prkr-20210518xresalesupp28
Filed pursuant to Rule 424(b)(3)
Registration No. 333-230888
PROSPECTUS SUPPLEMENT No. 28
(to Prospectus dated April 19, 2019)
PARKERVISION, INC.
12,800,000 Shares of Common Stock
This
Prospectus Supplement relates to the prospectus dated April 19,
2019, as amended and supplemented from time to time (the
“Prospectus”), which permits the resale by the selling
stockholders listed in the Prospectus of up to 12,800,000 shares of
our common stock, par value $0.01 per share (“Common
Stock”), consisting of (i) up to 7,800,000 shares of Common
Stock issuable upon conversion of, and for the payment of interest
from time to time at our option for, convertible promissory notes
and (ii) 5,000,000 shares of Common Stock issuable upon the
exercise of a five-year warrant.
We will
not receive proceeds from the sale of the shares of Common Stock by
the selling stockholders. To the extent the warrant is exercised
for cash, we will receive up to an aggregate of $800,000 in gross
proceeds. We expect to use proceeds received from the exercise of
the warrant, if any, to fund our patent enforcement actions and for
other working capital and general corporate purposes.
This Prospectus Supplement is
being filed to update and supplement the information previously
included in the Prospectus with the information contained in our
Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission (the “SEC”) on May 18, 2021.
Accordingly, we have attached the 10-Q to this prospectus
supplement. You should read this prospectus supplement together
with the prospectus, which is to be delivered with this prospectus
supplement.
Any
statement contained in the Prospectus shall be deemed to be
modified or superseded to the extent that information in this
Prospectus Supplement modifies or supersedes such statement. Any
statement that is modified or superseded shall not be deemed to
constitute a part of the Prospectus except as modified or
superseded by this Prospectus Supplement.
This
Prospectus Supplement should be read in conjunction with, and may
not be delivered or utilized without, the Prospectus.
Our
Common Stock is listed on the OTCQB Venture Capital Market under
the ticker symbol “PRKR.”
Investing in our securities involves a high degree of risk. See
“Risk Factors”
beginning on page 5 of the Prospectus for a discussion of
information that should be considered in connection with an
investment in our securities.
Neither the SEC nor any such authority has approved or disapproved
these securities or determined whether this Prospectus or
Prospectus Supplement is truthful or complete. Any representation
to the contrary is a criminal offense.
The
date of this Prospectus Supplement is May 18, 2021.
UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-Q
(Mark
One)
|
|
☒
|
QUARTERLY REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the quarterly period ended
March 31, 2021
|
TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
☐
|
|
For the transition
period from ________to____________
Commission file
number 000-22904
PARKERVISION, INC.
(Exact name of
registrant as specified in its charter)
|
|
|
Florida
|
|
59-2971472
|
(State or other
jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer
Identification No)
|
4446-1A Hendricks
Avenue,
Suite
354
Jacksonville, Florida 32207
(Address of
principal executive offices)
(904)
732-6100
(Registrant’s
telephone number, including area code)
N/A
(Former name,
former address and former fiscal year, if changed since last
report)
Securities
registered pursuant to Section 12(b) of the Act:
|
|
|
Title of Each
Class
|
Trading
Symbol
|
Name of Each Exchange
on Which Registered
|
Common Stock, $.01 par
value
|
PRKR
|
OTCQB
|
Common Stock
Rights
|
|
OTCQB
|
Indicate by check
mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days. Yes ☒ No ☐ .
Indicate by check
mark whether the registrant has submitted electronically every
Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months (or
for such shorter period that the registrant was required to submit
such file).
Yes ☒ No ☐ .
Indicate by check
mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the
definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act:
|
|
|
Large accelerated
filer ☐
|
|
Accelerated
filer ☐
|
Non-accelerated
filer ☒
|
|
Smaller reporting
company ☒
|
|
|
Emerging growth
company ☐
|
If an emerging
growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying
with any new or revised accounting standards provided pursuant to
Section 13(a) of the Exchange Act. ☐
Indicate by check
mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange
Act). Yes ☐ No ☒
As of May 7,
2021,
72,238,730 shares
of the issuer’s common stock, $.01 par value, were
outstanding.
TABLE OF CONTENTS
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2
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18
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21
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21
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22
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22
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22
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23
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23
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23
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23
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24
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PA RT I - FINANCIAL
INFORMATION
ITEM 1. Financial
Statements (Unaudited)
PARKERVISION,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands,
except par value data)
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December
31,
|
|
2021
|
|
2020
|
CURRENT
ASSETS:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
2,247
|
|
$
|
1,627
|
Prepaid
expenses
|
|
682
|
|
|
599
|
Other current
assets
|
|
13
|
|
|
8
|
Total current
assets
|
|
2,942
|
|
|
2,234
|
|
|
|
|
|
|
Property and
equipment, net
|
|
27
|
|
|
30
|
Intangible assets,
net
|
|
2,077
|
|
|
2,170
|
Operating lease
right-of-use assets
|
|
10
|
|
|
10
|
Other assets,
net
|
|
12
|
|
|
12
|
Total
assets
|
$
|
5,068
|
|
$
|
4,456
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Accounts
payable
|
$
|
849
|
|
$
|
4,318
|
Accrued
expenses:
|
|
|
|
|
|
Salaries and
wages
|
|
41
|
|
|
19
|
Professional
fees
|
|
130
|
|
|
128
|
Statutory court
costs
|
|
109
|
|
|
251
|
Other accrued
expenses
|
|
476
|
|
|
936
|
Related party note
payable, current portion
|
|
101
|
|
|
100
|
Secured note
payable, current portion
|
|
-
|
|
|
26
|
Unsecured notes
payable, current portion
|
|
90
|
|
|
65
|
Operating lease
liabilities, current portion
|
|
152
|
|
|
146
|
Total current
liabilities
|
|
1,948
|
|
|
5,989
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES:
|
|
|
|
|
|
Secured contingent
payment obligation
|
|
33,458
|
|
|
33,057
|
Unsecured
contingent payment obligations
|
|
5,383
|
|
|
5,222
|
Convertible notes,
net
|
|
3,465
|
|
|
3,018
|
Related party note
payable, net of current portion
|
|
680
|
|
|
703
|
Operating lease
liabilities, net of current portion
|
|
119
|
|
|
159
|
Unsecured notes
payable
|
|
104
|
|
|
129
|
Total long-term
liabilities
|
|
43,209
|
|
|
42,288
|
Total
liabilities
|
|
45,157
|
|
|
48,277
|
|
|
|
|
|
|
SHAREHOLDERS'
DEFICIT:
|
|
|
|
|
|
Common stock, $.01
par value, 140,000 shares authorized, 69,887 and 58,591 shares
issued and outstanding at March 31, 2021
and December 31, 2020, respectively
|
|
699
|
|
|
586
|
Additional paid-in
capital
|
|
382,761
|
|
|
376,954
|
Accumulated
deficit
|
|
(423,549)
|
|
|
(421,361)
|
Total shareholders'
deficit
|
|
(40,089)
|
|
|
(43,821)
|
Total liabilities
and shareholders' deficit
|
$
|
5,068
|
|
$
|
4,456
|
|
|
|
|
|
|
PARKERVISION,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
March 31,
|
|
2021
|
|
2020
|
Product
revenue
|
$
|
-
|
|
$
|
-
|
Cost of
sales
|
|
-
|
|
|
-
|
Gross
margin
|
|
-
|
|
|
-
|
|
|
|
|
|
|
Selling, general
and administrative expenses
|
|
2,280
|
|
|
5,495
|
Total operating
expenses
|
|
2,280
|
|
|
5,495
|
|
|
|
|
|
|
Interest
expense
|
|
(37)
|
|
|
(186)
|
Change in fair
value of contingent payment obligations
|
|
(150)
|
|
|
(2,240)
|
Total interest and
other
|
|
(187)
|
|
|
(2,426)
|
|
|
|
|
|
|
Net
loss
|
|
(2,467)
|
|
|
(7,921)
|
|
|
|
|
|
|
Other comprehensive
loss, net of tax
|
|
-
|
|
|
-
|
|
|
|
|
|
|
Comprehensive
loss
|
$
|
(2,467)
|
|
$
|
(7,921)
|
|
|
|
|
|
|
Basic and diluted
net loss per common share
|
$
|
(0.04)
|
|
$
|
(0.21)
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
63,695
|
|
|
38,329
|
|
|
|
|
|
|
PARKERVISION,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT
(UNAUDITED)
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock, Par
Value
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Total
Shareholders'
Deficit
|
Balance as of December 31,
2020
|
|
$
|
586
|
|
$
|
376,954
|
|
$
|
(421,361)
|
|
$
|
(43,821)
|
Cumulative effect
of change in accounting principle
|
|
|
-
|
|
|
(1,126)
|
|
|
279
|
|
|
(847)
|
Issuance of common
stock and warrants in public and private offerings, net of issuance
costs
|
|
|
62
|
|
|
4,734
|
|
|
-
|
|
|
4,796
|
Issuance of common
stock upon exercise of options and warrants
|
|
|
27
|
|
|
397
|
|
|
-
|
|
|
424
|
Issuance of common
stock and warrants for services
|
|
|
6
|
|
|
391
|
|
|
-
|
|
|
397
|
Issuance of common
stock upon conversion and payment of interest-in-kind on
convertible debt
|
|
|
17
|
|
|
459
|
|
|
-
|
|
|
476
|
Share-based
compensation, net of shares withheld for taxes
|
|
|
1
|
|
|
952
|
|
|
-
|
|
|
953
|
Comprehensive loss
for the period
|
|
|
-
|
|
|
-
|
|
|
(2,467)
|
|
|
(2,467)
|
Balance as of March 31,
2021
|
|
$
|
699
|
|
$
|
382,761
|
|
$
|
(423,549)
|
|
$
|
(40,089)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock, Par
Value
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Total
Shareholders'
Deficit
|
Balance as of December 31,
2019
|
|
$
|
341
|
|
$
|
368,345
|
|
$
|
(401,783)
|
|
$
|
(33,097)
|
Issuance of common
stock and warrants in public and private offerings, net of issuance
costs
|
|
|
39
|
|
|
2,811
|
|
|
-
|
|
|
2,850
|
Issuance of common
stock upon exercise of warrants
|
|
|
14
|
|
|
487
|
|
|
-
|
|
|
501
|
Issuance of common
stock and warrants for services
|
|
|
5
|
|
|
219
|
|
|
-
|
|
|
224
|
Issuance of
convertible debt with beneficial conversion feature
|
|
|
-
|
|
|
173
|
|
|
-
|
|
|
173
|
Issuance of common
stock upon conversion and payment of interest-in-kind on
convertible debt
|
|
|
7
|
|
|
187
|
|
|
-
|
|
|
194
|
Issuance of common
stock upon conversion of short-term loans and payables
|
|
|
22
|
|
|
318
|
|
|
-
|
|
|
340
|
Share-based
compensation, net of shares withheld for taxes
|
|
|
3
|
|
|
458
|
|
|
-
|
|
|
461
|
Comprehensive loss
for the period
|
|
|
-
|
|
|
-
|
|
|
(7,921)
|
|
|
(7,921)
|
Balance as of March 31,
2020
|
|
$
|
431
|
|
$
|
372,998
|
|
$
|
(409,704)
|
|
$
|
(36,275)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PARKERVISION,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
March 31,
|
|
2021
|
|
2020
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net
loss
|
$
|
(2,467)
|
|
$
|
(7,921)
|
Adjustments to
reconcile net loss to net cash used in
operating activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
97
|
|
|
208
|
Share-based
compensation
|
|
953
|
|
|
461
|
Noncash lease
expense
|
|
-
|
|
|
28
|
Loss on changes in
fair value of contingent payment obligations
|
|
150
|
|
|
2,240
|
Loss on disposal of
equipment and other assets
|
|
-
|
|
|
33
|
Warrant
expense
|
|
-
|
|
|
1,775
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
Prepaid expenses
and other assets
|
|
282
|
|
|
107
|
Accounts payable
and accrued expenses
|
|
(3,970)
|
|
|
1,851
|
Operating lease
liabilities
|
|
(34)
|
|
|
(83)
|
Total
adjustments
|
|
(2,522)
|
|
|
6,620
|
Net cash used in
operating activities
|
|
(4,989)
|
|
|
(1,301)
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
Purchases of
property and equipment
|
|
(1)
|
|
|
-
|
Net cash used in
investing activities
|
|
(1)
|
|
|
-
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
Net proceeds from
issuance of common stock, contingent payment rights and
warrants in public and private offerings
|
|
5,208
|
|
|
1,075
|
Net proceeds from
exercise of options and warrants
|
|
424
|
|
|
501
|
Net proceeds from
debt financings
|
|
-
|
|
|
1,050
|
Principal payments
on notes payable
|
|
(22)
|
|
|
(1,209)
|
Net cash provided
by financing activities
|
|
5,610
|
|
|
1,417
|
|
|
|
|
|
|
NET INCREASE IN
CASH AND CASH EQUIVALENTS
|
|
620
|
|
|
116
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
1,627
|
|
|
57
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
$
|
2,247
|
|
$
|
173
|
|
|
|
|
|
|
PARKERVISION,
INC.
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Description of
Business
ParkerVision, Inc.
and its wholly-owned German subsidiary, ParkerVision GmbH
(collectively “ParkerVision”, “we” or the
“Company”) is in the business of innovating fundamental
wireless technologies and products.
We have designed
and developed proprietary radio frequency (“RF”)
technologies and integrated circuits for use in wireless
communication products. We have expended significant financial and
other resources to research and develop our RF technologies and to
obtain patent protection for those technologies in the United
States of America (“U.S.”) and certain foreign
jurisdictions. We believe certain patents
protecting our proprietary technologies have been broadly
infringed by others, and therefore the primary focus of our
business plan is the enforcement of our intellectual property
rights through patent infringement litigation and licensing
efforts. We currently have patent enforcement actions ongoing
in various U.S. district courts against providers of mobile
handsets, smart televisions and other WiFi products and,
in certain cases, their chip suppliers for the infringement of a
number of our RF patents. We have made significant
investments in developing and protecting our
technologies.
2. Liquidity and
Going Concern
Our accompanying
condensed consolidated financial statements were prepared assuming
we would continue as a going concern, which contemplates that we
will continue in operation for the foreseeable future and will be
able to realize assets and settle liabilities and commitments in
the normal course of business for a period of at least one year
from the issuance date of these condensed consolidated financial
statements. These condensed consolidated financial
statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that could result
should we be unable to continue as a going concern.
We have incurred
significant losses from operations and negative cash flows from
operations in every year since inception and have utilized the
proceeds from the sales of debt and equity securities and
contingent funding arrangements with third parties to fund our
operations, including the cost of litigation. For the
three months ended March 31, 2021, we incurred a net loss of
approximately $2.5 million and negative cash flows from
operations of approximately $5.0 million. At March
31, 2021, we had cash and cash equivalents of approximately
$2.2 million and an accumulated deficit of approximately
$423.5 million. Additionally, a significant amount of
future proceeds that we may receive from our patent enforcement and
licensing programs will first be utilized to repay borrowings and
legal fees and expenses under our contingent funding
arrangements. These circumstances raise substantial doubt
about our ability to continue to operate as a going concern for a
period of one year following the issue date of these condensed
consolidated financial statements.
For the three
months ended March 31, 2021, we received aggregate net
proceeds from equity financings of approximately $5.2 million and
proceeds from the exercise of outstanding options and warrants of
approximately $0.4 million. We used a significant
portion of these proceeds to pay current obligations resulting in a
reduction in our accounts payable and accrued expenses of
approximately $4.0 million for the three months ended March 31,
2021. Our current capital resources may not be
sufficient to meet our short-term liquidity needs 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, and/or (iii) our ability to
obtain additional debt or equity financing, if
needed. We expect that proceeds received by us from
patent enforcement actions and technology licenses over the next
twelve months may not be sufficient to cover our working capital
requirements. In the event we do not generate revenues,
or other patent-related proceeds, sufficient to cover our
operational costs and contingent repayment obligations, we will be
required to raise additional working capital through the sale of
equity securities or other financing
arrangements.
We expect to
continue to invest in the support of our patent enforcement and
licensing programs. The long-term continuation of our
business plan is dependent upon the generation of sufficient
revenues from our technologies and/or products to offset expenses
and contingent payment obligations. In the event that we
do not generate sufficient revenues, 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 revenues, raise
additional capital through debt or equity financings or contingent
fee arrangements, and/or reduce operating costs will have a
material adverse effect on our ability to meet our long-term
liquidity needs and achieve our intended long-term business
objectives.
3. Basis of
Presentation
The accompanying
unaudited condensed consolidated financial statements for the
period ended March 31, 2021 were prepared in accordance with
generally accepted accounting principles (“GAAP”) for
interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Operating results for
the three months ended March 31, 2021, are not necessarily
indicative of the results that may be expected for the year ending
December 31, 2021, or future years. All normal and
recurring adjustments which, in the opinion of management, are
necessary for a fair statement of the consolidated financial
condition and results of operations have been
included.
The year-end
condensed consolidated balance sheet data was derived from audited
financial statements for the year ended December 31, 2020.
Certain
information and disclosures normally included in the notes to the
annual financial statements prepared in accordance with
GAAP
have
been omitted from these interim condensed
consolidated financial
statements. These
interim condensed consolidated financial statements should be read
in conjunction with our latest Annual Report on Form 10-K for the
year ended December 31, 2020 (“2020 Annual
Report”).
The condensed
consolidated financial statements include the accounts of
ParkerVision, Inc. and its wholly-owned German subsidiary,
ParkerVision GmbH, after elimination of all intercompany
transactions and accounts.
4. Accounting
Policies
There have been no
changes in accounting policies from those stated in our 2020 Annual
Report, other than as described below. We do not expect
any newly effective accounting standards to have a material impact
on our financial position, results of operations or cash flows when
they become effective.
We adopted
Accounting Standards Update (“ASU”) 2020-06,
“Accounting for Convertible Instruments and Contracts in
an Entity’s Own Equity” as of January 1,
2021. ASU 2020-06 simplifies accounting for convertible
instruments, eliminating separation accounting for certain embedded
conversion features. We used the modified
retrospective method of adoption which allows for application of
the guidance to transactions outstanding at the beginning of the
fiscal year of adoption with the cumulative effect of
the
change being
recorded as an adjustment to beginning retained
earnings. Our adoption of ASU 2020-06 resulted in an
increase to our long-term debt of approximately $0.8 million, a
decrease in additional paid-in-capital of approximately $1.1
million, and an adjustment to our beginning accumulated deficit of
$0.3 million resulting from the elimination of the previously
recognized beneficial conversion feature as a debt
discount.
5. Loss per Common
Share
Basic loss 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 as
all common share equivalents are excluded from the calculation, as
their effect is anti-dilutive.
We have shares underlying
outstanding
options, warrants, unvested restricted stock units
(“RSUs”) and convertible notes that were
excluded from the computation of diluted loss per share as their
effect would have been anti-dilutive. These common share
equivalents at March 31, 2021 and 2020 were as follows (in
thousands):
|
|
|
|
|
|
|
March 31,
|
|
2021
|
|
2020
|
Options
outstanding
|
|
24,875
|
|
|
12,176
|
Warrants
outstanding
|
|
12,169
|
|
|
15,920
|
Unvested
RSUs
|
|
85
|
|
|
750
|
Shares underlying
convertible notes
|
|
21,957
|
|
|
23,807
|
|
|
59,086
|
|
|
52,653
|
|
|
|
|
|
|
6. Prepaid
Expenses
Prepaid expenses
consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December
31,
|
|
|
2021
|
|
2020
|
Prepaid
services
|
|
$
|
470
|
|
$
|
408
|
Prepaid bonds for
German statutory costs
|
|
|
136
|
|
|
142
|
Prepaid licenses,
software tools and support
|
|
|
24
|
|
|
21
|
Prepaid
insurance
|
|
|
31
|
|
|
11
|
Other prepaid
expenses
|
|
|
21
|
|
|
17
|
|
|
$
|
682
|
|
$
|
599
|
|
|
|
|
|
|
|
Prepaid services
include approximately $0.4 million and $0.1 million of consulting
services paid in shares of stock or warrants to purchase shares of
stock in the future at March 31, 2021 and December 31, 2020,
respectively.
7. Intangible
Assets
Intangible assets
consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December
31,
|
|
|
2021
|
|
2020
|
Patents and
copyrights
|
|
$
|
14,948
|
|
$
|
14,948
|
Accumulated
amortization
|
|
|
(12,871)
|
|
|
(12,778)
|
|
|
$
|
2,077
|
|
$
|
2,170
|
|
|
|
|
|
|
|
8. Debt
Notes
Payable
Related Party
Note
Payable
We have an
unsecured promissory note of approximately $0.8 million payable to
Sterne, Kessler, Goldstein, & Fox, PLLC (“SKGF”), a
related party, for outstanding unpaid fees for legal
services. The SKGF note, as amended, accrues interest at
a rate of 4% per annum, requires repayments of principal and
interest at a rate of $10,000 per month with a final balloon
payment due in April 2022. We are currently in
compliance with all the terms of the note, as amended.
Secured Note
Payable
Our secured note payable
as of
December 31, 2020
represented default interest accrued related to a note payable to
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C
(“Mintz”) for outstanding fees and
expenses. Additionally, as of December 31, 2020, we had
approximately $3.1 million in accounts payable to
Mintz for
outstanding fees and expenses. We also had approximately
$3.6 million in disputed legal fees and expenses billed by
Mintz that we treated as a loss contingency that was not probable
as of December 31, 2020 and accordingly, for which we recognized no
expense in the consolidated financial
statements. On March 29,
2021, we
entered into an agreement with Mintz to satisfy our outstanding
obligations to
Mintz. Under the terms of the agreement, (i) Mintz waived all
past defaults on the note resulting in a reversal of previously
accrued interest, (ii) we paid Mintz a lump-sum payment
of $3.0 million in satisfaction of all outstanding obligations including
our accounts payable to Mintz and all disputed and unrecorded
billings, and
(iii) Mintz agreed to a significant reduction in future
success fees that might be payable to Mintz from
patent-related proceeds.
Unsecured Notes
Payable
Unsecured notes
payable at March 31, 2021 represents a Paycheck
Protection Program loan of approximately $0.2 million received in
May 2020. The loan is eligible for forgiveness provided
that (i) we used the loan proceeds exclusively for allowed costs
including payroll, employee group health benefits, rent and
utilities and (ii) employee and compensation levels were maintained
during the coverage period. If the loan is not forgiven,
it will accrue interest at a rate of 1%, computed on a simple
interest basis, and we will be required to make monthly repayments
of approximately $8,000 per month commencing on the later of May 1,
2021, or, in the event an application for forgiveness is submitted,
such date that a determination is made on the forgiveness
application. The loan will mature on May 3, 2022, at
which time any unpaid principal and accrued interest will be due
and payable. We applied for loan forgiveness in April 2021
and believe we meet the criteria for forgiveness of the loan in
full. Currently, a determination of loan forgiveness has
not yet been made.
Convertible
Notes
Our convertible
notes represent five-year 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, subject to certain equity
conditions, in either cash, shares of our common stock, or a
combination thereof. To date, all interest payments on the
convertible notes have been made in shares of our common
stock. We have recognized the convertible notes as
debt in our condensed consolidated financial
statements. The fixed conversion prices of certain of
the notes were below the market value of our common stock on the
closing date resulting in the recognition of a beneficial
conversion feature that was recorded as a discount on the
convertible notes at the note inception date, with a corresponding
increase to additional paid in capital. Upon our
adoption of ASU 2020-06 on January 1, 2021, the beneficial
conversion feature was eliminated, resulting in an increase of $0.8
million to convertible debt and a cumulative adjustment to
beginning accumulated deficit of $0.3 million, representing the
discount amortization recognized prior to adoption of the new
standard (see Note 4).
We have the option to prepay
the majority of the notes, subject to a premium on the
outstanding principal prepayment amount of 25% prior to
the two-year anniversary of the note issuance
date, 20% prior to the three-year anniversary of the note
issuance date, 15% prior to the four-year anniversary of
the note issuance date, or 10% thereafter. The
notes provide for events of default that include failure to pay
principal or interest when due, breach of any of the
representations, warranties, covenants or agreements made by us,
events of liquidation or bankruptcy, and a change in
control. In the event of default, the interest rate
increases to 12% per annum and the outstanding principal
balance of the notes plus all accrued interest due may be declared
immediately payable by the holders of a majority of the then
outstanding principal balance of the notes.
Convertible notes
payable at March 31, 2021 and December 31, 2020 consist of
the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
|
|
|
|
Principal
Outstanding as of
|
|
|
Conversion
|
|
Interest
|
|
|
|
March 31,
|
|
December
31,
|
Description
|
|
Rate
|
|
Rate
|
|
Maturity
Date
|
|
2021
|
|
2020
|
Convertible notes
dated September 10, 2018
|
|
$0.40
|
|
8.0%
|
|
September 7,
2023
|
|
$
|
600
|
|
$
|
600
|
Convertible note
dated September 19, 2018
|
|
$0.57
|
|
8.0%
|
|
September 19,
2023
|
|
|
425
|
|
|
425
|
Convertible notes
dated February/March 2019
|
|
$0.25
|
|
8.0%
|
|
February 28, 2024
to March 13, 2024
|
|
|
900
|
|
|
1,300
|
Convertible notes
dated June/July 2019
|
|
$0.10
|
|
8.0%
|
|
June 7, 2024 to
July 15, 2024
|
|
|
340
|
|
|
340
|
Convertible notes
dated July 18, 2019
|
|
$0.08
|
|
7.5%
|
|
July 18,
2024
|
|
|
700
|
|
|
700
|
Convertible notes
dated September 13, 2019
|
|
$0.10
|
|
8.0%
|
|
September 13,
2024
|
|
|
50
|
|
|
50
|
Convertible notes
dated January 8, 2020
|
|
$0.13
|
|
8.0%
|
|
January 8,
2024
|
|
|
450
|
|
|
450
|
Total principal
balance
|
|
|
|
|
|
|
|
|
3,465
|
|
|
3,865
|
Less unamortized
discount
|
|
|
|
|
|
|
|
|
-
|
|
|
847
|
|
|
|
|
|
|
|
|
$
|
3,465
|
|
$
|
3,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended March 31, 2021, convertible notes with a face value of
$0.4 million were converted, at the option of the holder, into
1,600,000 shares of our common stock and we recognized interest
expense of approximately $0.07 million related to the contractual
interest which we elected to pay
in shares of our
common stock. For the three months ended March 31,
2021, we issued approximately 98,000 shares of our common stock as
interest-in-kind payments on our convertible
notes.
At March 31, 2021,
we estimate our convertible notes have an aggregate fair value of
approximately $2.7 million and would be categorized within
Level 2 of the fair value hierarchy.
Secured Contingent Payment
Obligation
The following table
provides a reconciliation of our secured contingent payment
obligation, measured at estimated fair market value, for the three
months ended March 31, 2021 and the year ended
December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
2021
|
|
Year
Ended
December 31,
2020
|
Secured contingent
payment obligation, beginning of period
|
|
$
|
33,057
|
|
$
|
26,651
|
Change in fair
value
|
|
|
401
|
|
|
6,406
|
Secured contingent
payment obligation, end of period
|
|
$
|
33,458
|
|
$
|
33,057
|
|
|
|
|
|
|
|
Our secured
contingent payment obligation represents the estimated fair value
of our repayment obligation to Brickell Key Investments, LP
(“Brickell”) under a February 2016 funding agreement,
as amended. Brickell is entitled to priority payments of
55% to 100% of proceeds received from all patent-related actions
until such time that Brickell has been repaid its minimum
return. The minimum return is determined as a multiple
of the funded amount that increases over time. The
estimated minimum return due to Brickell was approximately $43.1
million and $42.0 million as of March 31, 2021 and December 31,
2020, respectively. In addition, Brickell is entitled to
a pro rata portion of proceeds from specified legal actions to the
extent aggregate proceeds from those actions exceed the minimum
return. The range of potential proceeds payable to
Brickell is discussed more fully in Note 9. As of March
31, 2021, we are in compliance with our obligations under
this agreement.
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
9). The secured contingent payment obligation is
remeasured to fair value at each reporting period with changes
recorded in the condensed consolidated statements of comprehensive
loss until the contingency is resolved.
Unsecured Contingent Payment
Obligations
The following table
provides a reconciliation of our unsecured contingent payment
obligations, measured at estimated fair market value, for the three
months ended March 31, 2021 and the year ended
December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31, 2021
|
|
Year Ended
December 31, 2020
|
Unsecured
contingent payment obligations, beginning of period
|
|
$
|
5,222
|
|
$
|
-
|
Reclassification of
other liabilities
|
|
|
-
|
|
|
1,003
|
Issuance of
contingent payment rights
|
|
|
412
|
|
|
2,258
|
Change in fair
value
|
|
|
(251)
|
|
|
1,961
|
Unsecured
contingent payment obligations, end of period
|
|
$
|
5,383
|
|
$
|
5,222
|
|
|
|
|
|
|
|
Our unsecured
contingent payment obligations represent amounts payable to others
from future patent-related proceeds including (i) a termination
fee due to a litigation funder and (ii) contingent payment
rights issued to accredited investors in connection with equity
financings (“CPRs”). We have elected to measure these
unsecured contingent payment obligations at their estimated fair
value based on probability-weighted estimated cash outflows,
discounted back to present value using a discount rate determined
in accordance with accepted valuation methods. The
unsecured contingent payment obligations will be remeasured to fair
value at each reporting period with changes recorded in the
condensed consolidated statements of comprehensive loss until the
contingency is resolved (see Note 9). During the three
months ended March 31, 2021, we received proceeds of
$1.0 million from the sale of common stock with CPRs, of which
approximately $0.4 million was allocated to the CPRs. Our
aggregate maximum obligation under the unsecured contingent payment
obligations is $10.8 million as of March 31, 2021.
9. Fair Value
Measurements
The following
tables summarize the fair value of our assets and liabilities
measured at fair value on a recurring basis as of March 31,
2021 and December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
Measurements
|
|
|
Total Fair
Value
|
|
Quoted
Prices
in Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
March 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured contingent
payment obligation
|
|
$
|
33,458
|
|
$
|
-
|
|
$
|
-
|
|
$
|
33,458
|
Unsecured
contingent payment obligations
|
|
|
5,383
|
|
|
-
|
|
|
-
|
|
|
5,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
Measurements
|
|
|
Total Fair
Value
|
|
Quoted
Prices
in Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured contingent
payment obligation
|
|
$
|
33,057
|
|
$
|
-
|
|
$
|
-
|
|
$
|
33,057
|
Unsecured
contingent payment obligations
|
|
|
5,222
|
|
|
-
|
|
|
-
|
|
|
5,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair values of
our secured and unsecured contingent payment obligations were
estimated using a probability-weighted income approach based on
various cash flow scenarios as to the outcome of patent-related
actions both in terms of timing and amount, discounted to present
value using a risk-adjusted rate. We used a
risk-adjusted discount rate of 14.26% at March 31, 2021,
based on a risk-free rate of 0.26% as adjusted by 8% for credit
risk and 6% for litigation inherent risk.
The following table
provides quantitative information about the significant
unobservable inputs used in the measurement of fair value for both
the secured and unsecured contingent payment obligations at March
31, 2021, including the lowest and highest undiscounted
payout scenarios as well as a weighted average payout scenario
based on relative undiscounted fair value of each cash flow
scenario.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured Contingent
Payment Obligation
|
|
Unsecured
Contingent Payment Obligations
|
Unobservable
Inputs
|
|
Low
|
|
Weighted
Average
|
|
High
|
|
Low
|
|
Weighted
Average
|
|
High
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
undiscounted cash outflows (in millions)
|
|
$
|
0.0
|
|
$
|
50.5
|
|
$
|
78.2
|
|
$
|
$0.0
|
|
$
|
$8.1
|
|
$
|
$10.8
|
Duration (in
years)
|
|
|
1.0
|
|
|
2.8
|
|
|
3.8
|
|
|
1.5
|
|
|
2.8
|
|
|
3.8
|
Estimated
probabilities
|
|
|
5%
|
|
|
23%
|
|
|
25%
|
|
|
25%
|
|
|
25%
|
|
|
25%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Changes in any of these Level 3 inputs could result in a
significantly higher or lower fair value measurement.
10. Legal
Proceedings
From time to time,
we are subject to legal proceedings and claims which arise in the
ordinary course of our business. These proceedings include patent
enforcement actions initiated by us against others for the
infringement of our technologies, as well as proceedings brought by
others against us, including proceedings at the Patent Trial and
Appeal Board of the U.S. Patent and Trademark Office
(“PTAB”).
As of March 31,
2021, and December 31, 2020, we have accrued an aggregate of $0.11
million and $0.25 million, respectively, for actual and
estimated costs assessed on cases in Germany in which we did not
prevail. We also have a bond posted in Germany with a value
of $0.14 million that upon release is expected to fully satisfy
these accrued costs. The bond is recorded in prepaid
expenses (see Note 6). In May 2021, the bond was
released and statutory court costs were paid in full.
ParkerVision v. Qualcomm
(Middle District of Florida)
We have a patent infringement
complaint pending in the Middle District of Florida against
Qualcomm Incorporated and Qualcomm Atheros, Inc. (collectively
“Qualcomm”) seeking approximately $1.3 billion
in damages for infringement of four of our patents (the
“Qualcomm
Action”).
HTC Corporation and HTC America, Inc. (collectively
“HTC”) were also
defendants in this case but we voluntarily dismissed
our claims against HTC and HTC dismissed their related
counter-claims against us in October
2020. Qualcomm has pending counterclaims
against us for non-infringement and invalidity for
all patents in the case. The case was filed in May 2014
and stayed in February 2016 pending decisions in other cases,
including the appeal of a PTAB proceeding with regard to U.S.
patent 6,091,940 (“the ‘940
Patent”)
asserted in this case. In March 2017, the PTAB ruled in
our favor on three of
the six petitions (the method
claims), ruled in Qualcomm’s favor
on two of
the six
petitions (the
apparatus claims) and issued a split decision on the claims covered
in the sixth petition. In September 2018, the Federal
Circuit upheld the PTAB’s decision with regard
to the ‘940 Patent and, in January 2019, the court lifted the
stay in this case. In July 2019, the court issued an
order that granted our proposed selection of patent claims
from four asserted patents, including the
‘940 Patent, and denied Qualcomm’s request to limit the
claims and patents. The court also agreed that we may elect to
pursue accused products that were at issue at the time the case was
stayed, as well as new products that were released by Qualcomm
during the
pendency of the
stay. In September 2019, Qualcomm filed a motion for
partial summary judgement in an attempt to exclude certain patents
from the case, including the ‘940 Patent. The
court denied this motion in January 2020. In April 2020,
the court issued its claim construction order in which the
court adopted our proposed construction
for seven of
the ten disputed terms and adopted
slightly modified versions of our proposed construction for the
remaining terms. Due to the impact of COVID-19,
a number of the scheduled deadlines in this case were moved
including the trial commencement date which was rescheduled from
December 2020 to May 2021. We are seeking
$1.3
billion in royalties
owed to us by Qualcomm for its unauthorized use of our technology,
based on a report submitted by our damages expert in this case in
October 2020. 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. Fact and expert
discovery in this case are closed, expert reports have been
submitted, and summary judgement and Daubert briefings
have been completed by the parties. In March 2021, the
court granted Qualcomm’s motion to strike certain of our 2020
infringement contentions. A number of outstanding
motions are pending decisions by the court. On March 26,
2021, the court further delayed the trial date citing backlog due
to the pandemic, among other factors. A new trial date
has not yet been set although the court indicated the case was
unlikely to be tried before November or December
2021. We are represented in this case on a full
contingency fee basis.
ParkerVision v. Apple and
Qualcomm (Middle District of Florida)
In December 2015, we filed a
patent infringement complaint in the Middle District of Florida
against Apple Inc. (“Apple”), LG Electronics, Inc., LG
Electronics U.S.A., Inc. and LG Electronics MobileComm U.S.A., Inc.
(collectively “LG”), Samsung Electronics Co. Ltd.,
Samsung Electronics America, Inc., Samsung Telecommunications
America LLC, and Samsung Semiconductor, Inc. (collectively
“Samsung”), and Qualcomm alleging infringement
of four of our patents. In February
2016, the district court proceedings were stayed pending resolution
of a corresponding case filed at the International Trade Commission
(“ITC”). In July 2016, we
entered into a patent license and settlement agreement with Samsung
and, as a result, Samsung was dismissed from the district court
action. In March 2017, we filed a motion to terminate the ITC
proceedings and a corresponding motion to lift the stay in the
district court case. This motion was granted in May 2017. In July
2017, we filed a motion to dismiss LG from the district court
case and re-filed our claims against LG in the District of New
Jersey (see ParkerVision v. LG below). Also in July
2017, Qualcomm filed a motion to change venue to the Southern
District of California, and Apple filed a motion to dismiss
for improper venue. In March 2018, the district court ruled against
the Qualcomm and Apple motions. The parties also filed a joint
motion in March 2018 to eliminate three of
the four patents in the case in order to expedite
proceedings leaving our U.S. patent 9,118,528 as the only remaining
patent in this case. A claim construction hearing was held on
August 31, 2018. In July 2019, the court issued its claim
construction order in which the court adopted our proposed claim
construction for two of the six terms and the
“plain and ordinary meaning” on the remaining terms. In
addition, the court denied a motion filed by Apple for summary
judgment. Fact discovery has closed in this case
and a jury trial was scheduled to begin in August
2020. In March 2020, as a result of the impact of
COVID-19, the parties filed a motion requesting an extension of
certain deadlines in the case. In April 2020, the court
stayed this proceeding pending the outcome of the
Qualcomm Action. We are represented in this case on a
limited success fee basis.
ParkerVision v. LG (District
of New Jersey)
In July 2017, we
filed a patent infringement complaint in the District of New Jersey
against LG for the alleged infringement of the same patents
previously asserted against LG in Florida (see ParkerVision v.
Apple and Qualcomm above). We elected to dismiss the
case in Florida and re-file in New Jersey as a result of a Supreme
Court ruling regarding proper venue. In March 2018, the
court stayed this case
pending a final
decision in ParkerVision v. Apple and Qualcomm in the Middle
District of Florida. As part of this stay, LG has agreed to be
bound by the final claim construction decision in that case. We are
represented in this case on a limited success fee
basis.
ParkerVision v. Intel
(Western District of Texas)
In February 2020,
we filed a patent infringement complaint in the Western District of
Texas against Intel Corporation (“Intel”) alleging
infringement of eight of our patents. The complaint was amended in
May 2020 to add two additional patents. In June 2020, we
requested that one of the patents be dropped from this case and
filed a second case in the Western District of Texas that included
this dismissed patent (see ParkerVision v. Intel
II below). Intel’s response to our
complaint was filed in June 2020 denying infringement and claiming
invalidity of the patents. Intel has also filed a motion
to transfer venue which has not yet been ruled on by the
court. The court issued its claim
construction ruling in January 2021 in which the
majority of the claims were decided in our favor. The
case is scheduled for trial beginning February 7,
2022. We are represented in this case on a full
contingency basis.
Intel v. ParkerVision
(PTAB)
Intel filed
petitions for Inter
Partes Review
(“IPR”) 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”), all of which are patents asserted in
ParkerVision v.
Intel. In January 2021, the PTAB issued its
decision to institute IPR proceedings for the ‘444 Patent and
the ‘474 Patent. Our response to the instituted
IPRs was submitted in April 2021. The PTAB has not yet
issued a decision for the ‘108 Patent.
ParkerVision v. Intel
II
(Western District
of Texas)
In June 2020, to
reduce the number of claims in ParkerVision v. Intel,
we filed a second patent infringement complaint in the
Western District of Texas against Intel that included a single
patent that we voluntarily dismissed from the original
case. In July 2020, we amended our complaint
adding two more patents to the case. The claim
construction hearing is expected to be scheduled after May 2021 and
the case is scheduled for trial beginning March 17, 2022. We
are represented in this case on a full contingency fee
basis.
ParkerVision filed a number of
additional patent cases in the Western District of Texas including
cases against (i) TCL Industries Holdings Co., Ltd, a Chinese
company, TCL Electronics Holdings Ltd., Shenzhen TCL New Technology
Co., Ltd, TCL King Electrical Appliances (Huizhou) Co., Ltd., TCL
Moka Int’l Ltd. and TCL Moka Manufacturing S.A. DE C.V.
(collectively “TCL”), (ii) Hisense Co.,
Ltd. and Hisense Visual Technology Co., Ltd (collectively
“Hisense”), a Chinese company,
(iii) Buffalo Inc., a Japanese company (“Buffalo”)and (iv) Zyxel
Communications Corporation, a Chinese multinational electronics
company headquartered in Taiwan, (“Zyxel”). Each case
alleges infringement of the same ten patents by
products that incorporate modules containing certain
Wi-Fi chips manufactured by Realtek and/or
MediaTek. Each of the defendants have filed responses
denying infringement and claiming invalidity of the patents, among
other defenses. The court has set Markman hearings in
these cases for October 2021 and estimated trial dates for December
2022. We are represented in each of these cases on a
full contingency fee basis.
11. Stock Issuance
Stock and
Warrant Issuances – Equity Based
Financings
Private Placements with
Accredited Investors
In January 2021, we
entered into securities purchase agreements with accredited
investors for the sale of an aggregate of 2,976,430 shares of our
common stock at a price of $0.35 per share for aggregate proceeds
of $1.0 million. The securities purchase agreements include
CPRs. Approximately $0.4 million
of the proceeds
were allocated to unsecured contingent payment obligations based on
the initial fair value estimate of the CPRs (see Note
8). The shares were registered for resale on a
registration statement that was declared effective on April 26,
2021 (File No. 333-255217).
In March 2021, we
entered into securities purchase agreements with accredited
investors for the sale of 3,230,942 shares of our common stock and
1,619,289 warrants at a price of $1.29 per common share for
aggregate proceeds of approximately $4.2 million. The
warrants have an exercise price of $1.75 per share and expire in
March 2026. The shares, including the shares underlying
the warrants, were registered for resale on a registration
statement that was declared effective on April 26, 2021 (File No.
333-255217). We used $3.0 million of the proceeds from
this transaction to satisfy our obligations to Mintz (see Note
8).
Stock Issuances –
Payment for Services
In January 2021, we amended our
business consulting and retention agreement with Chelsea Investor
Relations to increase the compensation for services over the
remaining term and to extend the term of the agreement through
February 2024. As consideration for the amended
agreement, we issued 500,000 shares of
unregistered common stock in exchange for a nonrefundable
retainer for services valued at approximately $0.33 million. The
value of the stock issued is being recognized as consulting expense
over the term of the agreement. The shares were
registered for resale on a registration statement that was declared
effective on April 26, 2021 (File No. 333-255217).
In January 2021,
we
also
issued 50,000 shares of our unregistered
common stock, valued at approximately $0.03 million, as compensation
for three
months of shareholder awareness services
provided by a third party. In April 2021, we issued this
third party an additional 50,000 shares of our unregistered common
stock, valued at approximately $0.07 million as compensation for
services over the remaining term of the
agreement.
Common Stock
Warrants
As of March 31,
2021, we had outstanding warrants for the purchase of up to 12.2
million shares of our common stock. The estimated grant
date fair value of these warrants of $3.1 million is included in
additional paid-in capital in our condensed consolidated balance
sheets. As of March 31, 2021, our outstanding warrants
have an average exercise price of $0.68 per share and a weighted
average remaining life of approximately 3.4 years.
12. Share-Based
Compensation
There has been no
material change in the assumptions used to compute the fair value
of our equity awards, nor in the method used to account for
share-based compensation from those stated in our 2020 Annual
Report.
The following table
presents share-based compensation expense included in our condensed
consolidated statements of comprehensive loss for the three months
ended March 31, 2021 and 2020, respectively (in
thousands):
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 31,
|
|
|
2021
|
|
2020
|
Selling, general
and administrative expenses
|
|
$
|
953
|
|
$
|
461
|
Total share-based
compensation expense
|
|
$
|
953
|
|
$
|
461
|
As of March 31,
2021, there was $5.3 million of total unrecognized
compensation cost related to all non-vested share-based
compensation awards. The cost is expected to be
recognized over a weighted-average remaining life of approximately
2 years.
During the three
months ended March 31, 2021, our board of directors
(“Board”) amended our 2019 Long-Term Incentive Plan
(“the 2019 Plan”) to increase the number of shares of
common stock reserved for issuance under the 2019 Plan from 12
million to 27 million shares. The Board also
approved awards under the 2019 Plan of 11.9 million nonqualified
stock options to executives and other key employees and an
aggregate of 1.1 million nonqualified stock options to non-employee
directors. The options are exercisable at $0.54 per
share, vest in eight equal quarterly installments commencing March
31, 2021, and expire on January 11, 2026.
Non-Employee
Compensation
On March 9, 2021, we granted
approximately 32,000 shares under our
2019 Plan to a consultant for business
communications services over a one-year term valued at
approximately $0.05 million. The
value of the shares issued will be recognized as consulting expense
over the term of the agreement.
IT EM
2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Forward-Looking
Statements
We believe that it
is important to communicate our future expectations to our
shareholders and to the public. This quarterly report
contains forward-looking statements, within the meaning of the
Private Securities Litigation Reform Act of 1995, including, in
particular, statements about our future plans, objectives, and
expectations contained in this Item. When used in this
quarterly report and in future filings by us with the Securities
and Exchange Commission (“SEC”), the words or phrases
“expects”, “will likely result”,
“will continue”, “is anticipated”,
“estimated” or similar expressions are intended to
identify “forward-looking
statements.” Readers are cautioned not to place
undue reliance on such forward-looking statements, each of which
speaks only as of the date made. Such statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from historical results and those
presently anticipated or projected, including the risks and
uncertainties identified in our annual report on Form 10-K for the
fiscal year ended December 31, 2020 (the “2020 Annual
Report”) and in this Item 2 of Part I of this quarterly
report. Examples of such risks and uncertainties include
general economic and business conditions, competition, unexpected
changes in technologies and technological advances, the timely
development and commercial acceptance of new products and
technologies, reliance on key suppliers, reliance on our
intellectual property, the outcome of our intellectual property
litigation and the ability to obtain adequate financing in the
future. We have no obligation to publicly release the
results of any revisions which may be made to any forward-looking
statements to reflect anticipated events or circumstances occurring
after the date of such statements.
Corporate
Website
We announce
investor information, including news and commentary about our
business, financial performance and related matters, SEC filings,
notices of investor events, and our press and earnings releases, in
the investor relations section of our website
(http://ir.parkervision.com). Additionally, if applicable, we
webcast our earnings calls and certain events we participate in or
host with members of the investment community in the investor
relations section of our website. Investors and
others can receive notifications of new information posted in the
investor relations section in real time by signing up for email
alerts and/or RSS feeds. Further corporate governance
information, including our governance guidelines, board of
directors (“Board”) committee charters, and code of
conduct, is also available in the investor relations section of our
website under the heading “Corporate
Governance.” The content of our website is not
incorporated by reference into this Quarterly Report or in any
other report or document we file with the SEC, and any references
to our website are intended to be inactive textual references
only.
Overview
We have designed
and developed proprietary radio frequency (“RF”)
technologies and integrated circuits for use in wireless
communication products. We have expended significant financial and
other resources to research and develop our RF technologies and to
obtain patent protection for those technologies in the United
States of America (“U.S.”) and certain foreign
jurisdictions. We believe certain patents
protecting our proprietary technologies have been broadly
infringed by others and therefore the primary focus of our business
plan is the enforcement of our intellectual property rights through
patent infringement litigation and licensing efforts. We currently
have patent enforcement actions ongoing in various U.S. district
courts against providers of mobile handsets and providers of smart
televisions and other WiFi products and, in certain cases, their
chip suppliers, for the infringement of several of our RF
patents. We have made significant investments in
developing and protecting our technologies, the returns on which
are dependent upon the generation of future revenues for
realization.
Liquidity and Capital
Resources
We have incurred
significant losses from operations and negative operating cash
flows in every year since inception, largely as a result of our
significant investments in developing and protecting our
intellectual property, and have utilized the proceeds from sales of
debt and equity securities and contingent funding arrangements with
third-parties to fund our operations, including the cost of
litigation.
For the three
months ended March 31, 2021, we incurred a net loss of
approximately $2.5 million and negative cash flows from
operations of approximately $5.0 million. At March
31, 2021, we had cash and cash equivalents of approximately
$2.2 million and an accumulated deficit of approximately
$423.6 million. Additionally, a significant amount of
future proceeds that we may receive from our patent enforcement and
licensing programs will first be utilized to repay borrowings and
legal fees and expenses under our contingent funding
arrangements. 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 our condensed
consolidated financial statements.
We used cash for
operations of approximately $5.0 million and $1.3 million
for the three months ended March 31, 2021 and 2020,
respectively. The increase in cash used for operations
from 2020 to 2021 is primarily due to the use of approximately $4.0
million in cash for the reduction of accounts payables and accrued
expenses during the three months ended March 31, 2021, as compared
to a $1.9 million increase in accounts payable and accrued expenses
during the three months ended March 31, 2020. This
increase in use of cash is somewhat offset by a reduction in
cash-based operating costs from 2020 to 2021. For the three
months ended March 31, 2021, we received aggregate net
proceeds from the sale of debt and equity securities, including the
exercise of outstanding options and warrants, of approximately $5.6
million compared to approximately $2.6 million in proceeds received
for the three months ended March 31, 2020. We
repaid approximately $0.02 million and $1.2 million, respectively
in debt obligations during the three months ended March 31,
2021 and 2020.
Our current capital
resources may not be sufficient to meet our short-term liquidity
needs and we may be required to seek additional capital. Our
ability to meet our short-term liquidity needs, including our debt
repayment obligations, 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 to third-party litigation funders,
legal counsel, and other investors; (ii) our ability to
control operating costs, and (iii) our ability to raise additional
capital from the sale of debt or equity securities or other
financing arrangements, if needed.
Patent enforcement
litigation is costly and time-consuming and the outcome is
difficult to predict. We expect to continue to
invest in the support of our patent enforcement and licensing
programs. We expect that revenue generated from patent
enforcement actions and/or technology licenses in 2021, if any,
after deduction of payment obligations to third-party litigation
funders, legal counsel, and other investors, may not be sufficient
to cover our operating expenses. In the event we do not
generate revenues, or other patent-related proceeds, sufficient to
cover our operational costs and contingent repayment obligations,
we will be required to raise additional working capital through the
sale of equity securities or other financing
arrangements.
The long-term
continuation of our business plan is dependent upon the generation
of sufficient revenues from our technologies and/or products to
offset expenses and contingent payment obligations. In
the event that we do not generate sufficient revenues, 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
revenues, raise additional capital through debt or equity
financings or contingent fee arrangements, and/or reduce operating
costs will have a material adverse effect on our ability to meet
our long-term liquidity needs and achieve our intended long-term
business objectives.
Financial
Condition
We had working
capital of approximately $1.0 million at March 31, 2021, compared
to a working capital deficit of approximately $3.8 million at
December 31, 2020, an increase of approximately $4.8
million. This increase in working capital is primarily
the result of a $4.0 million decrease in accounts payable and
accrued expenses during the three months ended March 31, 2021,
including a $3.0 million payment to a law firm in settlement of
outstanding fees and expenses and a reduction in potential success
fees payable to the firm from future patent-related proceeds.
The decrease in accounts payable and accrued expenses was funded by
proceeds from the issuance of debt and equity securities.
Results of Operations
for Each of the Three Months Ended March
31,
2021
and
2020
Revenue and Gross
Margin
We reported no
licensing revenue for the three-month periods ended March 31,
2021 or 2020. Although we do anticipate licensing
revenue and/or settlement gains to result from our licensing and
patent enforcement actions, the amount and timing is highly
unpredictable and there can be no assurance that we will achieve
our anticipated results.
Selling, General, and
Administrative Expenses
Selling, general
and administrative expenses consist primarily of litigation fees
and expenses, personnel and related costs, including share-based
compensation, for executive, Board, finance and accounting and
technical support personnel for our patent enforcement program, and
costs incurred for insurance, outside accounting and legal
professional fees, shareholder relations and noncash expenses
including amortization and expense recognized in connection with
contract amendments.
Our selling,
general and administrative expenses decreased by approximately
$3.2 million, or 58%, during the three months ended March 31,
2021 when compared to the same period in 2020. This is
primarily due to a $2.2 million decrease in litigation expenses
resulting from the stay in the Qualcomm and Apple infringement case
in Florida and a $1.8 million decrease in warrant expense
associated with a warrant amendment in February
2020. These decreases are partially offset by a
$0.5 million increase in share-based
compensation.
The increase in our
share-based compensation is the result of share-based compensation
expense attributed to nonqualified stock options awarded to
executives, key employees and nonemployee directors in January 2021
as more fully discussed in Note 12 to our condensed consolidated
financial statements. As of March 31, 2021, we had
$5.3 million of total unrecognized compensation cost related to all
non-vested share-based compensation awards that is expected to be
recognized over a period of approximately 2 years.
Change in Fair Value of
Contingent Payment Obligations
We have elected to
measure our secured and unsecured contingent payment obligations at
fair value which is based on significant unobservable
inputs. We estimated the fair value of our secured
contingent payment obligations using a probability-weighted income
approach based on the estimated present value of projected future
cash outflows using a risk-adjusted discount
rate. Increases or decreases in the significant
unobservable inputs could result in significant increases or
decreases in fair value. Generally, changes in fair value are a
result of changes in estimated amounts and timing of projected
future cash flows due to increases in funded amounts, passage of
time, and changes in the probabilities based on the status of the
funded actions.
For the three
months ended March 31, 2021, we recorded an aggregate increase in
the fair value of our secured and unsecured contingent payment
obligations of approximately $0.2 million, compared to
an increase of approximately $2.2 million for the three months
ended March 31, 2020. The change in fair value for the three
months ended March 31, 2020 included a $1.4 million increase in the
fair value of unsecured payment obligations resulting from a
termination fee due on a failed litigation funding arrangement
incurred in March 2020. In addition, the change in fair
value for the three months ended March 31, 2020 was impacted by the
sharp decrease in the risk free interest rate used to discount
projected future cash flows as a result of the Federal
Reserve lowering rates to stimulate economic activity amidst the
COVID-19 pandemic.
Off-Balance Sheet
Transactions, Arrangements and Other
Relationships
As of March 31,
2021, we had outstanding warrants to purchase approximately
12.2 million shares of our common stock. The
estimated grant date fair value of these warrants of approximately
$3.1 million is included in shareholders’ deficit in our
condensed consolidated balance sheets. The outstanding
warrants have a weighted average exercise price of $0.68 per share
and a weighted average remaining life of approximately 3.4
years.
Critical Accounting
Policies
There have been no
changes in accounting policies from those stated in our 2020 Annual
Report, except as described in Note 4 of the interim condensed
consolidated financial statements. We do not expect any newly
effective accounting standards to have a material impact on our
financial position, results of operations or cash flows when they
become effective.
IT EM 3. Quantitative
and Qualitative Disclosures About Market
Risk.
Not
applicable.
ITE M 4. Controls and
Procedures.
Evaluation of
Disclosure Controls and Procedures
As of March 31,
2021, our management, with the participation of our Chief Executive
Officer and Chief Financial Officer, evaluated the effectiveness of
our “disclosure controls and procedures,” as defined in
Rule 13a-15(e) and 15d-15(e) under the Securities and Exchange Act
of 1934, as amended (the “Exchange
Act”). Based upon this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that these
disclosure controls and procedures were effective as of March 31,
2021.
Changes in Internal
Control Over Financial Reporting
There have been no
changes in our internal control over financial reporting identified
in connection with the evaluation required by Rule 13a-15(d) under
the Exchange Act that occurred during the last fiscal quarter that
have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
PA RT II - OTHER
INFORMATION
ITEM 1. Legal
Proceedings.
Reference is made
to the section entitled “Legal Proceedings” in Note 10
to our unaudited condensed consolidated financial statements
included in this quarterly report for a discussion of current legal
proceedings, which discussion is incorporated herein by
reference.
There have been no
material changes from the risk factors disclosed in Item 1A of Part
I of our Annual Report. In addition to the information
in this quarterly report, the risk factors disclosed in our Annual
Report should be carefully considered in evaluating our business
because such factors may have a significant impact on our business,
operating results, liquidity and financial condition.
ITEM 2. Unregistered
Sales of Equity Securities and Use of Proceeds.
In January 2021, we
sold an aggregate of 2,976,430 shares of our common stock at a
price of $0.35 per share in a private placement transaction with
accredited investors for aggregate proceeds of $1.0 million.
The securities purchase agreements include contingent payment
rights. The shares sold were exempt from registration
under Section 4(a)(2) of the Securities Act and were registered for
resale on a Form S-1 registration statement that was declared
effective on April 26, 2021 (File No. 333-255217). The
proceeds were used for working capital and general corporate
purposes.
In January 2021, we issued
500,000 shares of our common stock as payment of a retainer valued
at $325,000 in connection with an amendment to a business
consulting and retention agreement with Chelsea Investor
Relations. The shares issued were exempt from
registration under Section 4(a)(2) of the Securities Act and were
registered for resale on a Form S-1 registration statement that was
declared effective on April 26, 2021 (File No.
333-255217).).
In January 2021,
we
also
issued 50,000 shares of our unregistered
common stock, valued at approximately $0.03 million, as compensation
for three
months of shareholder awareness services
provided by a third party. The shares issued were
exempt from registration under Section 4(a)(2) of the Securities
Act. We have no obligation to register the
shares.
In March 2021, we
sold an aggregate of 3,230,942 shares of our common stock and
1,619,289 warrants to purchase shares of our common stock at a
price of $1.29 per common share in a private placement transaction
with accredited investors for aggregate proceeds of approximately
$4.2 million. The warrants are exercisable at a price of
$1.75 per share and expire in March 2026. Upon cash exercise
of the warrants, we will receive additional proceeds of
approximately $2.8 million. The shares sold were exempt from
registration under Section 4(a)(2) of the Securities Act and the
shares, including the shares underlying the warrants, were
registered for resale on a Form S-1 registration statement that was
declared effective on April 26, 2021 (File No.
333-255217). We used $3.0 million of the proceeds from
this transaction in settlement of outstanding obligations to
litigation counsel (see Note 8 to our condensed
consolidated
financial statements). The remaining proceeds, including any
future proceeds received upon exercise of the warrants, will be
used for working capital and general corporate
purposes.
ITEM 3. Defaults Upon
Senior Securities.
None.
ITEM 4. Mine Safety
Disclosures.
Not
applicable.
ITEM 5. Other
Information.
None.
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Exhibit
Number
|
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Description of Exhibit
|
31.1
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31.2
|
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32.1
|
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101.INS
|
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XBRL Instance
Document*
|
|
|
|
101.SCH
|
|
XBRL Taxonomy
Extension Schema*
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101.CAL
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XBRL Taxonomy
Extension Calculation Linkbase*
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101.DEF
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XBRL Taxonomy
Extension Definition Linkbase*
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101.LAB
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XBRL Taxonomy
Extension Label Linkbase*
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101.PRE
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XBRL Taxonomy
Extension Presentation Linkbase*
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*Filed
herewith
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
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ParkerVision, Inc.
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Registrant
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May 17,
2021
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By:
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/s/Jeffrey L. Parker
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Jeffrey L. Parker
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Chairman and Chief Executive Officer
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(Principal Executive Officer)
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May 17,
2021
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By:
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/s/Cynthia L. French
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Cynthia L. French
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Chief Financial Officer
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(Principal Financial Officer and Principal
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Accounting Officer)
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