shares reserved for future in-kind interest payments on the notes, were registered on a registration statement that was declared effective on May 11, 2023 ( File No.

333 - 271351 ).

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

For the nine months ended September 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 and we repaid an aggregate of $ 0.2 million for notes at maturity. 

For the nine months ended September 30, 2023 , we recognized interest expense of approximately $ 0.3 million related to the contractual interest on our convertible notes which we elected to pay in shares of our common stock and issued approximately 2.4 million shares of our common stock as interest-in-kind payments.

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

Principal Outstanding as of

June 30,  

December 31,  

September 30,

Fixed Conversion Rate

Interest Rate  

Stated Interest Rate

Maturity Date

4 unchanged sentences

$ 0.25 1  

8.0 % September 19, 2023

8.0 % March 18, 2026 1

Convertible notes dated February/March 2019

7 unchanged sentences

7.5 % July 18, 2024

Convertible notes dated September 13, 2019

Convertible note dated September 13, 2019

$ 0.10  

6 unchanged sentences

8.0 % May 10, 2027 to August 3, 2027

Convertible notes dated January 11, 2023

Convertible note dated January 11, 2023

$ 0.16  

3 unchanged sentences

9.0 % January 13, 2028

Convertible note dated September 15, 2023

$ 0.25  

8.0 % March 15, 2026

Total principal balance

2 unchanged sentences

$ 3,913  

These notes were amended on September 15, 2023, reducing the conversion rate from $ 0.57 per share to $ 0.25 per share and extending the maturity date from September 18, 2023 to March 18, 2026. 

The amendments are accounted for on a prospective basis in accordance with ASC 470 - 60.

2 These notes were amended on September 15, 2023, extending the maturity dates from February 28, 2024 through March 13, 2024 to February 28, 2026 through March 13, 2026. 

The amendments are accounted for on a prospective basis in accordance with ASC 470 - 60.

3 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 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.

At September 30, 2023 , we estimate our convertible notes have an aggregate fair value of approximately $ 3.6 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 

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

Six Months Ended June 30, 2023

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

Nine Months Ended September 30, 2023

Year Ended December 31, 2022

8 unchanged sentences

$ 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 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. 

After repayment of principal, Brickell is entitled to a portion of remaining proceeds received from all patent-related actions until such time that Brickell has been repaid its minimum return. 

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 $ 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 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.

On August 14, 2023, our prior contingent funding agreement with Brickell Key Investments, LP (“Brickell”) was replaced with a secured, non-recourse note (the "Note") and a prepaid forward purchase agreement (the "PPFPA"). 

The Note has a face value of $ 45.5 million ("Face Value"), accrues simple interest at a fixed rate, and matures on August 14, 2028. 

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

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

If the amounts payable to Brickell from Distributions are insufficient to repay the face value and interest accrued on the Note by the maturity date, our remaining repayment obligations under the Note will be reduced to zero with future payment obligations, if any, being determined under the PPFPA. 

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

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

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

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

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

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

The Note and PPFPA are collectively referred to as our secured contingent payment obligation.

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

The underlying carrying value of the Note, which includes the Face Value plus accrued interest, was approximately $ 48.9 million as of September 30, 2023 , which compares to the minimum return due to Brickell under the prior agreements of $ 56.9 million as of December 31, 2022 . 

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

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

Unsecured Contingent Payment Obligations

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

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

Six Months Ended June 30, 2023  

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

Nine Months Ended September 30, 2023  

Year Ended December 31, 2022  

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Fair Value Measurements

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

Fair Value Measurements

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Significant Unobservable Inputs (Level 3)

June 30, 2023:

September 30, 2023:

Secured contingent payment obligation

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We used a risk-adjusted discount rate of 

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

18.92 % at September 30, 2023 , based on a risk-free rate of 4.92 % as adjusted by 

8 % for credit risk and 

6 % for litigation inherent risk.

The following table provides quantitative information about the significant unobservable inputs used in the measurement of fair value for both the secured and unsecured contingent payment obligations at June 30, 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 September 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

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(collectively “Qualcomm”). 

Appellate court briefs have been filed by both parties and we are awaiting a hearing date in this matter. 

A hearing was held on our appellate action on November 6, 2023 and we are currently awaiting the court's ruling.

The patent infringement case was filed in the Middle District of Florida in May 2014. 

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In July 2017, we filed a patent infringement complaint in the District of New Jersey against LG for the alleged infringement of the same four patents previously asserted against LG in the Middle District of Florida (see ParkerVision v.

Apple and Qualcomm above).

We elected to dismiss the case in the Middle District of Florida and re-file in New Jersey as a result of a Supreme Court ruling regarding proper venue.

Apple and Qualcomm above). 

We elected to dismiss the case in the Middle District of Florida and re-file in New Jersey as a result of a Supreme Court ruling regarding proper venue. 

In March 2018, the court stayed this case pending a final decision in ParkerVision v.

Apple and Qualcomm in the Middle District of Florida.

Apple and Qualcomm in the Middle District of Florida which case has also been stayed pending the outcome in ParkerVision v.

Qualcomm in the Middle District of Florida (Orlando division) which is currently pending an appellate court decision.

As part of this stay, LG has agreed to be bound by the final claim construction decision in that case.

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Intel (Western District of Texas)

In February 2020, we filed a patent infringement complaint in the Western District of Texas against Intel Corporation (“Intel”) alleging infringement of eight of our patents.

The complaint was amended in May 2020 to add two additional patents.

In June 2020, we requested that one of the patents be dropped from this case and filed a second case in the Western District of Texas that included this dismissed patent (see ParkerVision v.

Intel II below).

Intel’s response to our complaint was filed in June 2020 denying infringement and claiming invalidity of the patents.

Intel II below). 

Intel’s response to our complaint was filed in June 2020 denying infringement and claiming invalidity of the patents. 

Intel also filed a motion to transfer venue which was denied by the court. 

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In May 2022, we filed a motion to amend our complaint to add willful infringement based on information obtained during discovery. 

The court granted this motion in June 2022 and we filed an amended complaint.

As a result of additional discovery allowed by the court, the trial date was rescheduled from December 5, 2022 to February 6, 2023. 

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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") has exercised its right to intervene following Intel's withdrawal and defend the PTAB's decisions. 

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Private Placements with Accredited Investors

In January 2023, we entered into securities purchase agreements with accredited investors for the sale of an aggregate of 843,750 shares of our common stock at a price of $ 0.16 per share for aggregate proceeds of $ 0.14 million, including 62,500 shares to Sanford Litvack, a member of our Board of Directors. 

In January 2023, we entered into securities purchase agreements with accredited investors for the sale of an aggregate of 843,750 shares of our common stock at a price of $ 0.16 per share for aggregate gross proceeds of $ 0.14 million, including 62,500 shares to Sanford Litvack, a member of our Board of Directors. 

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

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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.

During the nine months ended September 30, 2023 , we issued 495,000 shares of our common stock to third parties as payment for services and recognized an aggregate of $ 0.1 million of consulting expense related to these share-based payments.

Common Stock Warrants

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

As of September 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. 

As of September 30, 2023 , our outstanding warrants have an average exercise price of $ 0.75 per share and a weighted average remaining life of approximately 1.3 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 six months ended June 30, 2023 and 2022 , we recognized share-based compensation expense of approximately $ 0.3 million and $ 1.5 million, respectively. 

For the nine months ended September 30, 2023 and 2022 , we recognized share-based compensation expense of approximately $ 0.4 million and $ 2.3 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 . 

As of September 30, 2023 , there was $ 0.1 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 0.6 years.

The Company's effective income tax rate was 0.0 % for each of the three and nine months ended September 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.

Related Party Transactions

On January 13, 2023, we sold 62,500 shares of our common stock to Sanford Litvack, one of our directors since October 2022, at $ 0.16 per share in a private placement transaction (see Note 12 ).   

Subsequent Events

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 also contains standard and customary respresentations, warranties and covenants. 

On January 13, 2023, we sold 62,500 shares of our common stock to Sanford Litvack, one of our directors since October 2022, at $ 0.16 per share in a private placement transaction (see Note 12 ).  

On September 15, 2023, we sold $ 0.1 million in promissory notes, convertible into shares of our stock at a fixed conversion price of $ 0.25 per share to Paul Rosenbaum, one of our directors. 

Any unconverted, outstanding principal amount of the note is payable on March 15, 2026 ( see Note 9 ).

Management ’

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Legal Proceedings

On November 6, 2023, we held oral arguments in our appeal of the ParkerVision v.

Qualcomm district court rulings that ended our district court case in Orlando, Florida in March 2022. 

We are currently awaiting a ruling from the appellate court.

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. 

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Liquidity and Capital Resources

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. 

We generated cash from operations of approximately $11.5 million for the nine months ended September 30, 2023 and used cash for operations of $2.4 million for the nine months ended September 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. 

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.

We made payments of 

$13.9 million on our secured contingent payment obligation during the nine months ended September 30, 2023, and paid approximately $0.31 million and $0.07 in convertible note maturities and related party debt obligations during the nine months ended September 30, 2023 and 2022, respectively.

For the nine months ended September 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 $0.9 million, compared to approximately $1.7 million in proceeds from issuance of convertible debt, equity financings and option exercises for the nine months ended September 30, 2022. 

At September 30, 2023, we had cash and cash equivalents of approximately $3.3 million and an accumulated deficit of $432.6 million. 

In addition, we have approximately $1.05 million in convertible debt maturities over the next twelve months. 

Our current capital resources are not sufficient to meet our liquidity needs for the next twelve months and we may be required to seek additional capital. 

We expect that proceeds received by us from patent enforcement actions and technology licenses over the next twelve months may not alone be sufficient to cover our working capital requirements.

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

The long-term continuation of our business plan is dependent upon the generation of sufficient cash flows from our technologies and/or products to offset expenses and debt obligations. 

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Financial Condition

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 

Our working capital increased approximately $2.8 million from December 31, 2022 to September 30, 2023. 

This increase in working capital is primarily the result of a $3.2 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 $0.4 million of convertible notes that mature within the next twelve months, from long-term to current liabilities.

Our long-term liabilities decreased $9.2 million from December 31, 2022 to September 30, 2023, primarily due to a $13.9 million repayment on our secured contingent payment obligation, a $0.2 million decrease in the fair value of our contingent payment obligations, the reclassification of an additional $0.4 million of convertible notes that mature within the next twelve months, 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 $0.8 million of new convertible notes.

Results of Operations for the Three and Nine Months Ended September 30, 2023 and 2022

Revenue and Cost of Sales

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. 

We reported no licensing revenue for the three and nine months ended September 30, 2022 or the three months ended September 30, 2023. 

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

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

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

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

Although we anticipate additional revenue to result in 2024 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 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. 

Our selling, general and administrative expenses decreased by approximately $0.8 million, or 46.1%, during the three months ended September 30, 2023 when compared to the same period in 2022. 

This is primarily the result of a $0.7 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. 

Our selling, general and administrative expenses increased by approximately $8.9 million, or 168.2%, during the nine months ended September 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 $1.9 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 and nine months ended September 30, 2023 is primarily the result of share-based compensation expense attributed to nonqualified stock options awarded to executives, key employees and non-employee directors in 2021 being fully recognized as of December 31, 2022. 

As of September 30, 2023, we had $0.1 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 0.6 years.

The increase in litigation fees and expenses from 2022 to 2023 is the result of contingent legal fees and expenses recognized in 2023 in conjunction with the confidential patent license and settlement agreement reached in February 2023.

Change in Fair Value of Contingent Payment Obligations

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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 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.

For the three months ended September 30, 2023, we recorded an aggregate increase in the fair value of our secured and unsecured contingent payment obligations of approximately $2.9 million compared to an aggregate decrease in the fair value of our secured and unsecured contingent payment obligations of $1.3 million three months ended September 30, 2022. 

For the nine months ended September 30, 2023, we recorded an aggregate decrease in the fair value of our secured and unsecured contingent payment obligations of approximately $0.2 million compared to an aggregate decrease in the fair value of our secured and unsecured contingent payment obligations of $0.9 million nine months ended September 30, 2022. 

The change in fair value for the three and nine months ended September 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, as well as the impact of the revised funding agreements with Brickell. 

The decrease in fair value for the three and nine months ended September 30, 2022 was primarily the result of increasing interest rates, partially offset by increases resulting from changes in the estimated amounts and timing of projected future cash flows due to changes in probabilities and time frames based on the status of various patent infringement actions.

Off-Balance Sheet Transactions, Arrangements and Other Relationships

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

As of September 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’

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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