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Item 8. Financial Statements and Supplementary Data

2025-03-24 compared with 2024-03-21 · 448 added, 314 removed, 624 unchanged (55% of the section changed)

1 unchanged sentence

Index to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (for the years ended December 31, 2023 and 2022) (PCAOB ID:

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (FRAZIER & DEETER, LLC, PCAOB ID:

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (MSL, P.A., PCAOB ID:

FINANCIAL STATEMENTS:

Consolidated Balance Sheets – December 31, 2024 and 2023

Consolidated Statements of Comprehensive Income (Loss) - for the years ended December 31, 2023 and 2022

Consolidated Statements of Comprehensive (Loss) Income - for the years ended December 31, 2024 and 2023

Consolidated Statements of Shareholders’ Deficit - for the years ended December 31, 2024 and 2023

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

of ParkerVision, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of ParkerVision, Inc.

(the “Company”) as of December 31, 2024, and the related consolidated statements of comprehensive (loss) income, changes in shareholders’ deficit and cash flows for the year then ended, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We also have audited the adjustments to the 2023 information in Note 17 to retrospectively apply the change in accounting (resulting from the adoption of Accounting Standards Update (ASU) 2023-07, Segment Reporting Topic 280):

Improvements to Reportable Segment Disclosures) , as described in Note 1.

In our opinion, such adjustments are appropriate and have been properly applied.

We were not engaged to audit, review, or apply any procedures to the 2023 financial statements of the Company other than with respect to such adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2023 financial statements taken as a whole.

Substantial Doubt About the Company's Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements, the Company has losses from operations, negative operating cash flows and an accumulated deficit.

These factors raise substantial doubt about the Company's ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As a part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Fair Value of Contingent Payment Obligations

As described in Notes 1, 9 and 10 to the consolidated financial statements, the Company has recorded the contingent payment obligations at fair value as of December 31, 2024.

To determine the fair value of contingent payment obligations, the Company uses a present value technique based on discounted cash flows to estimate the fair value.

We determined the fair value of the contingent payment obligations listed above was a critical audit matter because the fair value estimates require significant estimates and assumptions by management, including those relating to future patent-related cash proceeds and discount rates.

Testing these estimates and obtaining sufficient audit evidence involved increased auditor judgment and effort.

Our audit procedures related to the valuation of the contingent payment obligations included the following, among others:

We obtained an understanding and evaluated the appropriateness of management's valuation methodology, including testing the mathematical accuracy of the calculation.

● We engaged an external patent litigation specialist to assist with discussions with the Company's patent litigation attorneys in understanding and evaluating significant assumptions used in management's estimate of the fair value of the contingent payment obligations.

● We performed sensitivity analyses of the timing of future cash flows to evaluate changes in the fair value of the contingent payment obligations.

● We utilized our internal valuation specialist to evaluate the methodology and significant assumptions used in calculating the credit risk portion of the discount rate utilized by management in estimating the fair value of the contingent payment obligations.

/s/ Frazier & Deeter, LLC

We have served as the Company’s auditor since 2024.

Atlanta, Georgia

March 24, 2025

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of ParkerVision, Inc.

(the “Company”) and its subsidiary as of December 31, 2023 and 2022, and the related consolidated statements of comprehensive income (loss), shareholders’ deficit and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company and its subsidiary as of December 31, 2023 and 2022, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

We have audited, before the effects of the adjustments to retrospectively apply the change in accounting described in Notes 1 and 17, and the disclosure of “Segment Information” (as described in Note 17), the accompanying consolidated balance sheet of ParkerVision, Inc.

(the “Company”) and its subsidiary as of December 31, 2023, and the related consolidated statements of comprehensive income, shareholders’ deficit, and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements referred to above, before the effects of the adjustments to retrospectively apply the change in accounting (as described in Notes 1 and 17), and disclosure of “Segment Information” (as described in Note 17) , present fairly, in all material respects, the financial position of the Company and its subsidiary as of December 31, 2023, and the results of their operations and their cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting (as described in Notes 1 and 17), and disclosure of “Segment Information” (as described in Note 17), and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied.

Those adjustments were audited by Frazier & Deeter, LLC.

Substantial Doubt About the Entity's Ability to Continue as a Going Concern

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These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Basis for Opinion (Continued)

We conducted our audit in accordance with the standards of the PCAOB.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As a part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Estimation of Fair Value of Contingent Payment Obligations

As disclosed in Note 1 of the Company’s consolidated financial statements, the Company accounts for their secured and unsecured contingent payment obligations as long-term debt.

Their payment obligations are contingent upon the receipt of proceeds from patent enforcement and/or patent monetization actions.

The Company has elected to measure their contingent payment obligations at their estimated fair values.

The Company recorded the fair value of their contingent payment obligations at approximately $37,020,000 as of December 31, 2023.

Auditing management’s estimate of the fair value of their contingent payment obligations involved subjective evaluation and a high degree of auditor judgement due to significant assumptions involved in estimating the receipt of proceeds from patent enforcement and/or patent monetization actions.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

We obtained an understanding and evaluated the design of internal controls that address the risks of material misstatement relating to recording the contingent payment obligations at fair value.

We tested the accuracy and completeness of the underlying data used in calculating the fair value.

We evaluated management’s ability to accurately estimate the assumptions used to develop the fair value of the contingent payment obligations.

We also involved an independent legal firm to assist in evaluating the reasonableness of the assumptions of future litigation outcomes used by the Company in estimating the receipt of proceeds from patent enforcement and/or patent monetization actions.

We believe that our audit provides a reasonable basis for our opinion.

/s/ MSL, P.A.

We have served as the Company’s auditor since 2019.

We have served as the Company’s auditor from 2019-2024.

Fort Lauderdale, Florida

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Convertible notes, current portion

Related party convertible notes, current portion

Related party note payable, current portion

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Convertible notes, net of current portion

Related party convertible notes, net of current portion

Related party note payable, net of current portion

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SHAREHOLDERS' DEFICIT:

Common stock, $ .01 par value, 175,000 shares authorized, 87,681 and 81,246 issued and outstanding at December 31, 2023 and 2022, respectively

Common stock, $ .01 par value, 225,000 and 175,000 shares authorized, 113,970 and 87,681 issued and outstanding at December 31, 2024 and 2023, respectively

Additional paid-in capital

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PARKERVISION, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

FOR THE YEARS ENDED December 31, 2024 and 2023

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Cost of sales

( 229 ) ( 227 )

( 229 ) 24,773

Selling, general, and administrative expenses

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Interest and other expense

( 394 ) ( 424 )

Change in fair value of contingent payment obligations

( 9,639 ) ( 148 )

Total interest and other

Net income (loss) before income tax

( 9,981 ) ( 514 )

Net (loss) income before income tax

( 14,472 ) 9,515

Provision for income taxes

Net income (loss)

Net (loss) income

( 14,472 ) 9,515

Other comprehensive income, net of tax

Comprehensive income (loss)

Earnings (loss) per common share

Comprehensive (loss) income

$ ( 14,472 ) $ 9,515

(Loss) earnings per common share

$ ( 0.16 ) $ 0.11

$ ( 0.16 ) $ 0.08

Weighted average common shares outstanding

92,150 85,732

92,150 119,888

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

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(in thousands)

Common Stock Outstanding

Common Stock, Par Value

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Balance as of December 31, 2022

81,246 $ 812 391,724 ( 443,225 ) ( 50,689 )

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

844 8 422 - 430

Issuance of common stock upon exercise of options and warrants

Issuance of common stock and warrants for services

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

Issuance of equity-based instruments for services

495 5 122 - 127

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

4,875 49 542 - 591

Share-based compensation, net of shares withheld for taxes

Net loss for the year

200 2 501 - 503

Net income for the year

- - - 9,515 9,515

Balance as of December 31, 2023

87,681 877 393,314 ( 433,710 ) ( 39,519 )

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

Issuance of common stock upon exercise of options and warrants

Issuance of common stock, warrants, and options for services

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

10,000 100 4,900 - 5,000

Issuance of common stock upon exercise of options and warrants, net of deferred offering costs

4,259 42 407 - 449

Issuance of equity-based instruments for services

370 4 90 - 94

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

11,660 117 1,627 - 1,744

Share-based compensation, net of shares withheld for taxes

Net income for the year

- - 292 - 292

Net loss for the year

- - - ( 14,472 ) ( 14,472 )

Balance as of December 31, 2024

113,970 $ 1,140 $ 400,630 $ ( 448,182 ) $ ( 46,412 )

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

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CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

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

Net (loss) income

$ ( 14,472 ) $ 9,515

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

Depreciation and amortization

1 unchanged sentence

Change in fair value of contingent payment obligations

Loss on disposal/impairment of equipment and intangible assets

(Gain) loss on disposal/impairment of equipment and intangible assets

Paid in kind interest expense

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Accounts payable and accrued expenses

Total adjustments

Net cash provided by (used in) operating activities

Net cash (used in) provided by operating activities

( 3,216 ) 10,791

CASH FLOWS FROM INVESTING ACTIVITIES:

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CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from issuance of common stock in private offerings

Net proceeds from issuance of common stock and warrants in public and private offerings

Net proceeds from exercise of options and warrants

Net proceeds from debt financings

Net proceeds from convertible debt financings

Proceeds from contingent payment obligation

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Principal payments on long-term debt

Net cash (used in) provided by financing activities

( 184 ) ( 338 )

Net cash provided by (used in) financing activities

5,574 ( 8,338 )

NET CHANGE IN CASH AND CASH EQUIVALENTS

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CASH AND CASH EQUIVALENTS, end of year

$ 4,918 $ 2,560

SUPPLEMENTAL CASH FLOW INFORMATION:

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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.

and its wholly-owned German subsidiary, ParkerVision GmbH (collectively “ParkerVision”, “we” or the “Company”) is in the business of innovating and licensing fundamental wireless technologies.

We have determined that our business currently operates under a single operating and reportable segment.

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

As of December 31, 2023, we are in the process of liquidating ParkerVision GmbH which will have no impact on the consolidated financial statements.

As of December 31, 2024 , ParkerVision GmbH has been dissolved.

The dissolution of ParkerVision GMBH had no material impact on the consolidated financial statements.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

The more significant estimates made by us include projected future cash flows and risk-adjusted discount rates for estimating the fair value of our contingent payment obligations, the volatility and estimated lives of share-based awards used in the estimate of the fair market value of share-based compensation, the assessment of recoverability of long-lived assets, the amortization periods for intangible and long-lived assets, and the valuation allowance for deferred taxes.

The more significant estimates made by us include projected future cash flows and risk-adjusted discount rates for estimating the fair value of our contingent payment obligations.

Other estimates include the estimated lives of share-based awards used in the estimate of the fair market value of share-based compensation, the assessment of recoverability of long-lived assets, the amortization periods for intangible and long-lived assets, and the valuation allowance for deferred taxes.

Actual results could differ from the estimates made.

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As part of our ongoing patent maintenance program, we will, from time to time, abandon a particular patent if we determine fees to maintain the patent exceed its expected recoverability.

The cost and accumulated amortization of abandoned intangible assets are removed from their respective accounts, and any resulting net loss is recognized in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income (loss).

Contingent Payment Obligations

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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 (see Note 10 ).

Actual results could differ from the estimates made.

Changes in fair value, including the component related to imputed interest, are included in the accompanying consolidated statements of comprehensive income (loss) under the heading “Change in fair value of contingent payment obligations.”

Actual results could differ materially from the estimates made.

Changes in fair value, including the component related to imputed interest, are included in the accompanying consolidated statements of comprehensive (loss) income under the heading “Change in fair value of contingent payment obligations.”

We account for finance and operating leases in accordance with ASC 842, “Leases” which requires the recognition of lease right-of-use assets and lease liabilities on our consolidated balance sheets for finance and operating leases with initial lease terms of more than 12 months.

No new finance or operating leases commenced during the years ended December 31, 2023 or 2022 .

The impacts of leasing arrangements during the years ended December 31, 2023 and 2022 were not considered material.

No new finance or operating leases commenced during the years ended December 31, 2024 or 2023 and as of December 31, 2024 and 2023, we had no finance or operating leases with initial lease terms of more than 12 months.

Revenue Recognition

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Cost of sales includes amortization of intangible assets directly linked with revenue generating licensing activities.

Amortization expense for intangible assets that are not directly related to revenue generating licensing activities are included in selling, general, and administrative expenses in our consolidated statements of comprehensive income (loss).

As a result of the confidential patent license and settlement agreement reached in February 2023, all of our patents are now directly linked with revenue generating licensing activities and, therefore, amortization expense for all intangible assets is now recorded to cost of sales.

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We estimate the fair value of stock option awards using the Black-Scholes option valuation model.

This valuation model requires the use of highly subjective assumptions and estimates including how long employees will retain their stock options before exercising them and the volatility of our common stock price over the expected life of the equity award.

This valuation model requires the use of subjective assumptions and estimates including how long persons will retain their stock options before exercising them and the volatility of our common stock price over the expected life of the equity award.

Such estimates, and the basis for our conclusions regarding such estimates, are outlined in detail in Note 14.

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We account for forfeitures of share-based awards as they occur.

The provision for income taxes is based on income (loss) before taxes as reported in the accompanying consolidated statements of comprehensive income (loss).

The provision for income taxes is based on (loss) income before taxes as reported in the accompanying consolidated statements of comprehensive (loss) income.

Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns.

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Our deferred tax assets exclude unrecognized tax benefits which do not meet a more-likely-than- not threshold for financial statement recognition for tax positions taken or expected to be taken in a tax return.

New Accounting Pronouncements

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.

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).

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.

ASU 2023 - 07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

We adopted this standard during the fiscal year ended December 31, 2024.

Other than additional disclosure (see Note 17 ), there was no material impact on our consolidated financial statements upon adoption.

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ) - Improvements to Income Tax Disclosures.

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.

This ASU is effective for fiscal years beginning after December 15, 2024, and can be applied on a prospective basis.

We are currently evaluating the effect of adopting this new accounting guidance.

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.

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.

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.

In addition, entities are required to disclose the nature and amount of selling expenses.

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.

Early adoption is permitted and the amendments should be applied on a prospective basis.

Retrospective application is permitted.

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.

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.

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.

ASU 2024 - 04 is effective for reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods.

Early adoption is permitted for entities that have adopted ASU 2020 - 06.

We are currently evaluating the impact of this new accounting guidance.

LIQUIDITY AND GOING CONCERN

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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.

For the year ended December 31, 2023 , we recognized net income of approximately $ 9.5 million and cash flows from operations of approximately $ 10.8 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 year ended December 31, 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.

For the year ended December 31, 2024 , we incurred a net loss of approximately $ 14.5 million and used cash from operations of approximately $ 3.2 million.

For the year ended December 31, 2024 , we made aggregate payments of approximately $ 0.2 million on long-term debt.

We received aggregate net proceeds in 2024 from equity-based financings of $ 5.0 million and proceeds from option and warrant exercises of approximately $ 0.8 million.

These proceeds will be used to support our operations.

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.

In addition, we have approximately $ 1.5 million in convertible debt that, if not converted, will mature between June 2024 and January 2025.

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 consolidated financial statements.

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.

In addition, we have approximately $ 1.6 million in convertible debt that, if not converted, or extended in accordance with the terms of the debt, will mature between July 2025 and March 2026.

Although all of our convertible notes have conversion prices that are currently below the market price of our common stock, conversion is at the option of the holder and there can be no assurance that the holders will exercise their conversion option prior to maturity.

These circumstances indicate there is 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 consolidated financial statements.

Our business plan is currently focused solely on our patent enforcement and technology licensing objectives.

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We currently have contingent fee arrangements in place for all of our active cases.

In addition to our contingent fee agreements with legal counsel, we have secured and unsecured contingent payment obligations that have priority payments due from patent-related proceeds.

In addition to our contingent fee agreements with legal counsel, we have secured and unsecured contingent payment obligations that have contingent payments due from patent-related proceeds.

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.

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) the exercise behavior of our convertible note holders, and/or (iv) our ability to obtain additional debt or equity financing.

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

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

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.

The long-term continuation of our business plan is dependent upon the generation of sufficient cash flows from our technology licenses 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 could have a material adverse effect on our ability to meet our short and long-term liquidity needs and achieve our intended long-term business objectives.

During the years ended December 31, 2023 and 2022 , we recognized $ 25.00 million and $ 0.93 million of revenue, respectively, derived from contracts with licensees.

We recognized no revenue during the year ended December 31, 2024 .

During the year ended December 31, 2023 , we recognized $ 25 million of revenue derived from contracts with licensees.

The contracts provide access to specified patented technologies as they exist at a point in time, and we have no obligation to provide any future updates.

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No contract assets or liabilities exist as of December 31, 2024 .

EARNINGS PER SHARE

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

(LOSS) EARNINGS PER 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 year ended December 31, 2024, as all common share equivalents are excluded from the calculation, as their effect is anti-dilutive.

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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 (loss) per share for the years ended December 31, 2023 and 2022 (net income (loss) and shares in thousands):

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

Year Ended December 31,

Net income (loss)

Net (loss) income

$ ( 14,472 ) $ 9,515

Effect of dilutive securities

Net income (loss) adjusted for dilutive effect

Net (loss) income adjusted for dilutive effect

( 14,472 ) 9,917

4 unchanged sentences

92,150 119,888

Basic earnings (loss) per share

Basic (loss) earnings per share

$ ( 0.16 ) $ 0.11

Diluted earnings (loss) per share

Diluted (loss) earnings per share

$ ( 0.16 ) $ 0.08

Diluted earnings per common share for the years ended December 31, 2023 and 2022 excludes options, warrants, and shares underlying convertible notes that are anti-dilutive.

Diluted (loss) earnings per common share for the years ended December 31, 2024 and 2023 excludes options, warrants, and shares underlying convertible notes that are anti-dilutive.

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

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Warrants outstanding

10,346 10,346

Shares underlying convertible notes

62,921 36,380

PREPAID EXPENSES

Prepaid expenses consisted of the following at December 31, 2023 and 2022 (in thousands):

Prepaid services

Prepaid insurance

Prepaid licenses, software tools and support

Other prepaid expenses

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

There were no consulting services paid in shares of stock or warrants included in prepaid services at December 31, 2023.

INTANGIBLE ASSETS

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Amortization expense for the years ended December 31, 2024 and 2023 was approximately $ 0.23 million and $ 0.25 million, respectively.

For the years ended December 31, 2023 and 2022 , we recorded losses on the disposal of intangible assets of approximately $ 0.06 million and $ 0.12 million, respectively.

Amortization expense of approximately $ 0.23 million was recorded to cost of sales in each of the years ended December 31, 2024 and 2023 as the related patents are directly linked to revenue-generating licenses.

Future estimated amortization expense for intangible assets that have remaining unamortized amounts as of December 31, 2024 is as follows (in thousands):

2030 and thereafter

ACCRUED LIABILITIES

OTHER ACCRUED EXPENSES

Other accrued expenses consisted of the following at December 31, 2024 and 2023 (in thousands):

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The note, as amended, accrues interest at 4 % per annum and provides for monthly payments of principal and interest of $ 12,500 with a final balloon payment of approximately $ 0.02 million due at the maturity date of April 30, 2027.

We recognized interest expense of approximately $ 0.02 million related to this note for each of the years ended December 31, 2024 and 2023 .

Principal repayments of $ 0.13 million and $ 0.14 million for the years ended December 31, 2024 and 2023 , respectively, are included under the caption "Principal payments on long-term debt" in our consolidated statements of cash flows.

Failure to comply with the payment terms of this note constitutes an event of default which, if uncured, will result in the entire unpaid principal balance of the note and any unpaid, accrued interest to become immediately due and payable.

In addition, an event of default results in an increase in the interest rate under the notes to a default rate of 12 % per annum.

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

For the years ended December 31, 2023 and 2022 , we recognized interest expense of approximately $ 0.02 million and $ 0.03 million, respectively related to this note.

At December 31, 2024 , the aggregate maturities of our notes payable are as follows (in thousands):

The estimated fair value of our notes payable at December 31, 2023 is approximately $ 0.39 million based on a risk-adjusted discount rate.

CONVERTIBLE NOTES

Our convertible notes represent promissory notes that are convertible, at the holders’ option, into shares of our common stock at fixed conversion prices.

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

Interest payments are generally made on a quarterly basis and are payable, at our option and 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.

Upon conversion by the holder, any accrued and unpaid interest, if not paid in cash, is converted into shares of common stock at the conversion price.

To date, nearly 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 consolidated financial statements.

We have the option to prepay the majority of the notes any time following the

We have the option to prepay approximately

60 % of the face value of the notes any time following the

one -year anniversary of the issuance of the notes, subject to a premium on the outstanding principal prepayment amount of

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may be declared immediately payable by the holders of a majority of the then outstanding principal balance of the notes.

No convertible notes were issued during the year ended

December 31, 2024.

2023, we issued a

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May 11, 2023 ( File

five -year convertible promissory notes for aggregate proceeds of

$ 1.7 million and a conversion price of

$ 0.13 per share.

The shares underlying the notes, as well as shares reserved for future in-kind interest payments on the notes, were registered on a registration statement that was declared effective on

August 22, 2022 ( File

For the year ended

December 31, 2023 , we repaid an aggregate of

$ 0.2 million at maturity.

For the years ended

December 31, 2024 and 2023 ,we repaid an aggregate of

$ 0.05 million and

$ 0.2 million, respectively upon the maturity of convertible notes.

Repayments of our convertible notes upon maturity are included in the caption "Principal payments on long-term debt" in our consolidated statements of cash flows.

For the years ended

December 31, 2024 and 2023 , convertible notes with a face value of

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1.5 million shares of our common stock, respectively.

September 15, 2023, we 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 the 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, including the

$ 0.25 fixed conversion price, remain unchanged.

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

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

At the holders’ option, subject to ownership limitations, the convertible notes outstanding at

December 31, 2023 could be converted into an aggregate of approximately

36.4 million shares of our common stock based on the fixed conversion prices.

With the exception of the shares underlying the September 15, 2023 note to a related party, all of the shares underlying our convertible notes, including shares reserved for future in-kind interest payments on the notes, have been registered for resale.

For the years ended

December 31, 2023 and 2022 , we recognized interest expense of approximately

$ 0.4 million and

$ 0.3 million, respectively.

We recognized interest expense of approximately

$ 0.4 million during each of the years ended

December 31, 2024 and 2023 .

We have elected to pay contractual interest in shares of our common stock.

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3,336,000 shares of our common stock, respectively, as interest-in-kind payments on our convertible notes.

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

For the years ended

December 31, 2024 and 2023 , we amended convertible notes with an aggregate face value of

$ 2.35 million and

$ 1.18 million, respectively with primary purpose of extending the maturity date of the notes.

Each of the amendments was considered to be a troubled debt restructuring in accordance with ASC

60, and accordingly, the changes were accounted for prospectively and

no gain or loss was recognized as a result of the note modifications.

At the holders’ option, subject to ownership limitations, the convertible notes outstanding at

December 31, 2024 could be converted into an aggregate of approximately

27.7 million shares of our common stock based on the fixed conversion prices.

Convertible notes payable to non-related parties at December 31, 2024 and 2023 , consist of the following (in thousands):

Maturity Date

Convertible notes dated September 18, 2018

$ 0.40 8.0 % September 7, 2023

Convertible notes dated September 18, 2018

$ 0.25 8.0 % March 18, 2026 1

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$ 0.25 8.0 % February 28, 2026 to March 13, 2026 2

Convertible notes dated June 7, 2019

$ 0.10 8.0 % December 1, 2024 3

Convertible notes dated June/July 2019

$ 0.10 8.0 % June 7, 2024 to July 15, 2024

$ 0.10 8.0 % June 19, 2024 to March 19, 2026 4

Convertible notes dated July 18, 2019

$ 0.08 7.5 % July 18, 2025 5

Convertible notes dated September 13, 2019

$ 0.10 8.0 % September 13, 2024

Convertible notes dated January 8, 2020

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$ 0.16 9.0 % January 13, 2028

Convertible note dated September 15, 2023

$ 0.25 8.0 % March 15, 2026

Total principal balance

2 unchanged sentences

1 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 date 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 holder’s option at a reduced interest rate of 2 %.

At December 31, 2023 , we estimate our convertible notes have an aggregate fair value of approximately $ 3.7 million and would be categorized within Level 2 of the fair value hierarchy.

Notes with an aggregate face value of $ 0.5 million were converted, at the holders' option in 2024.

3 On June 3, 2024, this note was amended to extend the maturity date to December 1, 2024.

This note was converted, at the option of the holder, into shares of our common stock in October 2024.

4 Between June 18 and July 9, 2024, these notes were amended to extend the maturity dates to January 15, 2026 through March 19, 2026.

5 On June 3, 2024, notes with an aggregate face value of $ 0.2 million were amended to extend their maturity date from July 18, 2024 to December 1, 2024.

These notes were subsequently converted at the option of the holders in September 2024 into shares of our common stock.

On July 8, 2024, the remaining note, with a face value of $ 0.5 million, was amended to extend its maturity date from July 18, 2024 to December 1, 2024, and to add multiple automatic extensions of the maturity date, provided the holder does not revoke the extension option in writing at least ten ( 10 ) trading days prior to the then applicable maturity date.

The first automatic extension extended the maturity date to July 18, 2025, and the subsequent automatic extensions will extend the maturity date by up to ten ( 10 ) one -year periods.

6 On July 8, 2024, a note with a face value of $ 0.4 million was amended to provide for up to ten ( 10 ) one -year automatic extensions of the original maturity date, at the original stated interest rate, provided the holder does not revoke the extension option in writing at least ten ( 10 ) trading days prior to the then applicable maturity date.

7 On July 8, 2024, this note was amended to provide for up to ten ( 10 ) one -year automatic extensions of the original maturity date, at the original stated interest rate, provided the holder does not revoke the extension option in writing at least ten ( 10 ) trading days prior to the then applicable maturity date.

In addition, the conversion price was reduced from $ 0.16 to $ 0.11 .

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

Maturity Date

Convertible notes dated June 19, 2019

$ 0.10 5.0 % 1 March 15, 2026 1

Convertible notes dated September 13, 2019

$ 0.10 5.0 % 1 March 15, 2026 1

Convertible notes dated January 8, 2020

$ 0.13 8.0 % January 8, 2026

Convertible notes dated May-August 2022

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

Convertible note dated September 15, 2023

$ 0.25 8.0 % March 15, 2026

Total principal balance

Less current portion

1 On May 10, 2024, convertible notes, held by a director of ours, were amended to extend their maturity date to March 15, 2026 and reduce their interest rate on a going forward basis from 8 % to 5 %.

In September 2024, these notes were converted, at the option of the holder, into shares of our common stock.

CONTINGENT PAYMENT OBLIGATIONS

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

To date, we have received aggregate proceeds of $ 23 million in exchange for Brickell’s right to reimbursement and compensation from gross proceeds resulting from patent enforcement and other patent monetization actions and have repaid an aggregate of $ 17.3 million from patent license and settlement proceeds.

The underlying carrying value of the Note, which includes the Face Value plus accrued interest, was approximately $ 51.0 million as of December 31, 2023, which compares to the minimum return due to Brickell under the prior agreement of $ 56.9 million as of December 31, 2022.

Since 2016, we have received aggregate proceeds of $ 23 million in exchange for Brickell’s right to reimbursement and compensation from gross proceeds resulting from patent enforcement and other patent monetization actions and have repaid an aggregate of $ 17.3 million from patent license and settlement proceeds.

The underlying carrying value of the Note, which includes the Face Value plus accrued interest, was approximately $ 59.2 million and $ 51.0 million as of December 31, 2024 and 2023 , respectively.

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

3 unchanged sentences

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 consolidated statements of comprehensive income (loss) until the contingency is resolved.

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

Unsecured Contingent Payment Obligations

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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.

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

The unsecured contingent payment obligations will be remeasured to fair value at each reporting period with changes recorded in the consolidated statements of comprehensive (loss) income until the contingency is resolved (see Note 10 ).

The Termination Fee is a result of $ 1.0 million in advances received under a letter agreement with a third -party funder.

31 unchanged sentences

We used a risk-adjusted discount rate for the secured and unsecured contingent payment obligations of 18.27 % and 18.21 %, respectively, at December 31, 2024 , based on a risk-free rate of 4.27 % and 4.21 %, 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 December 31, 2023 , including the lowest and highest undiscounted payout scenarios as well as a weighted average payout scenario based on relative undiscounted fair value of each cash flow scenario.

We used a risk-adjusted discount rate for the secured and unsecured contingent payment obligations of 18.12 % and 18.51 %, respectively, at December 31, 2023 , based on a risk-free rate of 4.12 % and 4.51 %, respectively, as adjusted by 8% for credit risk and 6% for litigation inherent risk.

The following tables provide quantitative information about the significant unobservable inputs used in the measurement of fair value for both the secured and unsecured contingent payment obligations at December 31, 2024 and 2023 , respectively, 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.

December 31, 2024

Secured Contingent Payment Obligation

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15 % 19 % 25 % 15 % 21 % 25 %

December 31, 2023

Secured Contingent Payment Obligation

Unsecured Contingent Payment Obligations

Unobservable Inputs

Weighted Average

Estimated undiscounted cash outflows (in millions)

$ 0.0 $ 43.1 $ 79.6 $ 0.0 $ 9.7 $ 10.8

Duration (in years)

0.5 2.3 3.5 0.5 1.4 3.5

Estimated probabilities

5 % 20 % 35 % 5 % 23 % 35 %

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.

1 unchanged sentence

INCOME TAXES AND TAX STATUS

Our net income (loss) before income tax for the years ended December 31, 2023 and 2022 are from domestic operations as well as losses from our wholly-owned German subsidiary.

Our net (loss) income before income tax for the years ended December 31, 2024 and 2023 are from domestic operations as well as losses from our wholly-owned German subsidiary.

We elected to treat our German subsidiary as a disregarded entity for purposes of income taxes and accordingly, the losses from our German subsidiary have been included in our operating results.

3 unchanged sentences

A reconciliation between the provision for income taxes and the expected tax benefit using the federal statutory rate of 21 % for each of the years ended December 31, 2024 and 2023 , respectively are as follows (in thousands):

Tax expense (benefit) at statutory rate

Tax (benefit) expense at statutory rate

$ ( 3,039 ) $ 1,998

State tax expense (benefit)

(Decrease) increase in valuation allowance

State tax (benefit) expense

Change in valuation allowance

4,085 ( 2,512 )

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Research and development credit carry-forward

Stock compensation

Share based compensation

Patents and other

Contingent payment obligations

Accrued liabilities

Charitable contributions

Lease liabilities

83,968 83,714

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The periods subject to examination for those returns are the 2003 through 2024 tax years.

The following table provides a reconciliation of our unrecognized tax benefits due to uncertain tax positions for the years ended December 31, 2023 and 2022 , respectively (in thousands):

Unrecognized tax benefits – beginning of year

Reduction as a result of lapse of statute of limitations

Unrecognized tax benefits – end of year

Unrecognized tax benefits due to uncertain tax positions were $ 0.64 million for each of the years ended December 31, 2024 and 2023 .

Future changes in the unrecognized tax benefit will have no impact on the effective tax rate so long as we maintain a full valuation allowance.

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Court of Appeals for the Federal Circuit

In March 2022, the district court ruled on a number of pre-trial motions in our patent infringement case against Qualcomm.

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.

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

On September 6, 2024, the U.S Court of Appeals for the Federal Circuit ("CAFC") issued its opinion, ruling in our favor on each of the issues we appealed and remanding the case back to the Middle District of Florida (Orlando Division) where the case was reopened.

The CAFC appeal was filed following several March 2022 district court rulings on pre-trial motions in our patent infringement case against Qualcomm, a case that was originally filed in May 2014.

The district court granted Qualcomm motions to strike and exclude our technical expert report, essentially precluding the support of infringement testimony at trial and also issued an order granting Qualcomm's motion for summary judgment ruling that Qualcomm did not infringe the remaining three patents in the case.

We appealed these rulings to the CAFC and oral arguments were heard in November 2023.

In July 2024, the CAFC issued an order indicating that it did not have jurisdiction over this case as the district court had not entered a final judgement on Qualcomm's counterclaims of invalidity.

The parties filed a motion with the district court requesting an order dismissing Qualcomm's counterclaims of invalidity without prejudice.

On August 1, 2024, the district court issued such an order, and on August 7, 2024, the matter was transferred back to the CAFC for its decision which was then issued on September 6, 2024.

The parties have submitted to the district court a summary of pre-trial motions that remain open and a request for a trial schedule.

In addition, Qualcomm has filed a motion for a new claim construction hearing and we have filed a motion to substitute our infringement and validity expert due to the medical incapacity of our current expert.

The district court has not yet ruled on these pending motions.

The court indicated that it would establish a trial date at a pre-trial conference, following its rulings on outstanding motions.

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

8 unchanged sentences

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.

Discovery in this case was closed in January 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.

7,865,177, subject to appeal.

Citing the backlog due to the pandemic, among other factors, the court moved several scheduled deadlines.

Joint pre-trial statements were submitted by the parties in May 2021.

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

In March 2022, the district court rulings in favor of Qualcomm closed the district court case, subject to our appeal.

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.

As a result of the court’s summary judgment motion in favor of Qualcomm, Qualcomm had the right to petition the court for its fees and costs, a right that was subsequently mooted given the CAFC's decision to vacate the 2022 summary judgement decision.

Our damages expert has submitted a report supporting a 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.

ParkerVision v.

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.

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.

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.

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.

ParkerVision v.

16 unchanged sentences

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.

One of the seven patents was dropped from the litigation in August 2024.

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 July 2025, although based on ongoing discovery, it is anticipated that this date may be rescheduled.

A claim construction hearing was held in June 2024 in the second Realtek action, and the special master appointed by the court recommended the majority of the claim constructions in our favor.

The court adopted the special master recommendations in November 2024, and the trial for the second Realtek action has been set for November 2025.

ParkerVision v.

TCL (Western District of Texas)

5 unchanged sentences

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.

ParkerVision v.

MediaTek (Western District of Texas)

2 unchanged sentences

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

One of the patents was voluntarily dropped from the first MediaTek case in 2024 and MediaTek likewise terminated an IPR petition it had initiated against the same patent.

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 second MediaTek action has a tentative claim construction hearing date scheduled for May 2024 and jury trial in October 2025.

A jury trial for the first MediaTek action is currently scheduled for June 2025, although based on ongoing discovery, it is anticipated that this date will be rescheduled.

A claim construction hearing was held in June 2024 in the second MediaTek action, and the special master appointed by the court recommended the majority of the claim constructions in our favor.

The court adopted the special master recommendations in January 2025, and the trial for the second MediaTek action has been set for February 2026.

The third MediaTek action has a tentative claim construction hearing scheduled for June 2025 with a trial tentatively scheduled for June 2026.

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.

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.

A claim construction hearing is tentatively scheduled for May 2024 with a jury trial scheduled in May 2025.

In December 2023, TI filed a motion to change venue to the Northern District of Texas which the court denied in August 2024.

A claim construction hearing was held in June 2024, and the court issued its final claim construction order in November 2024.

A trial was originally set for May 2025, but in December 2024, a revised scheduling order moved the trial date to September 2025.

There may be additional changes in the trial schedule based on ongoing discovery.

ParkerVision v.

1 unchanged sentence

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.

A claim construction hearing is tentatively scheduled for May 2024 with a jury trial scheduled in August 2025.

Additional Patent Infringement Cases – Western District of Texas

ParkerVision filed a number of patent cases in the Western District of Texas in 2020 including cases against (i) Hisense Co., Ltd.

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

Each case alleged infringement of the same ten patents by products that incorporate modules containing certain WiFi semiconductors manufactured by Realtek and/or MediaTek.

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 two cases against Hisense following satisfaction of the parties' obligations under a patent license and settlement agreement.

A claim construction hearing was held in June 2024, and the court issued its final claim construction order in January 2025.

A trial has been tentatively scheduled for August 2025, although this date may be changed based on ongoing discovery.

Intel (USPTO) v.

ParkerVision (PTAB)

Intel filed IPR petitions against U.S.

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

patent 7,110,444 ("the ‘444 Patent"), and U.S.

patent 8,190,108 (“the ‘108 patent”) which were all patents asserted in ParkerVision v.

We appealed an IPR action, originally filed by Intel against our U.S.

patent 8,190,108 which was asserted in ParkerVision v.

Intel in the Western District of Texas.

In January 2022, the PTAB issued its final decision for the '474 Patent, ruling in our favor with respect to the seven challenged claims.

In January 2022, the PTAB also issued its final decision for the '444 Patent, determining that the single challenged claim of the '444 Patent was unpatentable.

In July 2022, we appealed the PTAB decision on the '444 Patent to the Federal Circuit and in December 2023, the appellate court issued its written opinion affirming the PTAB's decision.

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 and anticipate a hearing date on our appeal by April 2024.

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.

Patent and Trademark Office exercised its right to intervene to defend the PTAB's decision.

Oral arguments on our appeal were presented on May 9, 2024 and on May 16, 2024, the CAFC issued a Rule 36 decision upholding the PTAB ruling that the challenged claims are unpatentable.

ParkerVision (PTAB)

TCL, along with Hisense, filed IPR petitions against U.S.

two IPR actions filed by TCL and LGE against our U.S.

7,292,835 (“the

‘835 Patent”) and the

‘444 Patent, both of which were asserted in the infringement cases against these parties in the Western District of Texas.

December 2021, LGE filed nearly identical petitions against the same

two patents along with a joinder motion requesting to join the existing petitions, which was granted by the PTAB in

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.

‘835 Patent”) and U.S.

7,110,444, both of which are asserted in the infringement cases against these parties in the Western District of Texas.

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

We have appealed these decisions and anticipate hearing dates on our appeal by

We appealed these decisions to the CAFC and oral arguments for both appeals were presented to the CAFC on

June 3, 2024.

June 5, 2024, the CAFC issued its final decisions, in the form of Rule

36 decisions, affirming the PTAB rulings.

November 4, 2024, we submitted a petition for a Writ of Certiorari with the U.S.

Supreme Court challenging the CAFC's use of Rule

36 to affirm PTAB decisions without a written opinion.

March 24, 2025, the Supreme Court denied our petition.

ParkerVision (PTAB)

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first MediaTek infringement action.

This matter is still being briefed by the parties.

May, 2024, the PTAB instituted the IPR petition.

MediaTek withdrew its petition and the IPR was terminated in

September 2024, following our dismissal of the

'835 Patent from the patent infringement action against MediaTek.

MediaTek filed a

second petition for IPR in

May 2024 against the

'686 Patent which is

one of the patents asserted in the

second MediaTek infringement action.

The PTAB instituted this IPR in

November 2024 and a final decision is expected in

November 2025.

October 2024, MediaTek filed a

third petition for IPR against the

one of the patents asserted in the

third MediaTek action.

The PTAB's institution decision is expected by

Texas Instruments and NXP v.

ParkerVision (PTAB)

Texas Instruments filed

three petitions for IPR in

May 2024 against each of the patents asserted in the TI action.

three IPRs were instituted by the PTAB in

November 2024 and a decision is expected by

November 2025.

NXP filed petitions for IPR against

three patents asserted in the NXP action, which are the same as

two of the patents asserted in the TI action.

Accordingly, in

December 2024, the PTAB granted NXP's joinder motion to join the TI petitions.

ParkerVision (PTAB)

December 2024, Realtek filed petitions for IPR against

two patents asserted in the

second Realtek action, which are the same as the

two patents under joint IPR by TI and NXP.

Realtek has filed a joinder motion to join the TI/NXP proceedings.

STOCK AUTHORIZATION AND ISSUANCE

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We have 225 million shares of common stock authorized for issuance as of December 31, 2024 .

Our shareholders approved amendments to our articles of incorporation in September 2022 increasing the number of our authorized shares of common stock from 150 million to 175 million shares.

Our shareholders approved amendments to our articles of incorporation in October 2024 increasing the number of our authorized shares of common stock from 175 million to 225 million shares.

As of December 31, 2024 , we have 35.2 million shares reserved for issuance under outstanding warrants and options and 27.7 million shares reserved for issuance upon conversion of our outstanding convertible notes.

4 unchanged sentences

Average Price per Share/ Unit

# of Warrants Issued

Average Exercise Price per Warrant

Net Proceeds (1)

November 2022

Private placement of common stock

3 unchanged sentences

10,000 $ 0.50 2,000 $ 0.50 $ 5,000

Private placement of common stock

844 $ 0.16 $ 120

After deduction of applicable offering costs.

Private Placements

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 - 271651 ).

In November and December 2022, we entered into securities purchase agreements with accredited investors for the sale of 2,000,000 shares of our common stock at a price of $ 0.20 per share for aggregate proceeds of $ 0.4 million.

In December 2024, we entered into securities purchase agreements with accredited investors for the sale of 10,000,000 shares of our common stock and 2,000,000 warrants at a price of $ 0.50 per share for aggregate gross proceeds of $ 5.0 million.

The warrants are exercisable for a period of five years at an exercise price of $0.50 per share and have an estimated fair value of approximately $ 0.8 million.

We also entered into a registration rights agreement with the investors pursuant to which we will register the shares, including the shares underlying the warrants.

We have committed to file the registration statement by April 15, 2025, and to cause the registration to become effective by May 20, 2025, or, in the event of a full review by the Securities and Exchange Commission, no later than July 15, 2025.

The registration rights agreements provide for liquidated damages upon the occurrence of certain events including failure by us to file the registration statement or cause it to become effective by the deadlines set forth above.

The amount of liquidated damages is 1.0 % of the aggregate subscription upon the occurrence of the event, and monthly thereafter, up to a maximum of 6.0 %, or approximately $ 0.3 million.

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

333 - 271651 ).

Stock, Option and Warrant Issuances – Payment for Services

In April 2023, we entered into a consulting services agreement with Lewis Titterton to provide short-term advisory services to our chief executive officer in connection with the restructuring of the Brickell funding agreements.

As consideration for services under the agreement, we issued 250,000 unregistered shares of our common stock valued at approximately $ 0.03 million.

The consideration was recognized fully in the second quarter of 2023, prior to Mr.

Titterton being appointed to the Board (see Note 16 ).

In January 2023, we extended a prior consulting agreement with Intro-Act to provide research and shareholder relations services.

We issued 75,000 shares of unregistered common stock valued at approximately $ 0.02 million as consideration for services to be provided during the first quarter of 2023.

The agreement had been previously extended in August 2022 with the issuance of 150,000 shares of unregistered common stock valued at approximately $ 0.03 million as consideration for services provided over a six -month term.

On November 22, 2022, we entered into an agreement with a third party to provide consulting services.

As consideration for services provided under the twelve -month term of the agreement, we issued non-plan options to purchase 200,000 shares of unregistered common stock at an exercise price of $ 0.21 per share valued at approximately $ 0.03 million.

The options vest in four equal three -month increments beginning November 22, 2022 and will expire three years from the date of the grant.

The value of the stock issued was recognized as a consulting expense over the term of the agreement.

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

333 - 271651 ).

In October 2022, we entered into an agreement with Tailwinds Research Group LLC (“Tailwinds”) to provide continuing digital marketing services to us through December 2024.

As consideration for services to be provided under the term of the agreement, we extended the expiration date for warrants previously issued to Tailwinds in 2020 under a prior services agreement.

The warrants allow for the purchase of up to 200,000 shares of our common stock at an exercise price of $ 1.00 per share and the expiration date was extended from March 2023 to March 2026.

The fair value of the modification of the warrants was valued at approximately $ 0.02 million using the Black-Scholes method.

The expense was being recognized ratably over the term of the new agreement.

In June 2023, we terminated the services agreement and recognized all remaining unamortized expense.

In addition, from time to time, we issue share-based compensation awards under our equity compensation plans to third -party consultants.

During the year ended December 31, 2023, we issued an aggregate of 170,000 RSAs valued at approximately $ 0.05 million under our 2019 Long-Term Equity Incentive Plan to two non-employees as compensation under consulting agreements.

(See Note 15 ).

Common Stock Warrants

2 unchanged sentences

All other terms of the warrant agreement remain unchanged, including a call provision whereby if the closing price of our common stock for any period of five ( 5 ) consecutive trading days exceeds two times the exercise price, then we can call for the cancellation of all or a portion of the warrants for which a notice of exercise has not been delivered within five ( 5 ) trading days of our delivery of a call notice to Brickell.

The modification resulted in an increase in the fair value of the warrants of $ 0.3 million, which was recorded as an increase in additional paid in capital and an increase in deferred offering costs, included in other assets, in the accompanying consolidated financial statements at December 31, 2023.

We had outstanding warrants for the purchase of up to 10.3 million shares of our common stock as of December 31, 2023 and 2022 .

The modification resulted in an increase in the fair value of the warrants of $ 0.3 million, which was recorded as an increase in additional paid in capital with a corresponding increase in deferred offering costs, included in other assets, in the accompanying consolidated financial statements at December 31, 2023.

During the year ended December 31, 2024 , Brickell exercised 2.6 million warrants, resulting in the amortization of the deferred offering costs.

We had outstanding warrants for the purchase of up to 9.7 million and 10.3 million shares of our common stock as of December 31, 2024 and 2023 , respectively.

The estimated grant date fair value of these warrants of $ 4.0 million and $ 3.5 million for the years ended December 31, 2024 and 2023 , respectively, is included in shareholders’ deficit in our consolidated balance sheets.

As of December 31, 2024 , our outstanding warrants have an average exercise price of $ 0.85 per share and a weighted average remaining life of approximately 1.5 years.

Cash received from warrant exercises for the year ended December 31, 2024 was approximately $ 0.42 million.

No warrants were exercised during the year ended December 31, 2023 .

SHARE-BASED COMPENSATION

For the years ended December 31, 2024 and 2023 , we recognized share-based compensation expense of approximately $ 0.4 million and $ 0.8 million, respectively.

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

This share-based compensation expense includes in-kind consulting fees paid to third parties for the years ended December 31, 2024 and 2023 of $ 0.09 million and $ 0.3 million, respectively.

Share-based compensation, including in-kind consulting, is included in selling, general, and administrative expenses in our consolidated statements of comprehensive (loss) income.

As of December 31, 2024 , there was $ 0.26 million of total unrecognized compensation cost related to all non-vested share-based compensation awards.

6 unchanged sentences

The plan provides that non-employee directors may not be granted awards during any calendar year that exceed the lesser of 1.0 million shares or $ 175,000 in value, calculated based on grant-date fair value.

At December 31, 2023 , we had outstanding options for the purchase of up to 24,730,086 shares and we had 1,136,467 shares of common stock available for future grants under the 2019 Plan.

At December 31, 2024 , we had outstanding options for the purchase of up to 24,521,836 shares under the 2019 Plan, and we had 36,467 shares of common stock available for future grants under the 2019 Plan.

2011 Long-Term Incentive Equity Plan

3 unchanged sentences

Upon the exercise or expiration of these remaining outstanding options, the 2011 Plan will be terminated.

2008 Equity Incentive Plan

We adopted an equity incentive plan in August 2008 ( the “2008 Plan”) for the grant of stock-based awards to employees (excluding named executives), directors and consultants, not to exceed 50,000 shares of common stock.

We had no outstanding options for purchase of shares under the 2008 Plan and in January 2023, the 2008 Plan was terminated.

Non-Plan Awards

In addition, from time to time, we issue share-based compensation awards to third -party consultants as share-based compensation outside of our stock incentive plans.

At December 31, 2024 , we had outstanding options for the purchase of up to 250,000 shares and 250,000 unvested restricted stock awards that were issued as Non-Plan Awards.

The shares underlying these awards have not been registered at the time of the award ("Non-Plan Awards").

Restricted Stock Awards

3 unchanged sentences

From time to time, we issue fully vested share-based compensation awards to third parties as prepaid retainers for services over a specified period.

The grant date fair value of these awards is recorded as prepaid services and expensed to selling, general and administrative expense over the service period (see Note 5 ).

The grant date fair value of these awards is recorded as prepaid services and expensed to selling, general and administrative expense over the service period.

Restricted Stock Units

RSUs are issued as incentive compensation to executives, employees, and non-employee directors.

RSUs are issued as incentive compensation to executives, employees, and non-employee directors and as payment for services to others.

Each RSU represents a right to one share of our common stock, upon vesting.

The RSUs are not entitled to voting rights or dividends, if any, until vested.

RSUs generally vest over a one to three year period for employee awards and a one year period for non-employee director awards.

RSUs generally vest over a one to three year period for employee awards and a one year period for non-employee director and third -party awards.

The fair value of RSUs is generally based on the closing price of our common stock on the date of grant and is amortized to share-based compensation expense over the estimated life of the award, generally the vesting period.

RSAs and RSUs

The following table presents a summary of RSA and RSU activity under the 2011 and 2019 Plans (collectively, the “Stock Plans”) as of December 31, 2023 (shares in thousands):

The following table presents a summary of RSA and RSU activity for the year ended December 31, 2024 , all of which represent Non-Plan Awards (shares in thousands):

Non-vested Shares

1 unchanged sentence

Non-vested at beginning of year

( 370,000 ) 0.15

Non-vested at end of year

The total fair value of RSAs and RSUs vested under the Stock Plans for the years ended December 31, 2023 and 2022 was approximately $ 0.1 million and $ 0.03 million, respectively.

250,000 $ 0.50

The RSAs and RSUs activity during the year ended December 31, 2024 included 370,000 RSAs and 250,000 RSUs granted to third parties for services with an aggregate grant date fair value of approximately $ 0.2 million.

The total fair value of RSAs and RSUs vested for the years ended December 31, 2023 was approximately $ 0.06 million and $ 0.15 million, respectively.

Stock Options

5 unchanged sentences

Options for employees, including executives and non-employee directors, are generally granted under the Stock Plans.

The following table presents a summary of option activity under the Stock Plans for the year ended December 31, 2023 (shares in thousands):

The following table presents a summary of option activity under the Stock Plans and Non Plan activity for the year ended December 31, 2024 (shares in thousands):

Weighted- Average Exercise Price

3 unchanged sentences

26,034 $ 0.39

( 1,659 ) 0.21

Forfeited/Expired

3 unchanged sentences

24,626 $ 0.39 1.6 $ 12,128

The weighted average per share fair value of options granted under the Stock Plans during the years ended December 31, 2023 and 2022 was $ 0.24 and $ 0.17 , respectively.

The total fair value of option shares vested was $ 0.4 million and $ 3.0 million for the years ended December 31, 2023 and 2022 , respectively.

The fair value of option grants under the Stock Plans for the years ended December 31, 2023 and 2022 , respectively, was estimated using the Black-Scholes option-pricing model with the following assumptions:

The options awarded for the year ended December 31, 2024 included 250,000 nonqualified options issued as Non Plan Awards to third parties for services with a grant date fair value of approximately $ 0.1 million.

The weighted average per share fair value of options granted during the years ended December 31, 2024 and 2023 was $ 0.23 and $ 0.17 , respectively.

The total fair value of options vested was $ 0.3 million and $ 0.4 million for the years ended December 31, 2024 and 2023 , respectively.

The fair value of option grants for the years ended December 31, 2024 and 2023 , respectively, was estimated using the Black-Scholes option-pricing model with the following assumptions:

Year ended December 31,

2 unchanged sentences

150.9 - 155.9 %

143.9 - 155.9 %

Risk-free interest rate 3

3.60 - 4.45 %

3.05 - 4.09 %

Expected annual dividend yield

1 unchanged sentence

For employee options, groups of employees with similar historical exercise behavior are considered separately for valuation purposes.

2 The stock volatility for each grant is measured using the weighted average of historical daily price changes of our common stock over the most recent period equal to the expected option life of the grant.

3 The risk-free interest rate for periods equal to the expected term of the share option is based on the U.S.

For third parties, the expected term is estimated to be the contractual life of the related service agreement.

2 The stock volatility for each grant is measured using the weighted average of historical daily price changes of our common stock over the most recent period equal to the expected option term.

3 The risk-free interest rate for periods equal to the option expected term is based on the U.S.

Treasury yield curve in effect at the measurement date.

Options by Price Range

The options outstanding at December 31, 2023 under the Stock Plans have exercise price ranges, weighted average contractual lives, and weighted average exercise prices as follows (weighted average lives in years and shares in thousands):

The options outstanding at December 31, 2024 including Stock Plan and NonPlan Awards have exercise price ranges, weighted average contractual lives, and weighted average exercise prices as follows (weighted average lives in years and shares in thousands):

Options Outstanding

14 unchanged sentences

25,451 $ 0.38 1.6 24,626 $ 0.39 1.6

273 1.98 0.6 273 1.98 0.6

25,834 $ 0.40 2.5 24,659 $ 0.40 2.4

We issue new shares of our common stock upon exercise of options or vesting of RSUs or RSAs under the Stock Plans.

The shares underlying the Stock Plans are registered.

The shares underlying Non Plan Awards are not registered at the time of the award, but from time to time, such awards may be included in a subsequent registration statement.

Cash received from option exercises for the years ended December 31, 2024 and 2023 , was $ 0.34 million and $ 0.004 million, respectively.

RELATED PARTY TRANSACTIONS

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

A June 19, 2019 note with a principal balance of $ 0.03 million and a September 13, 2019 note with a principal balance of $ 0.05 million, 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 $ 0.48 million 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 $ 0.05 million convertible note dated January 8, 2020 and a $ 0.2 million convertible note dated May 10, 2022, both held by Lewis Titterton, a $ 0.1 million convertible note dated May 10, 2022 and a $ 0.1 million convertible note dated September 15, 2023, both held by Paul Rosenbaum, and a $ 0.03 million convertible note dated August 3, 2022 held by Sanford Litvak.

Notes with an aggregate face value of $ 0.33 million were converted by Messrs.

Titterton and Rosenbaum in 2024.

At December 31, 2024, these three directors hold outstanding convertible notes with an aggregate face value of $ 0.23 million with maturity dates ranging from May 2027 to August 2027 ( see Note 8 ).

We paid approximately $ 0.04 million and $ 0.05 million in 2024 and 2023 , respectively, for patent-related legal services to SKGF, of which Robert Sterne, one of our directors since September 2006, is a partner.

In addition, we paid approximately $ 0.2 million and $ 0.1 million in 2023 and 2022 , respectively, for principal and interest on the SKGF Note (see Note 8 ).

In addition, we paid approximately $ 0.2 million for principal and interest on the SKGF Note during each of the years ended December 31, 2024 and 2023 (see Note 7 ).

The SKGF Note has an outstanding balance, including accrued interest, of approximately $ 0.3 million at December 31, 2024 .

As consideration for services under the agreement, we issued 250,000 unregistered shares of our common stock valued at approximately $ 0.03 million.

As consideration for services under the agreement, we issued a Non Plan Award of 250,000 unregistered shares of our common stock valued at approximately $ 0.03 million.

The consideration was recognized fully in the second quarter of 2023, prior to Mr.

Titterton being appointed to the Board.

As of December 31, 2023, Mr.

Titterton holds an aggregate of $ 0.33 million in promissory notes, convertible into 2.7 million shares of common stock, that were purchased from 2019 to 2022 prior to being appointed to the Board.

In May 2022, we sold an aggregate of $ 0.1 million in promissory notes, convertible into shares of our common stock at a fixed conversion price of $ 0.13 to Paul Rosenbaum, one of our directors.

In September 2023, we sold an additional $ 0.1 million in promissory notes, convertible into shares of our common stock at a fixed conversion price of $ 0.25 to Mr.

As of December 31, 2023 , Mr.

Rosenbaum holds $ 0.2 million of our convertible promissory notes convertible into 1.2 million shares of common stock.

In August 2022, we sold an aggregate of $ 0.03 million in promissory notes, convertible into approximately 0.2 million shares of our common stock at a fixed conversion price of $ 0.13 to Sanford Litvack, who became an independent director in October 2022.

In January 2023, Mr.

Litvack purchased 62,500 shares of our common stock at $ 0.16 per share in a private placement transaction.

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject us to a concentration of credit risk principally consist of cash and cash equivalents.

Cash and cash equivalents are primarily held in bank accounts and overnight investments.

At times our cash balances on deposit with banks may exceed the balance insured by the Federal Deposit Insurance Corporation (F.D.I.C.).

Financial instruments that potentially subject us to a concentration of credit risk consist of cash and cash equivalents that are primarily held in bank accounts and overnight investments.

We are exposed to credit risk from time to time, subject to federal deposit insurance, in the event of default by the financial institution holding our cash and cash equivalents.

The cash and cash equivalents in deposit accounts held in excess of federally insured limits was $ 2.1 million at December 31, 2024 following our closing of an equity-based transaction on December 30, 2024.

We mitigate this risk by depositing our cash and cash equivalents with major financial institutions and by ensuring timely transfers of excess funds to a high-yield savings program that offers federal insurance protection through a network of financial institutions.

SEGMENT INFORMATION

Our operations constitute a single reportable segment, focused on licensing our innovative, fundamental wireless technologies, often through patent infringement enforcement actions.

All revenues, operating expenses and assets attributable to this segment are reflected in the consolidated financial statements.

Our Chief Executive Officer and Chief Financial Officer, collectively, are considered to be the chief operating decision maker ("CODM").

The CODM uses consolidated net (losses) earnings, along with consideration of certain significant cash and noncash expense categories, to assess performance by comparing to and monitoring against budget and prior year results.

This information is used to manage resources and invest in key strategic priorities.

Segment information for the years ended December 31, 2024 and 2023 is as follows (in thousands):

Licensing gross margin

$ ( 229 ) $ 24,773

Interest and other income

Cash expenses:

Personnel related expenses

Litigation & legal expenses

Third-party consulting expenses

Patent maintenance expenses

Non-cash expenses:

Share-based compensation

Third-party consulting expenses

In-kind interest expense

Change in fair value of contingent payment obligations

Other segment items 1

Net (loss) income

$ ( 14,472 ) $ 9,515

1 Other segment items primarily include costs incurred for insurance, shareholder and public relations, audit and other professional fees, outsourced information technology services, and employee travel.

Our segment assets represent our total assets as presented on the consolidated balance sheets at December 31, 2024 and 2023 .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

On November 1, 2024, MSL, P.A.

("MSL") notified our Audit Committee and management that MSL had entered into a transaction with Forvis Mazars, LLP ("Forvis") whereby substantially all of the partners and employees of MSL became partners and employees of Forvis, and MSL would no longer be providing accounting and auditing services and would cease its services as our independent registered public accounting firm upon completion of the review of our Quarterly Report on Form 10-Q for the period ended September 30, 2024.

The Audit Committee immediately commenced a search for a new independent registered public accounting firm.

MSL’s audit report on our consolidated financial statements as of and for the year ended December 31, 2023 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principles, except that MSL’s report for the year ended December 31, 2023 included an explanatory paragraph regarding our ability to continue as a going concern.

During the year ended December 31, 2023, and through the subsequent interim period through November 1, 2024, there were (i) no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between us and MSL on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which, if not resolved to MSL’s satisfaction, would have caused MSL to make reference thereto in their reports on the consolidated financial statements for such years, and (ii) no “reportable events” within the meaning if Item 304(a)(1)(v) of Regulation S-K.

On December 17, 2024, the Audit Committee engaged Frazier & Deeter, LLC ("FD") as our independent registered public accounting firm for the year ended December 31, 2024.

During the fiscal year ended December 31, 2023, and through the subsequent interim period through December 17, 2024 (1) neither we nor anyone acting on our behalf consulted with FD regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the our financial statements, (ii) any matter that was the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K, and (2) FD did not provide us with any written report or oral advice that FD concluded was an important factor considered by us in reaching a decision as to any accounting, auditing, or financial reporting issue.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data