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Executive Overview
−Removed: We are in the business of innovating fundamental wireless technologies and products.
+Added: We are in the business of innovating and licensing our fundamental wireless technologies.
We have designed and developed proprietary RF technologies and integrated circuits based on those technologies, and we license our technologies to others for use in wireless communication products.
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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.
−Removed: We continue to aggressively pursue licensing opportunities with wireless communications companies that make, use or sell semiconductors and/or products that incorporate RF.
+Added: We continue to aggressively pursue licensing opportunities with wireless communications companies that make, use or sell semiconductors and/or products that incorporate RF technologies.
We believe there are a number of wireless communications companies that can benefit from the use of the RF technologies we have developed, whether through a license or, in certain cases, a joint product venture that may include licensing rights.
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We have expended significant resources since 2011 and incurred significant debt for the enforcement and defense of our intellectual property rights.
−Removed: As of December 31, 2023, we had five licensees for our technologies, including one licensee added in 2023.
+Added: As of December 31, 2024, we had five licensees for our technologies.
Recent Developments
−Removed: On November 6, 2023, we presented oral arguments in our appeal of the ParkerVision v.
−Removed: Qualcomm district court rulings that ended our district court case in Orlando, Florida in March 2022.
−Removed: We are currently awaiting a ruling from the appellate court.
+Added: In December 2024, we completed two private placement transactions with accredited investors for net proceeds of $5 million.
+Added: These proceeds will be used to fund our operations in 2025.
+Added: On September 6, 2024, the CAFC issued its opinion in our long-standing patent infringement action against Qualcomm.
+Added: The CAFC ruled in our favor on each of the issues we appealed and remanded the case back to the Middle District of Florida (Orlando) where the case was reopened.
+Added: We are currently awaiting rulings from the district court on a number of outstanding motions, after which the court will schedule a pre-trial conference and a trial date.
Liquidity and Capital Resources
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At December 31, 2024, we had cash and cash equivalents of approximately $4.9 million, working capital of $2.6 million, and an accumulated deficit of approximately $448.2 million.
−Removed: Despite the net income and cash flows generated during the year ended December 31, 2023, a significant amount of future proceeds that we may receive from our patent enforcement and licensing programs will first be utilized to repay borrowings, legal fees, and litigation expenses under our contingent funding arrangements.
−Removed: In addition, we have approximately $1.5 million in convertible debt that, if not converted, will mature between June 2024 and January 2025.
+Added: For the year ended December 31, 2024, we incurred a net loss of approximately $14.5 million and used cash for operations of approximately $3.2 million.
+Added: A significant amount of future proceeds that we may receive from our patent enforcement and licensing programs will first be utilized to repay borrowings, legal fees, and litigation expenses under our contingent funding arrangements.
+Added: In addition, we have approximately $1.6 million in convertible debt that, if not converted, will mature between July 2025 and March 2026.
Our independent registered public accounting firm has included in their audit report an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.
See Note 2 to our consolidated financial statements included in Item 8 for a discussion of our liquidity and our ability to continue as a going concern.
−Removed: We generated cash from operations of approximately $10.8 million for the year ended December 31, 2023 and used cash for operations of $3.0 million for the year ended December 31, 2022.
−Removed: 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.
+Added: We used cash for operations of approximately $3.2 million for the year ended December 31, 2024 and generated cash from operations of $10.8 million for the year ended December 31, 2023.
+Added: The increase in cash used for 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.
We made payments of $13.9 million on our secured contingent payment obligation during the year ended December 31, 2023, and paid approximately $0.2 million and $0.3 million in other debt obligations during the years ended December 31, 2024 and 2023, respectively.
−Removed: For the year ended December 31, 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 $2.1 million in proceeds from issuance of convertible debt, equity financings, and option exercises for the year ended December 31, 2022.
+Added: During the year ended December 31, 2024, we received aggregate net proceeds from equity-based financings and option and warrant exercises of approximately $5.8 million, compared to aggregate net proceeds of $5.9 million from debt and equity-based financings and option exercises during the year ended December 31, 2023, including $5.0 million in new borrowings under our secured contingent payment obligation.
Significant portions of our litigation costs to date have been funded by contingent payment arrangements with legal counsel.
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As part of our ongoing patent maintenance program, we may, from time to time, abandon a particular patent if we determine fees to maintain the patent exceed its expected recoverability.
−Removed: For the years ended December 31, 2023 and 2022, we incurred losses of approximately $0.06 million and $0.12 million, respectively, for the write-off of specific patent assets.
−Removed: These losses are included in operating expenses in the accompanying consolidated statements of comprehensive income (loss) included in Item 8.
Contingent Payment Obligations
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These repayment obligations are contingent upon receipt of proceeds from patent enforcement and other patent monetization actions.
−Removed: As a result, we have elected to account for these contingent payment obligations at their estimated fair values which are subject to significant estimates and assumptions as discussed in “Critical Accounting Policies” below.
+Added: We have elected to account for these contingent payment obligations at their estimated fair values which are subject to significant estimates and assumptions as discussed in “Critical Accounting Policies” below.
Refer to Note 10 to our consolidated financial statements included in Item 8 for a discussion of the fair value measurement of our contingent payment obligations.
+Added: The fair value of our contingent payment obligations may fluctuate significantly from period to period based on unpredictable changes in the status of our various patent litigation actions.
Our secured contingent payment obligation is payable to Brickell as a result of $23 million in aggregate borrowings under litigation funding arrangements initiated in 2016.
As of December 31, 2024, we have repaid Brickell an aggregate of $17.3 million to date under these agreements.
−Removed: The contingent payment obligation to Brickell is recorded at its estimated fair market value of $29.4 million at December 31, 2023, a decrease of $11.3 million or 28% from the estimated fair market value at December 31, 2022.
−Removed: This decrease in fair value is primarily the result of $13.9 million in repayments, along with renegotiation of future repayment arrangements with Brickell in 2023, offset by $5.0 million in new borrowings and continued increases in accrued interest payable to Brickell.
+Added: The contingent payment obligation to Brickell is recorded at its estimated fair market value of $40.7 million at December 31, 2024, an increase of $11.3 million or 39% from the estimated fair market value at December 31, 2023.
+Added: This increase in fair value is 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, particularly as a result of the favorable CAFC decision received in September 2024 that remanded the Qualcomm case back to district court.
Brickell is entitled to the first $5.8 million in proceeds received by us, net of contingent legal fees, from any patent-related actions.
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In addition, we have incurred unsecured contingent payment obligations in connection with various funding arrangements.
−Removed: These contingent payment obligations are payable from our share of patent-related proceeds after satisfaction of our obligation to Brickell and payment of contingent fees to legal counsel.
−Removed: These unsecured contingent payment obligations are recorded at an aggregate estimated fair value of $7.6 million at December 31, 2023, representing an increase of $2.5 million from the estimated fair market value at December 31, 2022.
−Removed: This increase is 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.
+Added: These contingent payment obligations are payable from our share of patent-related proceeds after satisfaction of our priority obligation to Brickell and payment of contingent fees to legal counsel.
+Added: These unsecured contingent payment obligations are recorded at an aggregate estimated fair value of $5.9 million at December 31, 2024, representing a decrease of $1.7 million from the estimated fair market value at December 31, 2023.
+Added: This decrease is primarily the result of changes in the estimated amounts and timing of projected future cash flows due to changes in probabilities and time frames based on the status of various patent infringement actions.
The maximum payment obligation for our unsecured contingent payment obligations is $10.8 million at December 31, 2024.
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Convertible Notes
−Removed: As of December 31, 2023, we have $4.9 million in notes that are convertible, at the holders’ option, into shares of our common stock at fixed conversion prices ranging from $0.08 to $0.25 per share.
−Removed: These notes mature at varying dates from June 2024 to January 2028.
−Removed: The majority of the notes bear interest at a stated rate of 8%, payable quarterly.
−Removed: We have the option, subject to certain conditions, to pay the quarterly interest in-kind with shares of our common stock based on market price at the interest payment date.
−Removed: To date, all of the interest payments under these convertible notes have been paid in-kind and we anticipate that future payments of interest will also be paid in-kind.
+Added: As of December 31, 2024 and 2023, we had $3.5 million and $4.9 million, respectively in notes, convertible at the holders’ option, into shares of our common stock at fixed conversion prices ranging from $0.08 to $0.25 per share.
+Added: The decrease in the carrying value of our convertible notes is the result of approximately $1.4 million in notes that were converted into approximately 9.6 million shares of our common stock during 2024.
+Added: The outstanding convertible notes as of December 31, 2024 mature at varying dates from July 2025 to January 2028.
+Added: Notes representing approximately 40% of the outstanding principal balance are held by a single party and contain provisions for automatic extension of the maturity dates of the notes by up to ten one-year periods, if not revoked at the option of the holder.
+Added: The notes bear interest at stated rates ranging from 5% to 9% per annum and interest is generally payable quarterly.
+Added: We have the option, subject to certain conditions, to pay the quarterly interest in-kind with shares of our common stock based on the market price of our common stock at the interest payment date.
+Added: To date, nearly all of the interest payments under these convertible notes have been paid in-kind, and we anticipate that future payments of interest will also be paid in-kind to the extent allowable.
The notes provide for events of default that include failure to pay principal or interest when due, breach of any of the representations made by us, events of liquidation or bankruptcy, and a change in control.
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Revenues and Gross Margins
−Removed: Licensing revenue was $25.00 million and $0.93 million for the years ended December 31, 2023 and December 31, 2022, respectively.
+Added: We reported no licensing revenue for the year ended December 31, 2024.
+Added: Licensing revenue was $25 million for the year ended December 31, 2023.
Our licensing revenue is from patent licensing and settlement agreements resulting from patent enforcement actions filed by us.
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We recognized revenue from each contract when the parties’ performance obligations were met.
−Removed: Cost of sales related to the licensing revenue consists of amortization expense related to the patents covered under the license agreements.
+Added: Cost of sales related to the licensing revenue consists of amortization expense for the patents covered under the license agreements.
Our licensing revenue is expected to vary based on the market size of the licensee and the specific terms of the license and settlement agreement.
Our licensing proceeds in 2023 were used to pay contingent out-of-pocket expenses and fees incurred by our litigation counsel and to repay a portion of our secured contingent payment obligations.
−Removed: Our licensing proceeds in 2022 were fully used to pay contingent out-of-pocket expenses incurred by our litigation counsel and therefore did not have an impact on our cash flows from operations.
The contingent out-of-pocket expenses, which are recognized in the same period as the corresponding revenue, are included in selling, general and administrative expenses.
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Selling, General, and Administrative Expenses
−Removed: Selling, general and administrative expenses consist primarily of executive, director, technical support, and finance and administrative personnel costs, including share-based compensation, costs incurred for insurance, shareholder relations and outside legal and professional services, including litigation expenses, and amortization and maintenance expenses related to our patent assets.
−Removed: Our selling, general and administrative expenses were approximately $14.7 million for the year ended December 31, 2023, as compared to approximately $7.8 million for the year ended December 31, 2022, representing an increase of approximately $7.0 million or 90%.
−Removed: This increase results primarily from a $9.6 million increase in litigation fees and expenses and is partially offset by a decrease in share-based compensation of $2.6 million attributed to nonqualified stock options and restricted stock units becoming fully vested during the year ended December 31, 2022.
−Removed: We recognized approximately $11.1 million and $0.9 million in contingent litigation expenses resulting from patent license and settlement arrangements for the years ended December 31, 2023 and December 31, 2022, respectively.
+Added: Selling, general and administrative expenses consist primarily of executive, director, technical support, and finance and administrative personnel and third-party consulting costs, including share-based compensation, costs incurred for insurance, shareholder relations and outside legal and professional services, including litigation expenses, and maintenance expenses related to our patent assets.
+Added: Our selling, general and administrative expenses were approximately $4.3 million for the year ended December 31, 2024, as compared to approximately $14.7 million for the year ended December 31, 2023, representing a decrease of approximately $10.5 million or 71%.
+Added: This decrease results primarily from a $10.7 million decrease in litigation fees and expenses.
+Added: We recognized approximately $11.1 million in contingent litigation expenses resulting from patent license and settlement arrangements for the year ended December 31, 2023.
+Added: No contingent litigation expense was recognized during the year ended December 31, 2024.
The contingent legal fees and expenses recognized are generally proportionate to the amount of gross proceeds received from our confidential patent license and settlement agreements.
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We estimated the fair value of our secured contingent payment obligations using a probability-weighted income approach based on the estimated present value of projected future cash outflows using a risk-adjusted discount rate.
−Removed: Increases or decreases in the significant unobservable inputs could result in significant increases or decreases in fair value.
−Removed: 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.
+Added: Increases or decreases in the significant unobservable inputs could result in material increases or decreases in fair value.
+Added: Generally, changes in fair value are a result of changes in estimated amounts and timing of projected future cash flows resulting from increases in funded amounts, passage of time, and changes in the probabilities based on the litigation status of the funded actions.
For the year ended December 31, 2024, we recorded a net increase in the aggregate fair value of our secured and unsecured contingent payment obligations of approximately $9.6 million.
−Removed: The majority of the change in fair value is attributable to 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 revised funding agreements with Brickell.
+Added: The majority of the change in fair value is attributable to changes in the estimated amounts and timing of projected future cash flows due to changes in the litigation status of various patent infringement actions, including the September 2024 CAFC remand of our infringement action against Qualcomm back to district court for trial.
Critical Accounting Policies
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We have determined that the fair value of our secured and unsecured contingent payment obligations falls within Level 3 in the fair value hierarchy, which involves significant estimates and assumptions including projected future patent-related proceeds and the risk-adjusted rate for discounting future cash flows.
−Removed: Actual results could differ from the estimates made.
−Removed: Changes in fair value, including the component related to imputed interest, are included in the consolidated statements of comprehensive income (loss) under the heading “Change in fair value of contingent payment obligations.” Refer to Note 11 to our consolidated financial statements included in Item 8 for a discussion of the significant estimates and assumptions used in estimating the fair value of our contingent payment obligations.
−Removed: Accounting for Share-Based Compensation
−Removed: We calculate the fair value of share-based equity awards, including restricted stock, stock options and restricted stock units (“RSUs”), on the date of grant and recognize the calculated fair value as compensation expense over the requisite service periods of the related awards.
−Removed: The fair value of stock option awards is determined using the Black-Scholes option valuation model that requires the use of highly subjective assumptions and estimates including how long the holder will retain their stock options before exercising them and the volatility of our common stock price over the expected life of the equity award.
−Removed: Changes in these subjective assumptions can materially affect the estimate of fair value of share-based compensation and consequently, the related amount recognized as expense in the consolidated statements of comprehensive income (loss).
+Added: Actual results could differ materially from the estimates made.
+Added: Changes in fair value, including the component related to imputed interest, are included in the consolidated statements of comprehensive (loss) income under the heading “Change in fair value of contingent payment obligations.” Refer to Note 10 to our consolidated financial statements included in Item 8 for a discussion of the significant estimates and assumptions used in estimating the fair value of our contingent payment obligations.
New Accounting Pronouncements
−Removed: There have been no new accounting pronouncements that are expected to have a material impact on our financial position, results of operations or cash flows when they become effective.
+Added: In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.
+Added: This update modifies reportable segment disclosure requirements, primarily through enhanced disclosures about segment expenses categorized as significant or regularly provided to the Chief Operating Decision Maker (CODM).
+Added: In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, and contain other disclosure requirements.
+Added: ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.
+Added: We adopted this standard during the fiscal year ended December 31, 2024.
+Added: Other than additional disclosure, there was no material impact on our consolidated financial statements upon adoption.
+Added: Refer to Note 17 to our consolidated financial statements included in Item 8 for the new disclosure.
+Added: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures.
+Added: This update requires enhanced disclosures on income taxes paid, adds disaggregation of continuing operations before income taxes between foreign and domestic earnings, and defines specific categories for the reconciliation of jurisdictional tax rate to effective tax rate.
+Added: This ASU is effective for fiscal years beginning after December 15, 2024, and can be applied on a prospective basis.
+Added: We are currently evaluating the effect of adopting this new accounting guidance.
+Added: In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses.
+Added: This update requires disclosure of the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense line item on the income statement.
+Added: The standard also requires a qualitative description of other amounts included in each relevant expense line item on the income statement that are not separately disclosed.
+Added: In addition, entities are required to disclose the nature and amount of selling expenses.
+Added: The amendments in ASU 2024-03 are effective for annual periods beginning after December 15, 2026, which for the Company would be applicable to fiscal year 2027, and for subsequent interim periods.
+Added: Early adoption is permitted and the amendments should be applied on a prospective basis.
+Added: Retrospective application is permitted.
+Added: Adoption of this guidance will result in additional disclosures, but we do not expect the adoption of ASU 2024-03 to materially impact our consolidated financial statements.
+Added: In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20) - Induced Conversions of Convertible Debt Instruments.
+Added: This update clarifies the assessment of whether a transaction should be accounted for as an induced conversion or extinguishment of convertible debt when changes are made to conversion features as part of an offer to settle the instrument.
+Added: ASU 2024-04 is effective for reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods.
+Added: Early adoption is permitted for entities that have adopted ASU 2020-06.
+Added: We are currently evaluating the impact of this new accounting guidance.
Off-Balance Sheet Transactions
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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.