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Item 1. Financial Statements

2024-05-14 compared with 2023-11-14 · 274 added, 541 removed, 238 unchanged (77% of the section changed)

3 unchanged sentences

(in thousands, except par value data)

September 30, 2023

March 31, 2024

December 31, 2023

1 unchanged sentence

Cash and cash equivalents

$ 3,333  

$ 1,734 $ 2,560

Prepaid expenses

3 unchanged sentences

Other assets, net

$ 4,584  

$ 1,751  

$ 3,138 $ 4,023

CURRENT LIABILITIES:

9 unchanged sentences

Secured contingent payment obligation

28,993  

40,708  

29,643 29,402

Unsecured contingent payment obligations

Convertible notes, net of current portion

Related party note payable, net of current portion

Convertible notes, net of current portion

Total long-term liabilities

40,942  

50,183  

40,624 41,253

Total liabilities

43,494  

52,440  

43,161 43,542

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT:

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

Common stock, $ 0.01 par value, 175,000 shares authorized, 88,361 and 87,681 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

392,822  

391,724  

393,496 393,314

Accumulated deficit

( 432,600 )  

( 434,403 ) ( 433,710 )

Total shareholders' deficit

( 38,910 )  

( 40,023 ) ( 39,519 )

Total liabilities and shareholders' deficit

$ 4,584  

$ 1,751  

$ 3,138 $ 4,023

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

PARKERVISION, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

$ 25,000  

Three Months Ended March 31,

Cost of sales

( 61 )  

( 167 )  

( 61 )  

24,833  

Selling, general and administrative expenses

14,114  

Total operating expenses

14,114  

Interest expense

( 107 )  

( 95 )  

( 320 )  

Change in fair value of contingent payment obligations

( 2,880 )  

Total interest and other

( 2,958 )  

( 94 )  

Provision for income taxes

Net (loss) income

( 3,923 )  

( 402 )  

10,625  

Other comprehensive income, net of tax

Comprehensive (loss) income

$ ( 3,923 )  

$ ( 402 )  

$ 10,625  

(Loss) earnings per common share

$ ( 0.05 )  

$ ( 0.01 )  

$ 0.12  

$ ( 0.05 )  

$ ( 0.01 )  

$ 0.09  

Weighted average common shares outstanding

86,330  

78,542  

85,163  

78,025  

86,330  

78,542  

119,558  

78,025  

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

PARKERVISION, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Total shareholders' deficit, beginning balances

$ ( 35,204 )  

$ ( 47,149 )  

$ ( 50,689 )  

Beginning balances

1 unchanged sentence

Issuance of common stock upon exercise of options and warrants

Issuance of common stock and warrants for services

Issuance of common stock, warrants, and options for services

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

3 unchanged sentences

Beginning balances

392,618  

389,547  

391,724  

387,865  

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

4 unchanged sentences

Ending balances

392,822  

390,428  

392,822  

390,428  

Accumulated deficit

Beginning balances

( 428,677 )  

( 437,478 )  

( 443,225 )  

Comprehensive (loss) income for the period

( 3,923 )  

( 402 )  

10,625  

Ending balances

( 432,600 )  

( 437,880 )  

( 432,600 )  

Total shareholders' deficit, ending balances

$ ( 38,910 )  

$ ( 46,664 )  

$ ( 38,910 )  

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

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$ 10,625  

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

Net (loss) income

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

Depreciation and amortization

1 unchanged sentence

Gain on changes in fair value of contingent payment obligations

( 197 )  

Loss on disposal/impairment of equipment and intangible assets

Paid in kind interest expense

Changes in operating assets and liabilities:

2 unchanged sentences

Total adjustments

Net cash provided by (used in) operating activities

11,531  

Net cash (used in) provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds (payments) from issuance of common stock in private offerings

Net proceeds from issuance of common stock in private offerings

Net proceeds from exercise of options and warrants

Net proceeds from debt financings

Proceeds from contingent payment obligation

Repayment of contingent payment obligation

( 13,925 )  

Principal payments on long-term debt

( 306 )  

Net cash (used in) provided by financing activities

( 8,306 )  

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, beginning of period

CASH AND CASH EQUIVALENTS, end of period

$ 3,333  

NET (DECREASE) INCREASE 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

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

3 unchanged sentences

ParkerVision, Inc.

and its wholly-owned German subsidiary, ParkerVision GmbH (collectively “ParkerVision”, “we”

or the “Company”), is in the business of innovating fundamental wireless hardware technologies and products.

We have designed and developed proprietary radio frequency (“RF”) technologies and integrated circuits based on those technologies, and we license those technologies to others for use in wireless communication products. 

We have expended significant financial and other resources to research and develop our RF technologies and to obtain patent protection for those technologies in the United States of America (“U.S.”) and certain foreign jurisdictions. 

We believe certain patents protecting our proprietary technologies have been broadly infringed by others, and therefore the primary focus of our business plan is the enforcement of our intellectual property rights through patent licensing and infringement litigation efforts. 

(“ParkerVision”, “we” or the “Company”) is in the business of innovating fundamental wireless hardware technologies and products.

We believe certain patents protecting our proprietary technologies have been broadly infringed by others, and therefore the primary focus of our business plan is the enforcement of our intellectual property rights through patent licensing and infringement litigation efforts.

We currently have patent enforcement actions ongoing in various U.S.

district courts against mobile handset, smart television and other WiFi product providers, as well as semiconductor suppliers, for the infringement of a number of our RF patents. 

We have made significant investments in developing and protecting our technologies.

Liquidity and Going Concern

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 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 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. 

For the three months ended March 31, 2024 , we incurred a net loss of approximately $ 0.7 million and incurred negative cash flows from operations of approximately $ 0.8 million.

At March 31, 2024 , we had cash and cash equivalents of approximately $ 1.7 million and an accumulated deficit of approximately $ 434.4 million.

In addition, we have approximately $ 1.4 million in convertible debt that matures 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. 

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. 

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.

Basis of Presentation

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. 

The accompanying unaudited condensed consolidated financial statements for the period ended March 31, 2024 were prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10 -Q and Rule 10 - 01 of Regulation S- X.

Operating results for the three months ended March 31, 2024 , are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 , or future years.

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

The year-end condensed consolidated balance sheet data was derived from audited financial statements for the year ended December 31, 2022 . 

Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with GAAP have been omitted from these interim condensed consolidated financial statements. 

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

2022 Annual Report”). 

The year-end condensed consolidated balance sheet data was derived from audited financial statements for the year ended December 31, 2023 .

These interim condensed consolidated financial statements should be read in conjunction with our latest Annual Report on Form 10 -K for the year ended December 31, 2023 (“ 2023 Annual Report”).

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

1 unchanged sentence

and its wholly-owned German subsidiary, ParkerVision GmbH, after elimination of all intercompany transactions and accounts.

Cash, cash equivalents, and restricted cash at March 31, 2023 included $ 13.9 million of restricted 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 in May 2023.

Accounting Policies

There have been no changes in accounting policies from those stated in our 2022 Annual Report. 

We do not expect any newly effective accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective. 

We have an active monitoring and enforcement program with respect to our intellectual property rights that includes seeking appropriate compensation from third parties that utilize or have utilized our intellectual property without a license. 

As a result, we may receive payments as part of a settlement or in the form of court-awarded damages for a patent infringement dispute. 

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

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 

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. 

There have been no changes in accounting policies from those stated in our 2023 Annual Report.

We do not expect any newly effective accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective.

As a result, we may receive payments as part of a settlement or in the form of court-awarded damages for a patent infringement dispute.

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

No revenue was recognized during the three months ended March 31, 2024 .

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.

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.

(Loss) Earnings per Common Share

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

Diluted loss per common share is the same as basic loss per common share for the three months ended March 31, 2024 as all common share equivalents are excluded from the calculation because their effect is anti-dilutive.

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

The dilutive effect of shares underlying convertible notes was calculated using the if-converted method.

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

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  

The following table shows the computation of basic and diluted (loss) earnings per share for the three months ended March 31, 2024 and 2023 (net (loss) income and shares in thousands):

Three Months Ended March 31,

Net (loss) income

$ ( 693 ) $ 13,115

Effect of dilutive securities

Net income (loss) adjusted for dilutive effect

10,927  

Net (loss) income adjusted for dilutive effect

( 693 ) 13,214

Weighted-average basic shares outstanding

85,163  

78,025  

88,164 83,968

Effect of dilutive securities

34,395  

Weighted-average diluted shares

119,558  

78,025  

Basic earnings (loss) per share

$ 0.12  

Diluted earnings (loss) per share

$ 0.09  

Diluted earnings per common share for the 

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 

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

Three Months Ended September 30,

Nine Months Ended September 30,

88,164 121,696

Basic (loss) earnings per share

$ ( 0.01 ) $ 0.16

Diluted (loss) earnings per share

$ ( 0.01 ) $ 0.11

Diluted earnings per common share for the three months ended March 31, 2024 and 2023 excludes shares underlying options, warrants, and convertible notes that are anti-dilutive.

The anti-dilutive common share equivalents at March 31, 2024 and 2023 were as follows (in thousands):

Three Months Ended March 31,

Options outstanding

25,534  

23,580  

25,534  

23,580  

27,134 17,526

Warrants outstanding

10,346  

Shares underlying convertible notes

36,425  

32,734  

72,305  

66,660  

35,880  

66,660  

Prepaid Expenses

Prepaid expenses consist of the following (in thousands):

September 30, 2023

December 31, 2022

Prepaid services

Prepaid insurance

Prepaid licenses, software tools and support

Other prepaid expenses

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.

73,905 24,872

Intangible Assets

Intangible assets consist of the following (in thousands):

September 30, 2023

March 31, 2024

December 31, 2023

Patents and copyrights

$ 10,517  

$ 14,319  

$ 10,431 $ 10,431

Accumulated amortization

( 9,387 )  

$ 1,130  

$ 1,359  

( 9,435 ) ( 9,376 )

$ 996 $ 1,055

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. 

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

April 2027. 

We have an unsecured promissory note of approximately $ 0.4 million payable to Sterne, Kessler, Goldstein, & Fox, PLLC (“SKGF”), a related party, for outstanding unpaid fees for legal services.

The SKGF note, as amended from time to time, accrues interest at a rate of 4 % per annum, requires monthly payments of principal and interest of $ 12,500 with a final balloon payment of approximately $ 0.02 million in April 2027.

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

At 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.

At March 31, 2024 , we estimate the note has an aggregate fair value of approximately $ 0.36 million and would be categorized within Level 2 of the fair value hierarchy.

Convertible Notes

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. 

The number of shares issued for interest is determined by dividing the interest payment amount by the closing price of our common stock on the trading day immediately prior to the scheduled interest payment date. 

To date, all interest payments on the convertible notes have been made in shares of our common stock.

We have recognized the convertible notes as debt in our condensed consolidated financial statements.

We have the option to prepay the majority of the notes, subject to a premium on the outstanding principal prepayment amount of 

25 % prior to the two -year anniversary of the note issuance date, 

20 % prior to the three -year anniversary of the note issuance date, 

15 % prior to the four -year anniversary of the note issuance date, or 

10 % thereafter. 

The notes provide for events of default that include failure to pay principal or interest when due, breach of any of the representations, warranties, covenants or agreements made by us, events of liquidation or bankruptcy, and a change in control.  In the event of default, the interest rate increases to 

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 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):

For the three months ended March 31, 2024 , no convertible notes were converted.

For the three months ended March 31, 2024 , 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 0.6 million shares of our common stock as interest-in-kind payments.

On May 10, 2024, a $ 25,000 convertible note dated June 19, 2019, and a $ 50,000 convertible note dated September 13, 2019, payable to a related party, were amended to extend the maturity dates to March 15, 2026, to reduce the interest rate from 8 % to 5 % for the remaining term of the notes, and to eliminate quarterly interest payments in favor of a single lump-sum payment of accrued and unpaid interest upon the earlier of the conversion or the maturity date of the notes.

Accordingly, the principal balance of these notes was excluded from current maturities as of March 31, 2024.

We also amended additional related party convertible notes with aggregate outstanding principal of $ 475,000 and maturity dates ranging from January 2025 to August 2027 to eliminate quarterly interest payments in favor of a single lump-sum payment of accrued and unpaid interest upon the earlier of the conversion or the maturity date of the notes.

At March 31, 2024, we estimate our convertible notes have an aggregate fair value of approximately $ 3.8 million and would be categorized within Level 2 of the fair value hierarchy.

Convertible notes payable at March 31, 2024 and December 31, 2023 consist of the following (in thousands):

Principal Outstanding as of

September 30,

Fixed Conversion Rate

1 unchanged sentence

Maturity Date

Convertible notes dated September 10, 2018

$ 0.40  

8.0 % September 7, 2023

Convertible note dated September 18, 2018

$ 0.25 1  

$ 0.25 8.0 % March 18, 2026

Convertible notes dated February/March 2019

$ 0.25  

$ 0.25 8.0 % February 28, 2026 to March 13, 2026

Convertible notes dated June/July 2019

$ 0.10  

$ 0.10 8.0 % June 7, 2024 to July 1 5, 2024 1

Convertible notes dated July 18, 2019

$ 0.08  

$ 0.08 7.5 % July 18, 2024

Convertible note dated September 13, 2019

$ 0.10  

$ 0.10 8.0 % September 13, 2 024 2

Convertible notes dated January 8, 2020

$ 0.13  

$ 0.13 8.0 % January 8, 2025 3

Convertible notes dated May-August 2022

$ 0.13  

$ 0.13 8.0 % May 10, 2027 to August 3, 2027

Convertible note dated January 11, 2023

$ 0.16  

$ 0.16 9.0 % January 11, 2028 3

Convertible notes dated January 13, 2023

$ 0.16  

$ 0.16 9.0 % January 13, 2028

Convertible note dated September 15, 2023

$ 0.25  

$ 0.25 8.0 % March 15, 2026

1 unchanged sentence

Less current portion

$ 3,893  

$ 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 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.

$ 3,518 $ 3,893

On May 10, 2024, one note with a principal balance of $ 25,000 was amended to extend its maturity date to March 15, 2026 and reduce its interest rate on a going forward basis from 8 % to 5 %.

2 On May 10, 2024, this note was amended to extend its maturity date to March 15, 2026 and reduce its interest rate on a going forward basis from 8 % to 5 %.

3 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 %.

Contingent Payment Obligations

Secured Contingent Payment Obligation

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

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

Nine Months Ended September 30, 2023

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, 2024 and the year ended December 31, 2023 (in thousands):

Three Months Ended March 31, 2024

Year Ended December 31, 2023

Secured contingent payment obligation, beginning of period

$ 40,708  

$ 37,372  

( 13,925 )  

$ 29,402 $ 40,708

Change in fair value

( 2,790 )  

241 ( 2,381 )

Secured contingent payment obligation, end of period

$ 28,993  

$ 40,708  

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. 

$ 29,643 $ 29,402

Our secured contingent payment obligation consists of a secured, non-recourse note (the "Note") and a prepaid forward purchase contract (the "PPFPA") with Brickell Key Investments, LP (“Brickell”).

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

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

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. 

(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 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 underlying carrying value of the Note, which includes the Face Value plus accrued interest, was approximately $ 53.0 million and $ 51.0 million as of March 31, 2024 and December 31, 2023 , respectively.

The range of potential proceeds payable to Brickell is discussed more fully in Note 11.

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

As of March 31, 2024 , 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 

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  

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, 2024 and the year ended December 31, 2023 (in thousands):

Three Months Ended March 31, 2024 Year Ended December 31, 2023

Unsecured contingent payment obligations, beginning of period

$ 5,089  

$ 5,691  

$ 7,618 $ 5,089

Change in fair value

( 461 ) 2,529

Unsecured contingent payment obligations, end of period

$ 7,682  

$ 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”). 

We have elected to measure these unsecured contingent payment obligations at their estimated fair value based on probability-weighted estimated cash outflows, discounted back to present value using a discount rate determined in accordance with accepted valuation methods. 

$ 7,157 $ 7,618

The unsecured contingent payment obligations will be remeasured to fair value at each reporting period with changes recorded in the condensed consolidated statements of comprehensive loss until the contingency is resolved (see Note 11 ).

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 September 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 March 31, 2024 and December 31, 2023 (in thousands):

Fair Value Measurements

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Significant Unobservable Inputs (Level 3)

September 30, 2023:

March 31, 2024:

Secured contingent payment obligation

$ 28,993  

$ 29,643 $ - $ - $ 29,643

Unsecured contingent payment obligations

7,157 - - 7,157

Fair Value Measurements

5 unchanged sentences

Secured contingent payment obligation

$ 40,708  

$ 29,402 $ - $ - $ 29,402

Unsecured contingent payment obligations

The fair values of our secured and unsecured contingent payment obligations were estimated using a probability-weighted income approach based on various cash flow scenarios as to the outcome of patent-related actions both in terms of timing and amount, discounted to present value using a risk-adjusted rate. 

We used a risk-adjusted discount rate of 

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 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.

7,618 - - 7,618

We used a risk-adjusted discount rate for the secured and unsecured contingent payment obligations of 18.50 % and 18.81 %, respectively, at March 31, 2024 , based on a risk-free rate of 4.50 % and 4.81 %, respectively, as adjusted by 8 % for credit risk and 6 % for litigation inherent risk.

The following table provides quantitative information about the significant unobservable inputs used in the measurement of fair value for both the secured and unsecured contingent payment obligations at March 31, 2024 , including the lowest and highest undiscounted payout scenarios as well as a weighted average payout scenario based on relative undiscounted fair value of each cash flow scenario.

Secured Contingent Payment Obligation

4 unchanged sentences

Estimated undiscounted cash outflows (in millions)

$ 42.4  

$ 79.6  

$ 10.8  

$ - $ 42.4 $ 79.6 $ - $ 9.1 $ 10.8

Duration (in years)

0.5 2.4 3.3 0.5 1.6 3.3

Estimated probabilities

We evaluate the estimates and assumptions used in determining the fair value of our contingent payment obligations each reporting period and make any adjustments prospectively based on those evaluations. 

5 % 19 % 35 % 5 % 21 % 35 %

Changes in any of these Level 3 inputs could result in a significantly higher or lower fair value measurement.

Legal Proceedings

From time to time, we are subject to legal proceedings and claims which arise in the ordinary course of our business. 

These proceedings include patent enforcement actions initiated by us against others for the infringement of our technologies, as well as proceedings brought by others against us at the Patent Trial and Appeal Board of the U.S.

Patent and Trademark Office (“PTAB”) in an attempt to invalidate certain of our patent claims.

The majority of our litigation, including our PTAB proceedings, is being paid for through contingency fee arrangements with our litigation counsel as well as third -party litigation financing. 

In general, litigation counsel is entitled to recoup on a priority basis, from litigation proceeds, any out-of-pocket expenses incurred. 

Patent and Trademark Office (“PTAB”) in an attempt to invalidate certain of our patent claims.

The majority of our litigation, including our PTAB proceedings, is being paid for through contingency fee arrangements with our litigation counsel as well as third -party litigation financing.

In general, litigation counsel is entitled to recoup on a priority basis, from litigation proceeds, any out-of-pocket expenses incurred.

Following reimbursement of out-of-pocket expenses, litigation counsel is generally entitled to a percentage of remaining proceeds based on the terms of the specific arrangement between us, counsel and our third -party litigation funder.

2 unchanged sentences

Court of Appeals for the Federal Circuit

We have appealed certain 

March 2022 rulings by the Middle District of Florida in our patent infringement complaint against Qualcomm Incorporated and Qualcomm Atheros, Inc.

(collectively “Qualcomm”). 

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. 

The case was stayed in February 2016 pending decisions in other cases, including the appeal of a PTAB proceeding with regard to U.S.

patent 6,091,940 ("the '940 Patent") asserted in this case. 

In March 2017, the PTAB ruled in our favor on three of the six petitions (the method claims), ruled in Qualcomm's favor on two of the six petitions (the apparatus claims) and issued a split decision on the claims covered in the sixth petition. 

In September 2018, the Federal Circuit upheld the PTAB's decision with regard to the '940 Patent and, in January 2019, the court lifted the stay in this case. 

In July 2019, the court issued an order that granted our proposed selection of patent claims from four asserted patents, including the '940 Patent, and denied Qualcomm's request to limit the claims and patents. 

The court also agreed that we may elect to pursue accused products that were at issue at the time the case was stayed, as well as new products that were released by Qualcomm during the pendency of the stay. 

In September 2019, Qualcomm filed a motion for partial summary judgment in an attempt to exclude certain patents from the case, including the '940 Patent. 

The court denied this motion in January 2020.

In April 2020, the court issued its claim construction order in which the court adopted our proposed construction for seven of the ten disputed terms and adopted slightly modified versions of our proposed construction for the remaining terms. 

Due to the impact of COVID- 19, a number of the scheduled deadlines in this case were moved, including the trial commencement date which was rescheduled from December 2020 to May 2021. 

In October 2020, our damages expert submitted a report supporting our damages ask of $ 1.3 billion for Qualcomm's unauthorized use of our technology. 

Such amount excludes additional amounts requested by us for interest and enhanced damages for willful infringement. 

Ultimately, the amount of damages, if any, will be determined by the court. 

Discovery was expected to close in December 2020;

however, the court allowed us to designate a substitute expert due to medical issues with one of our experts in the case. 

Accordingly, the close of discovery was delayed until January 2021. 

As a result of these delays, the court rescheduled the trial commencement date from May 3, 2021 to July 6, 2021.

In March 2021, the court further delayed the trial date citing backlog due to the pandemic, among other factors. 

A new trial date was not set and the court indicated the case was unlikely to be tried before November or December 2021. 

Fact and expert discovery was completed, expert reports were submitted, and summary judgment and Daubert briefings were submitted by the parties. 

Joint pre-trial statements were submitted in May 2021. 

In March 2021, the court granted Qualcomm's motion to strike certain of our 2020 infringement contentions. 

As a result of this ruling, in July 2021, we filed a joint motion for entry of a judgment of non-infringement of our Patent No.

7,865,177 ("the '177 Patent"), subject to appeal.

In January 2022, the court held a hearing to allow the parties to present their respective positions on three outstanding motions. 

The court indicated that upon its ruling on these motions, a pre-trial conference would be scheduled and a trial date set. 

On March 9, 2022, the court ruled with respect to one of these motions granting Qualcomm’s motion to strike and exclude opinions regarding the alleged infringement and validity issues. 

This court order precluded the presentation of infringement and validity opinions by both of our experts at trial.

On March 22, 2022, the court issued an order granting Qualcomm’s motion for summary judgment ruling that Qualcomm does not infringe the remaining three patents in this case. 

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. 

In March 2022, the district court in the Middle District of Florida ruled on a number of pre-trial motions in our patent infringement case against Qualcomm that was originally filed in May 2014.

The court granted Qualcomm motions to strike and exclude opinions regarding the alleged infringement and validity issues, essentially precluding infringement and validity opinions by both of our experts at trial.

The court also issued an order granting Qualcomm's motion for summary judgment ruling that Qualcomm did not infringe the remaining three patents in the case.

In April 2022, we filed a notice of appeal to the United States Court of Appeals for the Federal Circuit ("CAFC").

A hearing was held on our appellate action on November 6, 2023, and we are currently awaiting a ruling from the CAFC.

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

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

We are represented in this case on a full contingency fee basis.

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Apple and Qualcomm (Middle District of Florida-Jacksonville Division)

In December 2015, we filed a patent infringement complaint in the Middle District of Florida against Apple Inc.

(“Apple”), LG Electronics, Inc., LG Electronics U.S.A., Inc.

and LG Electronics MobileComm U.S.A., Inc.

(collectively “LG”), Samsung Electronics Co.

Ltd., Samsung Electronics America, Inc., Samsung Telecommunications America LLC, and Samsung Semiconductor, Inc.

(collectively “Samsung”), and Qualcomm alleging infringement of 

four  of our patents. 

In February 2016, the district court proceedings were stayed pending resolution of a corresponding case filed at the International Trade Commission (“ITC”). 

In July 2016, we entered into a patent license and settlement agreement with Samsung and, as a result, Samsung was dismissed from the district court action. 

In March 2017, we filed a motion to terminate the ITC proceedings and a corresponding motion to lift the stay in the district court case.

This motion was granted in May 2017.

In July 2017, we filed a motion to dismiss LG from the district court case and re-filed our claims against LG in the District of New Jersey (see ParkerVision v.

LG below).  Also in July 2017, Qualcomm filed a motion to change venue to the Southern District of California, and Apple filed a motion to dismiss for improper venue.

In March 2018, the district court ruled against the Qualcomm and Apple motions.

The parties also filed a joint motion in March 2018 to eliminate 

three  of the 

four  patents in the case in order to expedite proceedings leaving our U.S.

patent 9,118,528 as the only remaining patent in this case. 

A claim construction hearing was held on August 31, 2018.

In July 2019, the court issued its claim construction order in which the court adopted our proposed claim construction for 

two  of the 

six  terms and the “plain and ordinary meaning”

on the remaining terms.

In addition, the court denied a motion filed by Apple for summary judgment.  Fact discovery has closed in this case and a jury trial was scheduled to begin in August 2020.  

In March 2020, as a result of the impact of COVID- 19, the parties filed a motion requesting an extension of certain deadlines in the case. 

In April 2020, 

the court stayed this proceeding pending the outcome of the infringement case against Qualcomm in the Orlando Division of the Middle District of Florida, which is currently pending an appeal.  

We have a patent infringement case in the Middle District of Florida against Apple Inc.

(“Apple”) and Qualcomm, filed in December 2015, alleging infringement of four of our patents, which was subsequently reduced to one patent.

Fact discovery has closed in this case and a jury trial was scheduled to begin in August 2020.

In March 2020, as a result of the impact of COVID- 19, the parties filed a motion requesting an extension of certain deadlines in the case.

In April 2020, the court stayed this proceeding pending the outcome of the infringement case against Qualcomm in the Orlando Division of the Middle District of Florida, which is currently pending an appeal.

ParkerVision v.

LG (District of New Jersey)

In July 2017, we filed a patent infringement complaint in the District of New Jersey against LG for the alleged infringement of 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. 

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

Apple and Qualcomm above).

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

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

Apple and Qualcomm in the Middle District of Florida 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.

Apple and Qualcomm in the Middle District of Florida.

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

1 unchanged sentence

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

In July 2020 and September 2020, Intel filed petitions for Inter Partes Review (“IPR”) against two of the patents in this case and in January 2021, the PTAB instituted proceedings with regard to these two petitions (see Intel v.

ParkerVision (PTAB) below).

The court issued its claim construction ruling in January 

2021  in which the majority of the claims were decided in our favor. 

The case was scheduled for trial beginning February 7, 2022. 

In April 2021, we filed an amended complaint to include additional Intel semiconductors and products, including WiFi devices, to the complaint. 

The court suggested that, given the number of patents at issue, the case would be separated into two trials and, as a result of the added products, the first trial date was scheduled for June 2022.

In January 2022, the PTAB issued its ruling on the IPRs (see Intel v.

ParkerVision (PTAB) below). 

In February 2022, the parties filed a joint motion with respect to both Intel cases whereby the first case would be narrowed to six total patents asserted against Intel cellular products. 

These same six patents would be also asserted in the second Intel case, along with one additional patent from the second case, against Intel WiFi and Bluetooth products. 

As a result of the restructuring of the two cases, the trial date was moved to October 2022. 

In March 2022, due to discovery delays, the court agreed to move the trial commencement date to December 5, 2022. 

In March 2022, Intel filed a motion requesting further claim construction which we opposed and the court denied. 

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. 

Beginning in November 2022, the parties filed a number of pre-trial motions. 

The court held hearings on these pre-trial motions in January 2023. 

The court issued its written orders with regard to these motions immediately prior to the February 6, 2023 trial start date. 

As a result of the court's pre-trial rulings, the potential damages in the case decreased significantly. 

On February 7, 2023, the parties resolved their outstanding dispute and we have dismissed all pending actions against Intel.

We filed two patent infringement complaints in the Western District of Texas against Intel Corporation ("Intel") in 2020, alleging infringement of approximately ten of our patents by Intel cellular, WiFi and Bluetooth products.

The first case was scheduled for trial commencing February 6, 2023.

Beginning in November 2022, the parties filed a number of pre-trial motions.

The court held hearings on these pre-trial motions in January 2023.

The court issued its written orders with regard to these motions immediately prior to the February 6, 2023 trial start date.

As a result of the court's pre-trial rulings, the potential damages in the case decreased significantly.

On February 7, 2023, the parties resolved their outstanding dispute and we dismissed all pending actions against Intel.

ParkerVision v.

Intel II (Western District of Texas)

In June 2020, to reduce the number of claims in ParkerVision v.

Intel , we filed a second patent infringement complaint in the Western District of Texas against Intel that included one patent that we voluntarily dismissed from the original case. 

In July 2020, we amended our complaint adding two more patents to the case. 

Intel responded to the complaint denying infringement and claiming invalidity of the patents. 

In January 2021, Intel filed a petition for IPR against one of the patents in this case and in July 2021, the PTAB instituted proceedings with regard to this petition (see Intel v.

ParkerVision (PTAB) below). 

We filed an amended complaint in 2021 adding Intel WiFi and Bluetooth products to the case. 

Two claim construction hearings were held in June 2021 and July 2021 and the court’s claim construction ruling was largely decided in our favor. 

The case was scheduled for trial in October 2022. 

In February 2022, the parties filed a joint motion which provided that the Intel II case would assert the same six patents from the first Intel case, provided none of the patents were invalidated in the first case, as well as one additional patent, depending on the outcome of the pending IPR proceeding. 

On February 7, 2023, the parties resolved their outstanding dispute and we have dismissed all pending actions against Intel.

ParkerVision (PTAB)

Intel filed IPR petitions against U.S.

patent 7,539,474 (“the ‘474 Patent”) and U.S.

patent 7,110,444 (“the ‘444 Patent”) which were both asserted in ParkerVision v.

Intel . 

Intel also filed a petition for IPR against U.S.

patent 8,190,108 (“the ‘108 Patent”), which is asserted in ParkerVision v.

In January 2021, the PTAB issued its decision to institute IPR proceedings for the ‘444 Patent and the ‘474 Patent. 

An oral hearing was held on November 1, 2021 and final decisions from the PTAB on the ‘474 Patent and the ‘444 Patent were issued in January 2022. 

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 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. 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. 

We filed our response to this petition in October 2021 and an oral hearing was scheduled for April 2022. 

A final decision from the PTAB was issued in June 2022 in which the PTAB ruled against us with respect to all of the challenged claims of the ‘108 Patent. 

We filed a notice of appeal with the Federal Circuit with respect to this IPR decision. 

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. 

Additional Patent Infringement Cases –

Western District of Texas

ParkerVision filed a number of additional patent cases in the Western District of Texas in 2020 including cases against (i) TCL Industries Holdings Co., Ltd, a Chinese company, TCL Electronics Holdings Ltd., Shenzhen TCL New Technology Co., Ltd, TCL King Electrical Appliances (Huizhou) Co., Ltd., TCL Moka Int’l Ltd. and TCL Moka Manufacturing S.A.

(collectively “TCL”), (ii) Hisense Co., Ltd. and Hisense Visual Technology Co., Ltd (collectively “Hisense”), a Chinese company, (iii) Buffalo Inc., a Japanese company (“Buffalo”) and (iv) Zyxel Communications Corporation, a Chinese multinational electronics company headquartered in Taiwan, (“Zyxel”). 

Each case alleges infringement of the same 

ten  patents by products that incorporate modules containing certain WiFi semiconductors manufactured by Realtek and/or MediaTek. 

In May 2021, a case alleging infringement of the same ten patents was filed against LG Electronics, a South Korean company ("LGE"). 

Each of the defendants have filed responses denying infringement and claiming invalidity of the patents, among other defenses. 

A second case was filed against Hisense in June 2021 alleging infringement of two additional patents and a second case was filed against TCL in November 2022 alleging infringement of the same two additional patents. 

In November 2022, patent infringement actions were also filed against Taiwanese companies, Realtek Semiconductor Corp.

("Realtek") and MediaTek Inc.

TCL (Western District of Texas)

We filed two patent infringement actions in the Western District of Texas in 2020 and 2021 against TCL Industries Holdings Co., Ltd, a Chinese company, TCL Electronics Holdings Ltd., Shenzhen TCL New Technology Co., Ltd, TCL King Electrical Appliances (Huizhou) Co., Ltd., TCL Moka Int'l Ltd.

and TCL Moka Manufacturing S.A.

(collectively "TCL") alleging infringement of approximately twelve of our patents.

The court issued its claim construction recommendations in the first TCL case, adopting our claim constructions for nearly all of the disputed terms.

In January 2023, the TCL action was stayed pending final resolution of patent infringement action filed against Realtek, the manufacturer of the integrated circuits used in TCL's alleged infringing products.

ParkerVision v.

LGE (Western District of Texas)

We filed a patent infringement action in the Western District of Texas against LG Electronics, a South Korean company ("LGE") in 2021, alleging infringement of ten of our patents.

The court issued its claim construction recommendations in June 2022 , adopting our claim constructions for nearly all of the disputed terms.

In January 2023, the LGE action was stayed pending final resolution of patent infringement actions filed against Realtek and MediaTek as well as final resolution of IPR actions against patents in this case.

ParkerVision v.

Realtek (Western District of Texas)

We filed two patent infringement actions in the Western District of Texas against Realtek Semiconductor Corp.

("Realtek"), the first in 2022 and a second in 2023 , alleging infringement of an aggregate of seven of our patents.

A claim construction hearing was held in January 2024 in the first Realtek action and the court adopted the majority of our claim constructions.

A jury trial for the first Realtek action is currently scheduled for January 2025 .

The parties have filed claim construction briefs and responses in the second action and are currently awaiting a court schedule.

ParkerVision v.

MediaTek (Western District of Texas)

We filed three patent infringement actions in the Western District of Texas against MediaTek Inc.

and MediaTek USA Inc.

(collectively, "MediaTek") 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. 

In November 2022, we dismissed the two cases against Hisense following satisfaction of the parties' obligations under a patent license and settlement agreement.

The court has issued claim construction recommendations for the TCL and LGE cases, in which nearly all of the claim terms were decided in our favor. 

In November 2022, the PTAB issued its written decision in two IPRs asserted by TCL and LGE against two of the patents asserted against them (see TCL, et.

ParkerVision (PTAB) below. 

In January 2023, the cases against TCL were stayed pending final resolution of the Realtek case that was filed in November 2022. 

In addition, in February 2023, the case against LGE was stayed pending final resolution of the cases against Realtek and MediaTek and the outstanding IPR actions to which LGE is a party.

(collectively, "MediaTek"), the first in 2022 and two additional cases in 2023, alleging infringement of an aggregate of ten of our patents.

A claim construction hearing was held in January 2024 in the first MediaTek action and the court adopted the majority of our claim constructions.

A jury trial for the first MediaTek action is currently scheduled for December 2024.

The parties have filed claim construction briefs and responses in the second MediaTek action and a claim construction hearing is scheduled for June 2024 with a jury trial scheduled for October 2025.

ParkerVision v.

Texas Instruments (Western District of Texas)

We filed a patent infringement action in the Western District of Texas against Texas Instruments ("TI") in 2023, alleging infringement of three of our patents.

In December 2023, TI filed a motion to change venue to the Northern District of Texas.

A ruling has not yet been issued on this motion.

The parties have filed claim construction briefs and responses and a claim construction hearing is currently scheduled for June 2024 with a jury trial scheduled in May 2025.

ParkerVision v.

NXP Semiconductors (Western District of Texas)

We filed a patent infringement action in the Western District of Texas against NXP Semiconductors ("NXP") in 2023, alleging infringement of three of our patents.

The parties have filed claim construction briefs and responses and a claim construction hearing is currently scheduled for June 2024, with a jury trial scheduled in August 2025 .

Intel (USPTO) v.

ParkerVision (PTAB)

In May 2021, TCL, along with Hisense, filed petitions for IPR against U.S.

patent 7,292,835 (“the ‘835 Patent”) and the ‘444 Patent, both of which are asserted in the infringement cases against these parties in the Western District of Texas. 

In November 2021, the PTAB issued its decision to implement IPR proceedings for these two patents. 

In December 2021, LGE filed nearly identical petitions against the same two patents along with a joinder motion requesting to join the existing petitions filed by TCL and Hisense. 

In April 2022, the PTAB granted LGE’s joinder motion. 

Oral hearings for these IPRs were held in September 2022. 

As part of a patent license and settlement agreement entered into with Hisense in November 2022, Hisense withdrew its participation in these IPR proceedings. 

In November 2022, the PTAB issued its written decision ruling that the challenged claims for both patents were unpatentable. 

We have appealed these decisions.

We have an appeal pending in an IPR action, originally filed by Intel, against our U.S.

patent 8,190,108, ("the '108 Patent") which was asserted in ParkerVision v.

Intel in the Western District of Texas.

Following our February 2023 resolution of the infringement actions against Intel, Intel withdrew from the IPR cases;

however the U.S.

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

In June 2022, the PTAB issued its final decision for the '108 Patent, determining that the challenged claims of the '108 Patent were unpatentable.

We appealed this decision to the CAFC and oral arguments were presented on May 9, 2024.

We are awaiting a decision from the CAFC.

TCL and LGE v.

ParkerVision (PTAB)

We have two appeals pending in IPR actions filed by TCL and LGE against our U.S.

patent 7,292,835 (“the ‘835 Patent”) and U.S.

patent 7,110,444 ("the ‘444 Patent"), both of which are asserted in the infringement cases against these parties in the Western District of Texas.

Oral hearings for these IPRs were held by the PTAB in September 2022.

In November 2022, the PTAB issued its written decision ruling that the challenged claims for both patents were unpatentable.

We have appealed these decisions to the CAFC and oral arguments for both appeals are scheduled to be presented to the CAFC on June 3, 2024.

ParkerVision (PTAB)

MediaTek filed an IPR petition in November 2023 against the '835 Patent, which is one of the patents asserted in the first MediaTek infringement action.

This matter is still being briefed by the parties.

Stock Authorization and Issuance

Stock Issuances

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 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.

333 - 271351 ).

Payment for Services

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.

During the three months ended March 31, 2024 , we issued 120,000 shares of our common stock to third parties, valued at approximately $ 19,000 , as payment for consulting services over a one -year period.

Common Stock Warrants

As of 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 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. 

As of March 31, 2024 , we had outstanding warrants for the purchase of up to 10.3 million shares of our common stock.

The estimated grant date fair value of these warrants of $ 3.5 million is included in additional paid-in capital in our condensed consolidated balance sheets.

As of March 31, 2024 , 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 2023 Annual Report.

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 September 30, 2023 , there was $ 0.1 million of total unrecognized compensation cost related to all non-vested share-based compensation awards. 

For the three months ended March 31, 2024 and 2023 , we recognized share-based compensation expense of approximately $ 0.1 million and $ 0.2 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 March 31, 2024 , there was $ 0.3 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 1.0 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.

The Company's effective income tax rate was 0.0 % for each of the three months ended March 31, 2024 and 2023 as we expect to be able to utilize net operating loss carryforwards not previously recognized as a tax benefit to offset any income tax expense related income for the 2023 and 2024 tax years.

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 ).  

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 ’

s Discussion and Analysis of Financial Condition and Results of Operations

On May 10, 2024, we amended convertible notes held by three of our directors.

A June 19, 2019 note with a principal balance of $ 25,000 and a September 13, 2019 note with a principal balance of $ 50,000 , both held by Lewis Titterton, were amended to extend the maturity dates to March 15, 2026, reduce the interest rate from 8 % to 5 % and to replace the quarterly interest payments with a single payment of unpaid, accrued interest at the earlier of conversion or maturity of the notes.

Additional convertible notes with an aggregate principal balance of $ 475,000 were also amended to replace the quarterly interest payment dates with a single payment of unpaid, accrued interest at the earlier of conversion or maturity of the notes.

These additional amended notes include a $ 50,000 convertible note dated January 8, 2020 and a $ 200,000 convertible note dated May 10, 2022, both held by Lewis Titterton, a $ 100,000 convertible note dated May 10, 2022 and a $ 100,000 convertible note dated September 15, 2023, both held by Paul Rosenbaum, and a $ 25,000 convertible note dated August 3, 2022 held by Sanford Litvak.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

We believe that it is important to communicate our future expectations to our shareholders and to the public. 

This quarterly report contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, including, in particular, statements about our future plans, objectives, and expectations contained in this Item. 

or similar expressions are intended to identify “forward-looking statements.” 

Readers are cautioned not to place undue reliance on such forward-looking statements, each of which speaks only as of the date made.

Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected, including the risks and uncertainties identified in our annual report on Form 10-K for the fiscal year ended December 31, 2022 (the “2022 Annual Report”) and in this Item 2 of Part I of this quarterly report. 

Examples of such risks and uncertainties include general economic and business conditions, competition, unexpected changes in technologies and technological advances, the timely development and commercial acceptance of new products and technologies, reliance on key suppliers, reliance on our intellectual property, the outcome of our intellectual property litigation and the ability to obtain adequate financing in the future. 

We believe that it is important to communicate our future expectations to our shareholders and to the public.

When used in this quarterly report and in future filings by us with the Securities and Exchange Commission (“SEC”), the words or phrases “expects”, “will likely result”, “will continue”, “is anticipated”, “estimated” or similar expressions are intended to identify “forward-looking statements.” Readers are cautioned not to place undue reliance on such forward-looking statements, each of which speaks only as of the date made.

Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected, including the risks and uncertainties identified in our annual report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report”) and in this Item 2 of Part I of this quarterly report.

We have no obligation to publicly release the results of any revisions which may be made to any forward-looking statements to reflect anticipated events or circumstances occurring after the date of such statements.

Corporate Website

We announce investor information, including news and commentary about our business, financial performance and related matters, SEC filings, notices of investor events, and our press and earnings releases, in the investor relations section of our website (http://ir.parkervision.com). 

Additionally, if applicable, we webcast our earnings calls and certain events we participate in or host with members of the investment community in the investor relations section of our website. 

Investors and others can receive notifications of new information posted in the investor relations section in real time by signing up for email alerts and/or RSS feeds.

The content of our website is not incorporated by reference into this Quarterly Report or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.

We have invented and developed proprietary radio frequency (“RF”) technologies and integrated circuits based on those technologies, and we license those technologies to third parties for use in wireless communication products. 

We believe certain patents protecting our proprietary technologies have been broadly infringed by others and therefore the primary focus of our business plan is the enforcement of our intellectual property rights through patent licensing and infringement litigation efforts. 

Further corporate governance information, including our governance guidelines, board of directors (“Board”) committee charters, and code of conduct, is also available in the investor relations section of our website under the heading “Corporate Governance.” The content of our website is not incorporated by reference into this Quarterly Report or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.

We believe certain patents protecting our proprietary technologies have been broadly infringed by others and therefore the primary focus of our business plan is the enforcement of our intellectual property rights through patent licensing and infringement litigation efforts.

We currently have patent enforcement actions ongoing in various U.S.

district courts against mobile handset, smart television, and other WiFi product providers, as well as semiconductor suppliers, for the infringement of several of our RF patents. 

We have made significant investments in developing and protecting our technologies, the returns on which are dependent upon the generation of future revenues for realization.

Recent Events

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. 

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

We repaid Brickell $13.9 million in May 2023 from our patent licensing and settlement proceeds. 

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.  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 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 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 used cash for operations of approximately $0.8 million for the three months ended March 31, 2024 and generated cash from operations of $13.2 million for the three months ended March 31, 2023.

The decrease in cash generated from operations from 2023 to 2024 is primarily due to proceeds received from the patent license and settlement agreement entered into in February 2023, net of contingent legal fees and expenses paid.

At March 31, 2024, we had cash and cash equivalents of approximately $1.7 million and an accumulated deficit of $434.4 million.

In addition, we have approximately $1.4 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. 

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.

Financial Condition

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

Our working capital decreased approximately $1.1 million from December 31, 2023 to March 31, 2024.

This decrease in working capital is primarily the result of cash used in operations during the three months ended March 31, 2024 and 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 $0.6 million from December 31, 2023 to March 31, 2024, primarily due to 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 an overall decrease in the estimated fair value our contingent payment obligations of $0.2 million.

Results of Operations for the Three Months Ended March 31, 2024 and 2023

Revenue and Cost of Sales

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 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.

We reported no licensing revenue for the three months ended March 31, 2024.

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.

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, 2024 and 2023 consists of amortization expense related to the patents covered under license agreements.

Although we anticipate 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.

Selling, General, and Administrative Expenses

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

Our selling, general and administrative expenses decreased by approximately $0.8 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 $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 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.

Our selling, general and administrative expenses decreased by approximately $11.3 million, or 93.6%, during the three months ended March 31, 2024 when compared to the same period in 2023.

This is primarily the result of an $11.1 million decrease in litigation fees and expenses and a $0.1 million decrease in share-based compensation.

The decrease in litigation fees and expenses from 2023 to 2024 is the result of contingent legal fees and expenses recognized in 2023 in conjunction with the confidential patent license and settlement agreement reached in February 2023.

The decrease in our share-based compensation for the three months ended March 31, 2024 is primarily the result of fewer share-based grants being awarded to employees and executives.

As of March 31, 2024, we had $0.3 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 1.0 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 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.

For the three months ended March 31, 2024 and 2023, we recorded aggregate decreases in the fair value of our secured and unsecured contingent payment obligations of approximately $0.2 million and $0.3 million, respectively.

The change in fair value for the three months ended March 31, 2024 was primarily the result of changes in the estimated amounts and timing of projected future cash flows due to changes in probabilities and time frames based on the status of various patent infringement actions.

With respect to the secured contingent payment obligation, the decrease in fair value resulting from the aforementioned factors was offset by an increase in fair value resulting from the accrual of interest on the outstanding obligation.

Off-Balance Sheet Transactions, Arrangements and Other Relationships

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’

deficit in our condensed consolidated balance sheets. 

As of March 31, 2024, we had outstanding warrants to purchase approximately 10.3 million shares of our common stock.

The estimated grant date fair value of these warrants of approximately $3.5 million is included in shareholders’ deficit in our condensed consolidated balance sheets.

The outstanding warrants have a weighted average exercise price of $0.75 per share and a weighted average remaining life of approximately 1.3 years.

Critical Accounting Policies

There have been no changes in accounting policies from those stated in our 2022 Annual Report. 

There have been no changes in accounting policies from those stated in our 2023 Annual Report.

We do not expect any newly effective accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective.

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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