prkr_20220511xresalesupp35
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-262147
PROSPECTUS SUPPLEMENT No. 3
(to Prospectus dated January 24, 2022)
PARKERVISION, INC.
1,578,946 Shares of Common Stock
This
Prospectus Supplement relates to the resale by the selling
stockholder listed under the heading “Selling Stockholder” of up to
1,578,946 shares of our common stock, par value $0.01 per share
(“Common Stock”) consisting of an aggregate of
1,052,631 shares of Common Stock and 526,315 shares of Common Stock
underlying warrants (“Warrants”) issued pursuant to a
securities purchase agreement dated December 14, 2021.
We will
not receive proceeds from the sale of the shares of Common Stock by
the selling stockholder. To the extent the Warrants are exercised
for cash, we will receive up to an aggregate of $526,315 in gross
proceeds. We expect to use the proceeds received from the exercise
of the Warrants, if any, for general working capital purposes,
including payment of litigation expenses.
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 11, 2022. 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modified or superseded to the extent that information in this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statement that is modified or superseded shall not be deemed to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superseded by this Prospectus Supplement.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 Securities and Exchange Commission nor any state
securities commission 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 11, 2022.
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, 2022
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
|
☐
|
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
|
None
|
|
|
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 6, 2022, 77,935,740 shares of the issuer’s common
stock, $.01 par value, were outstanding.
TABLE OF CONTENTS
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|
PART I - FINANCIAL INFORMATION
|
|
|
|
Item 1. Financial Statements (Unaudited)
|
2
|
Item
2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
|
18
|
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
|
21
|
Item 4. Controls and Procedures
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21
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|
|
PART II - OTHER INFORMATION
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|
Item 1. Legal Proceedings
|
22
|
Item 1A. Risk Factors
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22
|
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
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22
|
Item 3. Defaults Upon Senior Securities
|
22
|
Item 4. Mine Safety Disclosures
|
22
|
Item 5. Other Information
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22
|
Item 6. Exhibits
|
23
|
|
|
SIGNATURES
|
24
|
|
|
PART 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,
|
|
2022
|
|
2021
|
CURRENT
ASSETS:
|
|
|
|
|
|
Cash
and cash equivalents
|
$
|
198
|
|
$
|
1,030
|
Prepaid
expenses
|
|
463
|
|
|
574
|
Other
current assets
|
|
26
|
|
|
25
|
Total
current assets
|
|
687
|
|
|
1,629
|
|
|
|
|
|
|
Intangible assets,
net
|
|
1,696
|
|
|
1,785
|
Operating lease
right-of-use assets
|
|
7
|
|
|
7
|
Other
assets, net
|
|
17
|
|
|
19
|
Total
assets
|
$
|
2,407
|
|
$
|
3,440
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Accounts
payable
|
$
|
944
|
|
$
|
706
|
Accrued
expenses:
|
|
|
|
|
|
Salaries and
wages
|
|
43
|
|
|
27
|
Professional
fees
|
|
56
|
|
|
109
|
Other
accrued expenses
|
|
488
|
|
|
555
|
Related
party note payable, current portion
|
|
94
|
|
|
94
|
Operating lease
liabilities, current portion
|
|
116
|
|
|
155
|
Total
current liabilities
|
|
1,741
|
|
|
1,646
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES:
|
|
|
|
|
|
Secured
contingent payment obligation
|
|
36,212
|
|
|
37,372
|
Unsecured
contingent payment obligations
|
|
4,549
|
|
|
5,691
|
Convertible
notes
|
|
2,870
|
|
|
2,895
|
Related
party note payable, net of current portion
|
|
585
|
|
|
609
|
Operating lease
liabilities, net of current portion
|
|
3
|
|
|
4
|
Total
long-term liabilities
|
|
44,219
|
|
|
46,571
|
Total
liabilities
|
|
45,960
|
|
|
48,217
|
|
|
|
|
|
|
SHAREHOLDERS'
DEFICIT:
|
|
|
|
|
|
Common
stock, $0.01 par value, 150,000 shares authorized, 77,814 and
76,992 shares issued and outstanding at March 31, 2022
and December 31, 2021, respectively
|
|
778
|
|
|
770
|
Additional paid-in
capital
|
|
388,749
|
|
|
387,865
|
Accumulated
deficit
|
|
(433,080)
|
|
|
(433,412)
|
Total
shareholders' deficit
|
|
(43,553)
|
|
|
(44,777)
|
Total
liabilities and shareholders' deficit
|
$
|
2,407
|
|
$
|
3,440
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
2
PARKERVISION,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
March 31,
|
|
2022
|
|
2021
|
Licensing
revenue
|
$
|
-
|
|
$
|
-
|
Cost of
sales
|
|
(3)
|
|
|
-
|
Gross
margin
|
|
(3)
|
|
|
-
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
|
1,933
|
|
|
2,280
|
Total
operating expenses
|
|
1,933
|
|
|
2,280
|
|
|
|
|
|
|
Other
income
|
|
28
|
|
|
-
|
Interest
expense
|
|
(62)
|
|
|
(37)
|
Change
in fair value of contingent payment obligations
|
|
2,302
|
|
|
(150)
|
Total
other income (loss), net
|
|
2,268
|
|
|
(187)
|
|
|
|
|
|
|
Net
income (loss)
|
|
332
|
|
|
(2,467)
|
|
|
|
|
|
|
Other
comprehensive income, net of tax
|
|
-
|
|
|
-
|
|
|
|
|
|
|
Comprehensive
income (loss)
|
$
|
332
|
|
$
|
(2,467)
|
|
|
|
|
|
|
Earnings
(loss) per common share:
|
|
|
|
|
|
Basic
|
$
|
0.00
|
|
$
|
(0.04)
|
Diluted
|
$
|
0.00
|
|
$
|
(0.04)
|
|
|
|
|
|
|
Weighted
average common shares outstanding:
|
|
|
|
|
|
Basic
|
|
77,553
|
|
|
63,695
|
Diluted
|
|
106,859
|
|
|
63,695
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
3
PARKERVISION,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT
(UNAUDITED)
(in
thousands)
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
March 31,
|
|
|
2022
|
|
2021
|
Total shareholders' deficit, beginning balances
|
|
$
|
(44,777)
|
|
$
|
(43,821)
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
Beginning
balances
|
|
|
770
|
|
|
586
|
Issuance of common
stock and warrants in public and private offerings, net of issuance
costs and initial fair value of contingent payment
rights
|
|
|
-
|
|
|
62
|
Issuance of common
stock upon exercise of options and warrants
|
|
|
5
|
|
|
27
|
Issuance
of common stock and warrants for services
|
|
|
-
|
|
|
6
|
Issuance of common
stock upon conversion and payment of interest-in-kind on
convertible debt
|
|
|
3
|
|
|
17
|
Share-based
compensation, net of shares withheld for taxes
|
|
|
-
|
|
|
1
|
Ending
balances
|
|
|
778
|
|
|
699
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
|
|
|
|
Beginning
balances
|
|
|
387,865
|
|
|
376,954
|
Cumulative effect
of change in accounting principle
|
|
|
-
|
|
|
(1,126)
|
Issuance of common
stock and warrants in public and private offerings, net of issuance
costs and initial fair value of contingent payment
rights
|
|
|
(18)
|
|
|
4,734
|
Issuance of common
stock upon exercise of options and warrants
|
|
|
77
|
|
|
397
|
Issuance
of common stock and warrants for services
|
|
|
-
|
|
|
391
|
Issuance of common
stock upon conversion and payment of interest-in-kind on
convertible debt
|
|
|
79
|
|
|
459
|
Share-based
compensation, net of shares withheld for taxes
|
|
|
746
|
|
|
952
|
Ending
balances
|
|
|
388,749
|
|
|
382,761
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
|
|
|
|
|
Beginning
balances
|
|
|
(433,412)
|
|
|
(421,361)
|
Cumulative effect
of change in accounting principle
|
|
|
-
|
|
|
279
|
Comprehensive
income (loss) for the period
|
|
|
332
|
|
|
(2,467)
|
Ending
balances
|
|
|
(433,080)
|
|
|
(423,549)
|
|
|
|
|
|
|
|
Total
shareholders' deficit, ending balances
|
|
$
|
(43,553)
|
|
$
|
(40,089)
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
4
PARKERVISION,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
March 31,
|
|
2022
|
|
2021
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
Net
income (loss)
|
$
|
332
|
|
$
|
(2,467)
|
Adjustments
to reconcile net income (loss) to net cash used in
operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
83
|
|
|
97
|
Share-based
compensation
|
|
746
|
|
|
953
|
(Gain)
loss on changes in fair value of contingent payment
obligations
|
|
(2,302)
|
|
|
150
|
Loss on
disposal of assets
|
|
8
|
|
|
-
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
Prepaid
expenses and other assets
|
|
110
|
|
|
282
|
Accounts payable
and accrued expenses
|
|
191
|
|
|
(3,970)
|
Operating lease
liabilities
|
|
(40)
|
|
|
(34)
|
Total
adjustments
|
|
(1,204)
|
|
|
(2,522)
|
Net
cash used in operating activities
|
|
(872)
|
|
|
(4,989)
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
Purchases
of property and equipment
|
|
-
|
|
|
(1)
|
Net
cash used in investing activities
|
|
-
|
|
|
(1)
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
Net
(payments) proceeds from issuance of common stock, contingent
payment rights and warrants in public and private
offerings
|
|
(18)
|
|
|
5,208
|
Net
proceeds from exercise of options and warrants
|
|
82
|
|
|
424
|
Principal
payments on notes payable
|
|
(24)
|
|
|
(22)
|
Net
cash provided by financing activities
|
|
40
|
|
|
5,610
|
|
|
|
|
|
|
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
|
(832)
|
|
|
620
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS, beginning of period
|
|
1,030
|
|
|
1,627
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS, end of period
|
$
|
198
|
|
$
|
2,247
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
5
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 and license
those technologies to others for use in wireless communication
products. We have expended significant financial and other
resources to research and develop our RF technologies and to obtain
patent protection for those technologies in the United States of
America (“U.S.”) and certain foreign jurisdictions. We
believe certain patents protecting our proprietary
technologies have been broadly infringed by others, and therefore
the primary focus of our business plan is the enforcement of our
intellectual property rights through patent 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, 2022, we recognized net income of approximately
$0.3 million and incurred negative cash flows from operations
of approximately $0.9 million. At March 31, 2022, we had cash
and cash equivalents of approximately $0.2 million and an
accumulated deficit of approximately $433.1 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.
In May
2022, we received proceeds of $0.3 million from the sale of
convertible notes (see Note 14). Our current capital resources,
including the proceeds from the May 2022 transaction, are not
sufficient to meet our liquidity needs for the next twelve months
and we will 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. 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.
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, 2022 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, 2022, are not necessarily indicative
of the results that may be expected for the year ending
December 31, 2022, 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,
2021. 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, 2021 (“2021 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 2021 Annual Report. We do not expect any newly effective
accounting standards to have a material impact on our financial
position, results of operations or cash flows when they become
effective.
5.
Revenue
We have
an active monitoring and enforcement program with respect to our
intellectual property rights that includes seeking appropriate
compensation from third parties that utilize or have utilized our
intellectual property without a license. As a result, we may
receive payments as part of a settlement or in the form of
court-awarded damages for a patent infringement dispute. We
recognize such payments as
revenue
in accordance with Accounting Standards Codification
(“ASC”) 606, “Revenue from Contracts with
Customers.”
No
revenue was recognized during the three-month periods ended March
31, 2022 or 2021.
6.
Earnings (Loss) per Common Share
Basic
earnings (loss) per common share is determined based on the
weighted-average number of common shares outstanding during each
period.
The
dilutive effect of outstanding options and warrants is calculated
using the treasury stock method. The dilutive effect of shares
underlying convertible notes was calculated using the if-converted
method.
The
following table shows the computation of basic and diluted earnings
(loss) per share for the three months ended March 31, 2022 and 2021
(net income and shares in thousands):
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
2022
|
|
2021
|
Numerator:
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
332
|
|
$
|
(2,467)
|
Effect
of dilutive securities
|
|
|
56
|
|
|
-
|
Net
income (loss) adjusted for dilutive effect
|
|
$
|
388
|
|
$
|
(2,467)
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
Weighted-average
basic shares outstanding
|
|
|
77,553
|
|
|
63,695
|
Effect
of dilutive securities
|
|
|
29,306
|
|
|
-
|
Weighted-average
diluted shares
|
|
|
106,859
|
|
|
63,695
|
|
|
|
|
|
|
|
Basic
earnings (loss) per share
|
|
$
|
0.00
|
|
$
|
(0.04)
|
Diluted
earnings (loss) per share
|
|
$
|
0.00
|
|
$
|
(0.04)
|
|
|
|
|
|
|
|
Diluted
earnings (loss) per common share for the three months ended March
31, 2022 excludes options and warrants that are anti-dilutive. For
the three months ended March 31, 2021, all shares underlying
outstanding options, warrants, unvested restricted stock units
(“RSUs”) and convertible
notes were excluded from the computation of diluted loss per share
as their effect would have been anti-dilutive. The anti-dilutive
common share equivalents at March 31, 2022 and 2021 were as follows
(in thousands):
|
|
|
|
|
|
|
|
March 31,
|
|
2022
|
|
2021
|
Options
outstanding
|
|
373
|
|
|
24,875
|
Warrants
outstanding
|
|
7,346
|
|
|
12,169
|
Unvested
RSUs
|
|
-
|
|
|
85
|
Shares
underlying convertible notes
|
|
-
|
|
|
21,957
|
|
|
7,719
|
|
|
59,086
|
|
|
|
|
|
|
7. Prepaid Expenses
Prepaid
expenses consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December
31,
|
|
|
2022
|
|
2021
|
Prepaid
services
|
|
$
|
400
|
|
$
|
523
|
Prepaid
insurance
|
|
|
30
|
|
|
16
|
Prepaid
licenses, software tools and support
|
|
|
23
|
|
|
23
|
Other
prepaid expenses
|
|
|
10
|
|
|
12
|
|
|
$
|
463
|
|
$
|
574
|
|
|
|
|
|
|
|
Prepaid
services at March 31, 2022 and December 31, 2021 include
approximately $0.4 million and $0.5 million, respectively of
consulting services paid in shares of stock or warrants to purchase
shares of stock in the future.
8. Intangible Assets
Intangible
assets consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December
31,
|
|
|
2022
|
|
2021
|
Patents
and copyrights
|
|
$
|
14,683
|
|
$
|
14,755
|
Accumulated
amortization
|
|
|
(12,987)
|
|
|
(12,970)
|
|
|
$
|
1,696
|
|
$
|
1,785
|
|
|
|
|
|
|
|
9. Debt
Notes Payable
Related Party Note Payable
We have
an unsecured promissory note of approximately $0.7 million payable
to Sterne, Kessler, Goldstein, & Fox, PLLC
(“SKGF”), a related party, for outstanding unpaid fees
for legal services. The note, as amended, accrues interest at a
rate of 4% per annum and provides for monthly payments of principal
and interest of $10,000 with a final balloon payment of
approximately $0.59 million due at the maturity date of April 30,
2023. We are currently in compliance with all the terms of the
note.
Convertible Notes
Our
convertible notes represent 5-year promissory notes that are
convertible, at the holders’ option, into shares of our
common stock at fixed conversion prices. Interest payments are made
on a quarterly basis and are payable, at our option, subject to
certain equity conditions, in either cash, shares of our common
stock, or a combination thereof. The number of shares issued for
interest is determined by dividing the interest payment amount by
the closing price of our common stock on the trading day
immediately prior to the scheduled interest payment date. To date,
all interest payments on the convertible notes have been made in
shares of our common stock. We have recognized the convertible
notes as debt in our condensed consolidated financial
statements.
We have the option to prepay the majority of
the notes, subject to a premium on the outstanding principal
prepayment amount of 25% prior to the two-year
anniversary of the note issuance date, 20% prior to
the
three-year anniversary of the note issuance
date, 15% prior to the four-year anniversary of the note
issuance date, or 10% thereafter. The notes provide
for events of default that include failure to pay principal or
interest when due, breach of any of the representations,
warranties, covenants or agreements made by us, events of
liquidation or bankruptcy, and a change in control. In
the event of default, the interest rate increases
to 12% per annum and the outstanding principal balance of
the notes plus all accrued interest due may be declared immediately
payable by the holders of a majority of the then outstanding
principal balance of the notes.
Convertible
notes payable at March 31, 2022 and December 31, 2021 consist of
the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
|
|
|
|
Principal
Outstanding as of
|
|
|
Conversion
|
|
Interest
|
|
|
|
March 31,
|
|
December
31,
|
Description
|
|
Rate
|
|
Rate
|
|
Maturity
Date
|
|
2022
|
|
2021
|
Convertible
notes dated September 10, 2018
|
|
$0.40
|
|
8.0%
|
|
September
10, 2023
|
|
$
|
200
|
|
$
|
200
|
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
|
|
|
750
|
|
|
750
|
Convertible
notes dated June/July 2019
|
|
$0.10
|
|
8.0%
|
|
June 7,
2024 to July 15, 2024
|
|
|
295
|
|
|
320
|
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, 2025 1
|
|
|
450
|
|
|
450
|
Total
principal balance
|
|
|
|
|
|
|
|
$
|
2,870
|
|
$
|
2,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
The maturity date
may be extended by one-year increments for up to an additional five
years at the holders’ option at a reduced interest rate of
2%.
For the
three months ended March 31, 2022, convertible notes with a face
value of $0.03 million were converted, at the option of the
holders, into 250,000 shares of our common stock and we recognized
interest expense of approximately $0.06 million related to the
contractual interest which we elected to pay in shares of our
common stock. For the three months ended March 31, 2022, we issued
approximately 92,000 shares of our common stock as interest-in-kind
payments on our convertible notes.
At
March 31, 2022, we estimate our convertible notes have an aggregate
fair value of approximately $2.3 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, 2022 and the year ended
December 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
March
31, 2022
|
|
Year
Ended
December
31, 2021
|
Secured
contingent payment obligation, beginning of period
|
|
$
|
37,372
|
|
$
|
33,057
|
Change
in fair value
|
|
|
(1,160)
|
|
|
4,315
|
Secured
contingent payment obligation, end of period
|
|
$
|
36,212
|
|
$
|
37,372
|
|
|
|
|
|
|
|
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 52% 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 $50.5 million and $48.8 million as of
March 31, 2022 and December 31, 2021, 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 10. As of March
31, 2022, 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
10). The secured contingent payment obligation is remeasured to
fair value at each reporting period with changes recorded in the
condensed consolidated statements of comprehensive income (loss)
until the contingency is resolved.
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, 2022 and the year ended
December 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
Three
Months EndedMarch 31, 2022
|
|
Year
EndedDecember 31, 2021
|
Unsecured
contingent payment obligations, beginning of period
|
|
$
|
5,691
|
|
$
|
5,222
|
Issuance
of contingent payment rights
|
|
|
-
|
|
|
412
|
Change
in fair value
|
|
|
(1,142)
|
|
|
57
|
Unsecured
contingent payment obligations, end of period
|
|
$
|
4,549
|
|
$
|
5,691
|
|
|
|
|
|
|
|
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 income (loss) until the contingency is resolved (see
Note 10).
10. 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, 2022 and December 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements
|
|
|
Total
Fair Value
|
|
QuotedPricesin ActiveMarkets(Level
1)
|
|
SignificantOtherObservableInputs(Level
2)
|
|
SignificantUnobservableInputs(Level
3)
|
March 31, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
contingent payment obligation
|
|
$
|
36,212
|
|
$
|
-
|
|
$
|
-
|
|
$
|
36,212
|
Unsecured
contingent payment obligations
|
|
|
4,549
|
|
|
-
|
|
|
-
|
|
|
4,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements
|
|
|
Total
Fair Value
|
|
QuotedPricesin ActiveMarkets(Level
1)
|
|
SignificantOtherObservableInputs(Level
2)
|
|
SignificantUnobservableInputs(Level
3)
|
December 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
contingent payment obligation
|
|
$
|
37,372
|
|
$
|
-
|
|
$
|
-
|
|
$
|
37,372
|
Unsecured
contingent payment obligations
|
|
|
5,691
|
|
|
-
|
|
|
-
|
|
|
5,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 16.36% at March 31, 2022, based on a
risk-free rate of 2.36% 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, 2022, 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
|
|
$
59.4
|
|
|
$ 88.4
|
|
|
$
0.0
|
|
|
$7.5
|
|
|
$10.8
|
Duration
(in years)
|
|
1.5
|
|
2.9
|
|
|
3.5
|
|
|
1.5
|
|
|
3.0
|
|
|
3.5
|
Estimated
probabilities
|
|
5%
|
|
17%
|
|
|
35%
|
|
|
5%
|
|
|
18%
|
|
|
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.
Changes in any of these Level 3 inputs could result in a
significantly higher or lower fair value measurement.
11. 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”).
The
majority of our litigation, including our PTAB proceedings, is
being paid for through contingency fee arrangements with our
litigation counsel as well as third-party litigation financing. In
general, litigation counsel is entitled to recoup on a priority
basis, from litigation proceeds, any out-of-pocket expenses
incurred. Following reimbursement of out-of-pocket expenses,
litigation counsel is generally entitled to a percentage of
remaining proceeds based on the terms of the specific arrangement
between us, counsel and our third-party litigation
funder.
ParkerVision v. Qualcomm (Middle District of Florida-Orlando
Division)
We have filed a notice of appeal of a summary judgment decision
issued in March 2022 by the Middle District of Florida in our
patent infringement complaint against Qualcomm Incorporated and
Qualcomm Atheros, Inc. (collectively “Qualcomm”).
The patent infringement case was filed in the Middle District
of Florida in May 2014. The case was stayed in February 2016
pending decisions in other cases, including the appeal of a PTAB
proceeding with regard to U.S. patent 6,091,940 (“the
‘940 Patent”) asserted in this case. In
March 2017, the PTAB ruled in our favor on three of
the six petitions (the method claims), ruled in
Qualcomm’s favor on two of the six petitions (the
apparatus claims) and issued a split decision on the claims covered
in the sixth petition. In September 2018, the Federal
Circuit upheld the PTAB’s decision with regard
to the ‘940 Patent and, in January 2019, the court lifted the
stay in this case. In July 2019, the court issued an
order that granted our proposed selection of patent claims from
four asserted patents, including the ‘940 Patent, and denied
Qualcomm’s request to limit the claims and patents. The court
also agreed that we may elect to pursue accused products that were
at issue at the time the case was stayed, as well as new products
that were released by Qualcomm during the pendency of the
stay. In September 2019, Qualcomm filed a motion for
partial summary judgment in an attempt to exclude certain patents
from the case, including the ‘940 Patent. The
court denied this motion in January 2020.
In April 2020, the court issued its claim construction
order in which the court adopted our proposed construction
for seven of the ten disputed terms and adopted
slightly modified versions of our proposed construction for the
remaining terms. Due to the impact of COVID-19,
a number of the scheduled deadlines in this case were moved
including the trial commencement date which was rescheduled from
December 2020 to May 2021. In October 2020, our damages
expert submitted a report supporting our damages ask of $1.3
billion for Qualcomm’s unauthorized use of our technology.
Such amount excludes additional amounts requested by us for
interest and enhanced damages for willful infringement. Ultimately,
the amount of damages, if any, will be determined by the court.
Discovery was expected to close in December 2020; however, the
court allowed us to designate a substitute expert due to medical
issues with one of our experts in the case. Accordingly, the close
of discovery was delayed until January 2021. As a result of these
delays, the court rescheduled the trial commencement date from May
3, 2021 to July 6, 2021.
In March 2021, the court further delayed the trial date citing
backlog due to the pandemic, among other factors. A new
trial date was not set and the court indicated the case was
unlikely to be tried before November or December
2021. Fact and expert discovery has been completed,
expert reports have been submitted, and summary judgment
and Daubert briefings were submitted by the
parties. Joint pre-trial statements were submitted in
May 2021. In March 2021, the court granted Qualcomm’s motion
to strike certain of our 2020 infringement contentions. As a
result of this ruling, in July 2021, we filed a joint motion for
entry of a judgment of non-infringement of our Patent No. 7,865,177
(“the ‘177 Patent”), subject to appeal.
In January 2022, the court held a hearing to allow the parties to
present their respective positions on three outstanding motions.
The court indicated that upon its ruling on these motions, a
pre-trial conference would be scheduled and a trial date set. On
March 9, 2022, the court ruled with respect to one of these motions
granting Qualcomm’s motion to strike and exclude opinions
regarding the alleged infringement and validity issues. This court
order precluded the presentation of infringement and validity
opinions by both of our experts at trial. On March 22, 2022, the
court issued an order granting Qualcomm’s motion for summary
judgment ruling that Qualcomm does not infringe the remaining three
patents in this case. On April 20, 2022, we filed a notice of
appeal to the United States Court of Appeals for the Federal
Circuit. As a result of the court’s summary judgment motion
in favor of Qualcomm, Qualcomm has the right to petition the court
for its fees and costs. The court has granted a Qualcomm motion to
delay such a petition until 30 days following the appellate
court’s decision. We are represented in this case on a full
contingency fee basis.
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. LG
below). Also in July 2017, Qualcomm filed a motion
to change venue to the Southern District of California, and
Apple filed a motion to dismiss for improper venue. In March 2018,
the district court ruled against the Qualcomm and Apple motions.
The parties also filed a joint motion in March 2018 to
eliminate three of the four patents in the case
in order to expedite proceedings
leaving our U.S. patent 9,118,528 as the only remaining patent in
this case. A claim construction hearing was held on August 31,
2018. In July 2019, the court issued its claim construction order
in which the court adopted our proposed claim construction
for two of the six terms and the “plain
and ordinary meaning” on the remaining terms. In addition,
the court denied a motion filed by Apple for summary
judgment. Fact discovery has closed in this case
and a jury trial was scheduled to begin in August
2020. In March 2020, as a result of the impact of
COVID-19, the parties filed a motion requesting an extension of
certain deadlines in the case. In April 2020, the court
stayed this proceeding pending the outcome of the
infringement case against Qualcomm in the Orlando Division of the
Middle District of Florida, which is currently pending an
appeal.
ParkerVision v. LG (District of New Jersey)
In July
2017, we filed a patent infringement complaint in the District of
New Jersey against LG for the alleged infringement of the same four
patents previously asserted against LG in the Middle District of
Florida (see ParkerVision v. Apple
and Qualcomm above). We elected to dismiss the case in the
Middle District of Florida and re-file in New Jersey as a result of
a Supreme Court ruling regarding proper venue. In 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.
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 also filed a motion to transfer venue which was denied by the
court. In July 2020 and September 2020, Intel filed petitions for
Inter Partes Review (“IPR”) against two
of the patents in this case and in January 2021, the PTAB
instituted proceedings with regard to these two petitions (see
Intel v. ParkerVision (PTAB) below).
The
court issued its claim
construction ruling in January 2021 in which the
majority of the claims were decided in our favor. The case
was scheduled for trial beginning February 7, 2022. In April 2021,
we filed an amended complaint to include additional Intel chips and
products, including WiFi devices, to the complaint. The court
suggested that, given the number of patents at issue, the case
would be separated into two trials and, as a result of the added
products, the first trial date was scheduled for June
2022.
In
January 2022, the PTAB issued its ruling on the IPRs (see Intel v.
ParkerVision (PTAB) below). In February 2022, the parties filed a
joint motion with respect to both Intel cases whereby the first
case would be narrowed to six total patents asserted against Intel
cellular products. These same six patents would be also asserted in
the second Intel case, along with one additional patent from the
second case, against Intel WiFi and Bluetooth products. As a result
of the restructuring of the two cases, the trial date was moved to
October 2022. In March 2022, due to discovery delays, the court
agreed to move the trial commencement date to December 5, 2022.
Discovery is ongoing in this case. In March 2022, Intel filed a
motion requesting further claim construction which we have opposed.
The court has not yet ruled on this motion. In May 2022, we filed a
motion to amend our complaint to add willful infringement based on
information obtained during discovery. We are represented in this
case on a full contingency fee basis.
ParkerVision v. Intel II (Western District of Texas)
In June
2020, to reduce the number of claims in ParkerVision v. Intel, we filed a
second patent infringement complaint in the Western District of
Texas against Intel that included one patent that we voluntarily
dismissed from the original case. In July 2020, we amended our
complaint adding two more
patents
to the case. Intel responded to the complaint denying infringement
and claiming invalidity of the patents.
In
January 2021, Intel filed a petition for IPR against one of the
patents in this case and in July 2021, the PTAB instituted
proceedings with regard to this petition (see Intel v. ParkerVision
(PTAB) below). We filed an amended complaint in 2021 adding Intel
WiFi and Bluetooth products to the case. Two claim construction
hearings were held in June 2021 and July 2021 and the court’s
claim construction ruling was largely decided in our favor. The
case was scheduled for trial in October 2022. In February 2022, the
parties filed a joint motion which provided that the Intel II case
would assert the same six patents from the first Intel case,
provided none of the patents were invalidated in the first case, as
well as one additional patent, depending on the outcome of the
pending IPR proceeding. As a result of the restructuring of the
cases, we anticipate the trial will be scheduled for this case in
the fall of 2023. We are represented in this case on a full
contingency fee basis.
Intel v. ParkerVision (PTAB)
Intel
filed IPR petitions against U.S. patent 7,539,474 (“the
‘474 Patent”) and U.S. patent 7,110,444 (“the
‘444 Patent”) which were both asserted in ParkerVision v. Intel. Intel also filed
a petition for IPR against U.S. patent 8,190,108 (“the
‘108 Patent”),which is asserted in ParkerVision v. Intel II. In January
2021, the PTAB issued its decision to institute IPR proceedings for
the ‘444 Patent and the ‘474 Patent. An oral hearing
was held on November 1, 2021 and final decisions from the PTAB on
the ‘474 Patent and the ‘444 Patent were issued in
January 2022. The PTAB ruled against us with respect to the single
challenged claim of the ’444 Patent and ruled in our favor
with respect to the seven challenged claims of the ‘474
Patent. The ‘444 Patent has subsequently been excluded from
the narrowed claims asserted in ParkerVision v. Intel.
In July
2021, the PTAB issued its decision to institute IPR proceedings for
the ‘108 Patent. We filed our response to this petition in
October 2021 and an oral hearing was held on April 26, 2022. A
final decision from the PTAB with respect to the ‘108 Patent
is expected by July 2022. Depending on the PTAB’s ruling with
respect to the ‘108 Patent, we have the option to include or
exclude this patent from the patents being asserted in the Intel II
case.
Additional Patent Infringement Cases – Western District of
Texas
ParkerVision filed a number of additional patent cases in the
Western District of Texas in September and October 2020 including
cases against (i) TCL Industries Holdings Co., Ltd, a Chinese
company, TCL Electronics Holdings Ltd., Shenzhen TCL New Technology
Co., Ltd, TCL King Electrical Appliances (Huizhou) Co., Ltd., TCL
Moka Int’l Ltd. and TCL Moka Manufacturing S.A. 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 WiFi
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.
In May 2021, we also filed a patent infringement case against LG
Electronics, a South Korean company, in the Western District of
Texas alleging infringement of the same ten patents.
In September 2021, we dismissed the cases against Buffalo and Zyxel
following satisfaction of the parties’ obligations under
settlement and license agreements entered into in May 2021 and
September 2021, respectively.
In May 2021, TCL and Hisense filed petitions for IPR against two of
the ten patents asserted against them, including the ‘444
Patent which was challenged by Intel (see TCL, et. al. v.
ParkerVision (PTAB) below). In December 2021, LGE filed nearly
identical petitions for IPR against the same two patents along with
a joinder motion requesting to join the existing
petitions.
The court held a combined Markman hearing on October 27, 2021 for
the cases against Hisense and TCL. The court issued its claim
construction recommendations on October 29, 2021, in which nearly
all of the claim terms were decided in our favor. The Hisense and
TCL cases currently have a trial date scheduled for December 12,
2022. A claim construction hearing for the LGE case is scheduled
for May 2022, with a trial scheduled to commence on April 24, 2023.
We are represented in each of these cases on a full contingency fee
basis.
TCL, et. al. v. ParkerVision (PTAB)
In May
2021, TCL, along with Hisense, filed petitions for IPR against U.S.
patent 7,292,835 (“the ‘835 Patent”) and the
‘444 Patent, both of which are asserted in the infringement
cases against these parties in the Western District of Texas. In
November 2021, the PTAB issued its decision to implement IPR
proceedings for these two patents. In December 2021, LGE filed
nearly identical petitions against the same two patents along with
a joinder motion requesting to join the existing petitions filed by
TCL and Hisense. In April 2022, the PTAB granted LGE’s
joinder motion. Oral hearings are scheduled for these IPRs in
September 2022 with a final decision expected in November
2022.
12. Stock Authorization and Issuance
Common Stock Warrants
As of
March 31, 2022, we had outstanding warrants for the purchase of up
to 10.3 million shares of our common stock. The estimated grant
date fair value of these warrants of $3.2 million is included in
additional paid-in capital in our condensed consolidated balance
sheets. As of March 31, 2022, our outstanding warrants have an
average exercise price of $0.75 per share and a weighted average
remaining life of approximately 2.8 years.
13. 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 2021 Annual
Report.
For the
three months ended March 31, 2022 and 2021, we recognized
share-based compensation expense of approximately $0.75 million and
$0.95 million, respectively. Share-based compensation is included
in selling, general and administrative expenses in the accompanying
condensed, consolidated statements of comprehensive income
(loss).
As of
March 31, 2022, there was $2.2 million of total unrecognized
compensation cost related to all non-vested share-based
compensation awards. The cost is expected to be recognized over a
weighted-average remaining life of approximately 0.75
years.
14. Subsequent Events
On May
10, 2022, we received proceeds of $0.3 million from the sale of
convertible notes to accredited investors, including Paul
Rosenbaum, one of our directors. The notes mature five years from
the date of issuance and are convertible, at the holders’
option, into shares of our common stock at a fixed
conversion
price
of $0.13 per share. The notes bear interest at a stated rate of 8%
per annum. Interest is payable quarterly, and we may elect, subject
to certain equity conditions, to pay interest in cash, shares of
our common stock, or a combination thereof. We also entered into a
registration rights agreement with the investors pursuant to which
we will register the shares underlying the notes. We have committed
to file the registration statement by the 90th calendar day
following the closing date and to cause the registration statement
to become effective by the 120th calendar day
following the closing date. The registration rights agreement
provides 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%, or $0.02
million.
ITEM 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, 2021 (the
“2021 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
invented and developed proprietary radio frequency
(“RF”) technologies and integrated circuits and license
those technologies to third parties 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.
Recent Events
Legal Proceedings
On March 9, 2022, the U.S. District Court in the Middle District of
Florida granted a Qualcomm motion to strike and exclude opinions
regarding alleged infringement and validity issues in
ParkerVision v.
Qualcomm. This court order
precluded the presentation of infringement and validity opinions by
both of our experts at trial. On March 22, 2022, the same court
issued an order granting Qualcomm’s motion for summary
judgment ruling that Qualcomm does not infringe the three patents
in the case. On April 20, 2022, we filed a notice of appeal to the
United States Court of Appeals for the Federal Circuit. As a result
of the court’s summary judgment motion in favor of Qualcomm,
Qualcomm has the right to petition the court for its fees and
costs. The court has granted a Qualcomm motion to delay such a
petition until 30 days following the appellate court’s
decision.
In May 2022, we filed a motion to amend our complaint in
ParkerVision v.
Intel to add willful
infringement based on information obtained in
discovery.
Sale of Convertible Notes
On May
10, 2022, we received proceeds of $0.3 million from the sale of
five-year convertible notes to accredited investors, including Paul
Rosenbaum, one of our directors. The notes bear interest at a
stated rate of 8% per annum. Interest is payable quarterly, and we
may elect, subject to certain equity conditions, to pay interest in
cash, shares of our common stock, or a combination thereof. We also
entered into a registration rights agreement with the investors
pursuant to which we will register the shares underlying the
notes.
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, 2022, we recognized net income of
approximately $0.3 million and incurred negative cash flows
from operations of approximately $0.9 million. At March 31,
2022, we had cash and cash equivalents of approximately $0.2
million and an accumulated deficit of approximately
$433.1 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 $0.9 million and
$5.0 million for the three months ended March 31, 2022 and
2021, respectively. The decrease in cash used for operations from
2021 to 2022 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 $0.2 million increase in accounts payable and accrued expenses
during the three months ended March 31, 2022. For the three months
ended March 31, 2022, we received aggregate net proceeds from the
sale of debt and equity securities, including the exercise of
outstanding options and warrants, of approximately $0.1 million
compared to approximately $5.6 million in proceeds received for the
three months ended March 31, 2021. We repaid approximately $0.02
million in debt obligations during each of the three months ended
March 31, 2022 and 2021.
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.
Furthermore, we expect that revenue generated from patent
enforcement actions and/or technology licenses in the remainder of
2022, 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.
Our
current capital resources, including $0.3 million in proceeds
received from the sale of convertible notes in May 2022, are not
sufficient to meet our liquidity needs for the next twelve months
and we will be required to seek additional capital.
Our
ability to meet both our short-term and long-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. 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 our ability to achieve our
intended long-term business objectives.
Financial Condition
Our
working capital decreased approximately $1.0 million from December
31, 2021 to March 31, 2022. This decrease in working capital is
primarily the result of cash used in operations during the three
months ended March 31, 2022.
Our
long-term liabilities decreased approximately $2.4 million during
the three months ended March 31, 2022, primarily as a result of the
$2.3 million decrease in the estimated fair value of our secured
and unsecured contingent payment obligations.
Results of Operations for Each of the Three Months Ended March 31,
2022 and 2021
Revenue
We
reported no licensing revenue for the three-month periods ended
March 31, 2022 or 2021. Cost of sales consists of amortization
expense related to the patents covered under license agreements
reached during the year ended December 31, 2021. Although we do
anticipate additional revenue to result from our licensing
agreements 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 and outside
professional fees for accounting, legal and business consulting
services.
Our
selling, general and administrative expenses decreased by
approximately $0.3 million, or 13%, during the three months
ended March 31, 2022 when compared to the same period in 2021. This
is primarily the result of a $0.2 million decrease in share-based
compensation for the comparable periods and a $0.1 million decrease
in litigation fees and expenses.
The
decrease in our share-based compensation for the three-month period
ended March 31, 2022 is the result of share-based compensation
expense attributed to restricted stock units and nonqualified stock
options awarded to executives, key employees and nonemployee
directors in 2019 and 2020 being fully recognized as of December
31, 2021. As of March 31, 2022, we had $2.2 million of total
unrecognized compensation cost related to all non-vested
share-based compensation awards that is expected to be recognized
over a period of approximately 0.75 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, 2022, we recorded an aggregate
decrease in the fair value of our secured and unsecured contingent
payment obligations of approximately $2.3 million, compared to an
increase of approximately $0.2 million for the three months ended
March 31, 2021. The change in fair value for the three months ended
March 31, 2022 was impacted by a sharp increase in the risk-free
interest rate used in the calculation as a result of the Federal
Reserve ending bond purchases and signaling it would implement
multiple rate increases during 2022, resulting in a $1.8 million
decrease in the fair value of our secured and unsecured contingent
payment obligations. The remaining decrease is a result of changes
in the estimated amounts and timing of projected future cash flows
due to changes in probabilities and time frames based on changes in
the status of patent infringement actions.
Off-Balance Sheet Transactions, Arrangements and Other
Relationships
As of
March 31, 2022, we had outstanding warrants to purchase
approximately 10.3 million shares of our common stock. The
estimated grant date fair value of these warrants of approximately
$3.2 million is included in shareholders’ deficit in our
condensed consolidated balance sheets. The outstanding warrants
have a weighted average exercise price of $0.75 per share and a
weighted average remaining life of approximately 2.8
years.
Critical Accounting Policies
There
have been no changes in accounting policies from those stated in
our 2021 Annual Report. We do not expect any newly effective
accounting standards to have a material impact on our financial
position, results of operations or cash flows when they become
effective.
ITEM 3. Quantitative and Qualitative Disclosures About Market
Risk.
Not
applicable.
ITEM 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of
March 31, 2022, 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, 2022.
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.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
Reference
is made to the section entitled “Legal Proceedings” in
Note 11 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.
ITEM 1A. Risk Factors.
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.
None.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Mine Safety Disclosures.
Not
applicable.
ITEM 5. Other Information.
On May 10, 2022, we entered into a securities purchase agreement
(the “Purchase Agreement”) with accredited investors
(the “Holders”) which provides for the sale of
unsecured convertible promissory notes (the “Notes”)
with an aggregate face value of $300,000, including a Note with a
face value of $100,000 sold to one of our directors, Paul
Rosenbaum.
The Notes are convertible at any time and from time to time by the
Holders into shares of our common stock at a fixed conversion price
of $0.13 per share. Any unconverted, outstanding principal amount
of the Notes is payable on May 10, 2027. The $300,000 proceeds from
the sale of the Notes will be used to fund our
operations.
Interest accrues at a rate of 8% per annum on the Notes, and is
payable quarterly either in cash, shares of common stock, or a
combination thereof at our option, subject to certain equity
conditions, on the 15th
of July, October, January, and April
of each year during the term of the Notes, following the
registration of the underlying securities.
The Notes provide for events of default that include (i) failure to
pay principal or interest when due, (ii) any breach of any of
the representations, warranties, covenants or agreements made by us
in the Purchase Agreement, (iii) events of liquidation or
bankruptcy, and (iv) 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
outstanding principal balance of the Notes.
We also entered into a registration rights agreement (the
“Registration Rights Agreement”) with the Holders
pursuant to which we will register the shares of common stock
underlying the Notes. We have committed to file the registration
statement by the 90th
calendar day following the issuance
date of the Notes and to cause the registration statement to become
effective by the 120th
calendar day following the issuance
date. The Registration Rights Agreement provides for liquidated
damages upon the occurrence of certain events including failure by
the Company to file the registration statement or cause it to
become effective by the deadlines set forth above. The amount of
the liquidated damages is 1.0% of the aggregate subscription amount
paid by the Holders for the Notes upon the occurrence of the event,
and monthly thereafter, up to a maximum of 6%.
The Notes were offered and sold solely to accredited investors on a
private placement basis under Section 4(a)2) of the Securities Act
of 1933, as amended, and Rule 506 promulgated
thereunder.
The foregoing summaries of the Notes, the Purchase Agreements, the
Registration Rights Agreement and the list of accredited investors
are qualified in their entirety by reference to the full text of
the agreements, which are attached as part of Exhibits 10.1 through
10.4 hereto and are incorporated herein by reference.
On May
11, 2022, we issued a press release announcing our financial
condition and results of operations for the three months ended
March 31, 2022. The press release is attached hereto as Exhibit
99.1.
The
foregoing information, including the exhibits related thereto, is
furnished in response to Items 1.01, 2.02, and 3.02 of Form 8-K and
shall not be deemed “filed” for purposes of Section 18
of the Securities Exchange Act of 1934, nor shall it be deemed
incorporated by reference in any disclosure document of the
Registrant, except as shall be expressly set forth by specific
reference in such document.
ITEM 6. Exhibits.
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Exhibit
Number
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Description of Exhibit
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10.1
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10.2
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10.3
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10.4
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31.1
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31.2
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32.1
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99.1
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101.INS
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Inline
XBRL Instance Document*
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101.SCH
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Inline
XBRL Taxonomy Extension Schema*
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101.CAL
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Inline
XBRL Taxonomy Extension Calculation Linkbase*
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101.DEF
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Inline
XBRL Taxonomy Extension Definition Linkbase*
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101.LAB
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Inline
XBRL Taxonomy Extension Label Linkbase*
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101.PRE
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Inline
XBRL Taxonomy Extension Presentation Linkbase*
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104
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Inline
XBRL for the cover page of this Quarterly Report on Form 10-Q,
included in the Exhibit 101 Inline XBRL Document Set
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* Filed
herewith
**
Furnished herewith
SIGNATURES
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 11,
2022
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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 11,
2022
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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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