Form 424B3 PARKERVISION INC
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Filed pursuant to Rule 424(b)(3)
Registration No. 333-237762
PROSPECTUS SUPPLEMENT No. 15
(to Prospectus dated April 28, 2020)
PARKERVISION, INC.
16,809,295 Shares of Common Stock
This
Prospectus Supplement relates to the prospectus dated April 28,
2020, 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 16,809,295 shares of
our common stock, par value $0.01 per share (“Common
Stock”) consisting of (i) up to 4,961,538 shares of Common
Stock issuable upon conversion of, and for the payment of interest
from time to time at our option, for a convertible promissory note
dated September 13, 2019 which has a fixed conversion price of
$0.10 per share and convertible promissory notes dated January 8,
2020 which have a fixed conversion price of $0.13 per share (the
“Notes”), (ii) an aggregate of 3,907,331 shares of
Common Stock issued pursuant to securities purchase agreements
dated January 9, 2020, January 15, 2020, March 5, 2020 and March
19, 2020, (iii) an aggregate of 2,740,426 shares of Common Stock
issued as payment for services and repayment of short-term loans
and other accounts payable, including interest, (iv) up to
5,000,000 shares of Common Stock issuable upon exercise of a
five-year warrant with an exercise price of $0.74 per share,
subject to adjustment and issued pursuant to a warrant agreement
with Aspire Capital Fund LLC (“Aspire”) and (v) up to
200,000 shares of Common stock issuable upon exercise of a
three-year warrant with an exercise price of $1.00 per share,
subject to adjustment and issued pursuant to a warrant agreement
with Tailwinds Research Group LLC
(“Tailwinds”).
We will
not receive proceeds from the sale of the shares of Common Stock by
the selling stockholders. To the extent the Aspire and Tailwinds
warrants are exercised for cash, we will receive up to an aggregate
of $3,900,000 in gross proceeds. We expect to use proceeds received
from the exercise of the Aspire and Tailwinds warrants, if any, for
general working capital and 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 Annual Report on Form 10-K filed with
the Securities and Exchange Commission (the “SEC”) on
March 31, 2021. Accordingly, we have attached the 10-K 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 6 of this 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 is truthful
or complete. Any representation to the contrary is a criminal
offense.
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C.
20549
FORM 10-K
(Mark One)
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(X)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year
ended December 31,
2020
or
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( )
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
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For the transition
period from ________to__________
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Commission file
number 000-22904
PARKERVISION,
INC.
(Exact Name of
Registrant as Specified in its Charter)
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Florida
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59-2971472
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(State of
Incorporation)
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(I.R.S. Employer ID
No.)
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4446-1A
Hendricks Avenue,
Suite
354,
Jacksonville,
Florida 32207
(Address of
Principal Executive Offices)
Registrant’s
telephone number, including area code: (904) 732-6100
Securities
registered pursuant to Section 12(b) of the Act:
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Title of Each
Class
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Trading
Symbol(s)
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Name of Each Exchange
on Which Registered
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Common Stock, $.01 par
value
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PRKR
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OTCQB
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Common Stock
Rights
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OTCQB
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Securities
registered pursuant to Section 12(g) of the Act:
None
Indicate by check
mark if the registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act. Yes ( ) No
(X)
Indicate by check
mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Securities Exchange
Act. Yes ( ) No (X)
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 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 (X) 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
files). Yes (X) 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.
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Large accelerated
filer ( )
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Accelerated filer
( )
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Non-accelerated
filer (X)
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Smaller reporting
company (X)
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Emerging growth
company ( )
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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 financial accounting standards provided
pursuant to Section 13(a) of the Exchange
Act. ( )
Indicate by check
mark whether the registrant has filed a report on and attestation
to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of
the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit
reports. ( )
Indicate by check
mark whether the registrant is a shell company (as defined in Rule
12b-2 of the
Act). Yes ( ) No (X)
As of June 30,
2020, the aggregate market value of the registrant’s
common stock, $.01 par value, held by non-affiliates of the
registrant was approximately $23,474,499 (based upon $0.49 share
last sale price on that date, as reported by OTCQB).
As of
March 30, 2021, 69,886,849 shares of the Issuer's Common
Stock were outstanding.
TABLE OF
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Unless the context
otherwise requires, in this Annual Report on Form 10-K
(“Annual
Report”), “we”, “us”,
“our” and the “Company” mean ParkerVision,
Inc. and its wholly-owned German subsidiary, ParkerVision
GmbH.
Forward-Looking
Statements
We believe that it
is important to communicate our future expectations to our
shareholders and to the public. This Annual Report
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including,
without limitation, statements about our future plans, objectives,
and expectations under the headings “Item 1. Business”
and “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of
Operations.” Forward-looking statements include
any statement that does not directly relate to any historical or
current fact. When used in this Annual Report and in
future filings by the Company with the Securities and Exchange
Commission (“SEC”), the words or
phrases “will likely result”, “management
expects”, “we expect”, “will
continue”, “is anticipated”,
“estimated” or similar expressions are intended to
identify such “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 set forth in this Annual Report under the heading
“Item 1A. Risk Factors” and in our other periodic
reports. Examples of such risks and uncertainties
include general economic and business conditions, the outcome of
litigation, unexpected changes in technologies and technological
advances, reliance on our intellectual property, and the ability to
obtain adequate financing in the future. We have no obligation to
publicly release the results of any revisions that may be made to
any forward-looking statements to reflect anticipated events or
circumstances occurring after the date of such
statements.
We are 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 mobile handset providers 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.
In 2018, we
restructured our operations to reduce operating expenses in light
of our limited capital resources. As part of that
restructuring, we made significant reductions in our investment in
the development and marketing of a consumer distributed WiFi
product line marketed under the brand name Milo®. In
early 2019, we ceased substantially all ongoing research and
development efforts and, where
3
applicable,
repurposed resources to support our patent enforcement and product
sales and support efforts. We ceased sales of our Milo products in
the fourth quarter of 2019 and are currently focused exclusively on
our patent enforcement litigation and licensing
efforts.
We spent much of
2020 supporting our two patent infringement cases against Qualcomm
and others that were scheduled for jury trials in Florida in
2020. As a result of the COVID-19 pandemic, in 2020, one of
those trials was rescheduled for mid-year 2021 and the second was
stayed pending the outcome of the first case. In addition, in
2020, we filed a number of cases in Texas against alleged
infringers of our patented technologies. See
“Legal Proceedings” in Note 12 to our consolidated
financial statements included in Item 8 for a detailed description
of our various patent enforcement actions.
A significant
portion of our litigation costs have been funded under a secured
contingent payment arrangement with Brickell Key Investments, LP
(“Brickell”), contingent
arrangements with legal counsel, and various debt and equity
financings. See “Liquidity and Capital
Resources” included in Item 7 for a full discussion of our
litigation funding arrangements and our equity and debt
financings.
Products
We produced and
sold consumer WiFi products, under the tradename Milo, from 2017 to
2019. These products offered a cost-effective networking
system to enhance WiFi connectivity by effectively distributing the
WiFi signal from existing routers and modems throughout a broader
coverage area. We marketed these products primarily to
consumers through Amazon.com and other online outlets, including
our own direct-to-consumer online retail site. We ceased
sales of these WiFi products in 2019.
RF Technologies
Our RF technologies
enable highly accurate transmission and reception of RF carriers at
low power, thereby enabling extended battery life, and certain
size, cost, performance, and packaging
advantages.
We believe the most
significant hurdle to the licensing and/or sale of our technologies
and related products is the widespread use of certain of our
technologies in infringing products produced by companies with
significantly greater financial, technical, sales, and marketing
resources. We believe we can gain adoption and/or secure
licensing agreements with unauthorized current users of one or more
of our technologies, and therefore compete, based on a solid and
defensible patent portfolio and the advantages enabled by our
unique circuit architectures.
Patents and
Trademarks
We consider our
intellectual property, including patents, patent applications,
trademarks, and trade secrets to be significant to our business
plan. We have a program to file applications for and
obtain patents, copyrights, and trademarks in the U.S. and in
selected foreign countries where we believe filing for such
protection is appropriate to establish and maintain our proprietary
rights in our technology and products. As of
December 31, 2020, we had approximately 86 active U.S. and
foreign patents related to our RF technologies. In
addition, we have a number of recently expired patents that we
believe continue to have significant economic value as a result of
our ability to assert past damages in our patent enforcement
actions. We estimate the economic lives of our patents
to be the shorter of fifteen years from issuance or twenty years
from the earliest application date. Our current
portfolio of issued patents have expirations ranging from 2021 to
2036.
4
Employees
As of
December 31, 2020, we had seven full-time and two part-time
employees. We also outsource certain specialty services,
such as information technology, and utilize contract staff and
third-party consultants from time to time to supplement our
workforce. Our employees are not represented by any
collective bargaining agreements and we consider our employee
relations to be satisfactory.
We have taken
measures to protect our workforce in response to the COVID-19
pandemic, including optional remote worksites for all of our
employees beginning in April 2020. Our management, with
the oversight of our board of directors, monitors the hiring,
retention and management of our employees.
Available Information and Access to
Reports
We file annual
reports on Forms 10-K, quarterly reports on Forms 10-Q, proxy
statements and other reports, including any amendments thereto,
electronically with the SEC. The SEC maintains an
Internet site (http://www.sec.gov) where these reports may be
obtained at no charge. We also make copies of these
reports available, free of charge through our website
(http://www.parkervision.com) via the link “SEC
filings” as soon as practicable after filing or furnishing
such materials with the SEC.
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 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 Annual 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.
In addition to
other risks and uncertainties described in this Annual Report, the
following risk factors 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. As a result of the risk factors set forth
below, actual results could differ materially from those projected
in any forward-looking statements.
Financial and Operating
Risks
Our financial condition raises substantial
doubt as to our ability to continue as a going
concern.
We have had
significant losses and negative cash flows in every year since
inception, and continue to have an accumulated deficit which, at
December 31, 2020, was approximately $421.4 million. Our net losses
for the years ended December 31, 2020 and 2019 were approximately
$19.6 million and $9.5 million, respectively. Our
independent registered public accounting firm has included in their
audit opinion on our consolidated financial statements as of and
for the year ended December 31, 2020, a statement with respect to
substantial doubt about our ability to continue as a going
concern. Note 2 to our
5
consolidated
financial statements included in Item 8 includes a discussion
regarding our liquidity and our ability to continue as a going
concern. Our consolidated financial statements have been prepared
assuming we will continue to operate as a going concern, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. If we
become unable to continue as a going concern, we may have to
liquidate our assets and the values we receive for our assets in
liquidation or dissolution could be significantly lower than the
values reflected in our consolidated financial
statements. The substantial doubt as to our ability to
continue as a going concern may adversely affect our ability to
negotiate reasonable terms with our vendors and may adversely
affect our ability to raise additional capital in the
future.
We have had a history of losses which may
ultimately compromise our ability to implement our business plan
and continue in operation.
To date, our
technologies and products have not produced revenues sufficient to
cover our operating costs. We will continue to make expenditures on
patent protection and enforcement and general operations in order
to continue our current patent enforcement and licensing efforts.
Those efforts may not produce a successful financial outcome in
2021, or at all. Without a successful financial outcome
from one or more of our patent enforcement and licensing efforts,
we will not achieve profitability. Furthermore, our
current capital resources may not be sufficient to sustain our
operations through 2021. If we are not able to generate
sufficient revenues or obtain sufficient capital resources, we may
not be able to implement our business plan or meet our current obligations due within the
twelve months after the issuance date of our consolidated financial
statements and investors will suffer a loss in their
investment. This may also result in a change in our business
strategies.
We will need to raise substantial additional
capital in the future to fund our operations. Failure to
raise such additional capital may prevent us from implementing our
business plan as currently formulated.
Because we have had
net losses and, to date, have not generated positive cash flow from
operations, we have funded our operating losses primarily from the
sale of debt and equity securities, including our secured
contingent debt obligation. Our capital resources
include cash and cash equivalents of $1.6 million at
December 31, 2020 and proceeds of approximately $5.6 million
received during the first quarter of 2021 from various debt and
equity transactions, including the exercise of options and
warrants. Although we
implemented significant cost reduction measures in
2019 and 2020, our business plan will continue to require
expenditures for patent protection and enforcement and general
operations. For the years ended December 31, 2020 and 2019, we
used $4.8 million and $3.4 million, respectively in cash for operations
which was funded primarily through the sale of convertible
debt and equity
securities. In addition, we used $3.0 million of the proceeds received
during the first quarter of 2021 to repay outstanding obligations
to one of our litigation firms. Our current capital resources may not be
sufficient to meet our working capital needs for the twelve months
after the issuance of our consolidated financial statements and
we may require additional capital to fund our operations.
Additional capital may be in the form of debt securities, the sale
of equity securities, including common or preferred stock,
additional litigation funding, or a combination thereof. Failure to
raise additional capital may have a
material adverse impact on our ability to achieve our business
objectives.
Raising additional capital by issuing debt
securities or additional equity securities may result in dilution
and/or impose covenants or restrictions that create operational
limitations or other obligations.
We may require
additional capital to fund our operations and meet our current
obligations due within the twelve months after the issuance date of
our consolidated financial statements. Financing, if
any, may be
6
in the form of debt
or sales of equity securities, including common or preferred
stock. Debt instruments or the sale of preferred stock
may result in the imposition of operational limitations and other
covenants and payment obligations, any of which may be burdensome
to us and may have a material adverse impact on our ability to
implement our business plan as currently formulated. The
sale of equity securities, including common or preferred stock, may
result in dilution to the current stockholders’ ownership and
may be limited by the number of shares we have authorized and
available for issuance.
We may be obligated to repay
outstanding notes at a premium upon the occurrence of an event of
default.
We have $1.0
million in secured and unsecured notes
payable and $3.9 million
in outstanding principal under convertible notes payable at
December 31, 2020. If we fail to comply with the various
covenants set forth in each of the notes, including failure to pay
principal or interest when due or, under certain notes,
consummating a change in control, we could be in default
thereunder. Upon an event of default under each of the notes, the
interest rate of the notes will increase to 12% per annum and the
outstanding principal balance of the notes plus all accrued unpaid
interest may be declared immediately payable by the holders. We may
not have sufficient available funds to repay the notes upon an
event of default, and we cannot provide assurances that we will be
able to obtain other financing at terms acceptable to us, or at
all.
Our ability to utilize our tax benefits could
be substantially limited if we fail to generate sufficient income
or if we experience an “ownership
change.”
We have cumulative
net operating loss carryforwards (“NOLs”) totaling
approximately $323.2 million at December 31, 2020, of
which $294.1 million is subject to expiration in varying amounts
from 2021 to 2037. Our ability to fully recognize the
benefits from those NOLs is dependent upon our ability to generate
sufficient income prior to their expiration. In
addition, our NOL carryforwards may be limited if we experience an
ownership change as defined by Section 382 of the Internal Revenue
Code (“Section
382”). In general, an ownership change
under Section 382 occurs if 5% shareholders increase their
collective ownership of the aggregate amount of our outstanding
shares by more than 50 percentage points over a relevant lookback
period. We have sold a significant number of equity securities over
the relevant lookback period which increases the risk of triggering
an ownership change under Section 382 from the future sale of
additional equity securities. An ownership change under
Section 382 will significantly limit our ability to utilize our tax
benefits.
Our litigation funding arrangements may impair
our ability to obtain future financing and/or generate sufficient
cash flows to support our future operations.
We have funded much
of our cost of litigation through contingent financing arrangements
with Brickell and others and contingent fee arrangements with legal
counsel. The repayment obligation to Brickell is secured
by the majority of our assets until such time that we have repaid a
specified minimum return. Furthermore, our contingent
arrangements will result in reductions in the amount of net
proceeds retained by us from litigation, licensing and other
patent-related activities. The contingent fees payable to
legal counsel, Brickell and others will consume all of our initial
future proceeds up to specified limits and could exceed half of
our proceeds thereafter depending on size and timing of
proceeds, among other factors. The long-term continuation of our
business plan is dependent upon our ability to secure sufficient
financing to support our business, and our ability to generate
revenues and/or patent related proceeds sufficient to offset
expenses and meet our contingent payment
obligations. Failure to generate revenue or other
patent-related proceeds sufficient to repay our contingent
obligations may impede our ability to obtain additional financing
which will have a material adverse effect on our ability to achieve
our long-term business objectives.
7
Our litigation can be time-consuming, costly
and we cannot anticipate the results.
Since 2011, we have
spent a significant amount of our financial and management
resources to pursue patent infringement litigation against third
parties. We believe this litigation, and other litigation matters
that we may in the future determine to pursue, will continue to
consume management and financial resources for long periods of
time. There can be no assurance that our current or future
litigation matters will ultimately result in a favorable outcome
for us or that our financial resources will not be exhausted before
achieving a favorable outcome. In addition, even if we
obtain favorable interim rulings or verdicts in particular
litigation matters, they may not be predictive of the ultimate
resolution of the matter. Unfavorable outcomes could result in
exhaustion of our financial resources and could hinder our ability
to pursue licensing and/or product opportunities for our
technologies in the future. Failure to achieve favorable
outcomes from one or more of our patent enforcement actions will
have a material adverse impact on our financial condition, results
of operations, cash flows, and business prospects.
If our patents and intellectual property rights
do not provide us with the anticipated market protections, our
competitive position, business, and prospects will be
impaired.
We rely on our
intellectual property rights, including patents and patent
applications, to provide competitive advantage and protect us from
theft of our intellectual property. We believe that our patents are
for entirely new technologies and that our patents are valid,
enforceable and valuable. However, third parties have made claims
of invalidity with respect to certain of our patents and other
similar claims may be brought in the future. For example, the
Federal Patent Court in Munich recently invalidated one of our
patents that was the subject of infringement cases against LG and
Apple in Germany following a nullity claim filed by
Qualcomm. If our patents are shown not to be as broad as
currently believed, or are otherwise challenged such that some or
all of the protection is lost, we will suffer adverse effects from
the loss of competitive advantage and our ability to offer unique
products and technologies. As a result, there would be an adverse
impact on our financial condition and business prospects.
Furthermore, defending against challenges to our patents may give
rise to material costs for defense and divert resources away from
our other activities.
Our business, results of operations, and
financial condition may be impacted by the recent coronavirus
(COVID-19) outbreak.
The global spread
of COVID-19 has created significant volatility and uncertainty in
financial markets. If such volatility and uncertainty
persist, we may be unable to raise additional capital on terms that
are acceptable to us, or at all. Additionally, in
response to the pandemic, governments and the private sector have
taken a number of drastic measures to contain the spread of
COVID-19. While our employees currently have the ability
and are encouraged to work remotely, such measures may have a
substantial impact on employee attendance or productivity, which,
along with the possibility of employees’ illness, may
adversely affect our operations.
In addition,
COVID-19 has negatively impacted the timing of our current patent
infringement actions as a result of office closures, travel
restrictions and court closures. For example, our patent
infringement trial in Orlando, Florida has been delayed twice due
to the impact of COVID-19. It is possible that further delays
in our cases could occur.
Although COVID-19
is currently not material to our results of operations, there is
significant uncertainty relating to the potential impact of
COVID-19 on our business. The extent to which COVID-19
impacts our ongoing patent enforcement actions and our ability to
obtain financing, as well as our results of operations and
financial condition, generally, will depend on future developments
which are highly
8
uncertain and
cannot be predicted, including new information which may emerge
concerning the severity of COVID-19 and the actions taken by
governments and private businesses to contain COVID-19 or treat its
impact, among others. If the disruptions posed by
COVID-19 continue for an extensive period of time, our business,
results of operations, and financial condition may be materially
adversely affected.
We are subject to outside influences beyond our
control, including new legislation that could adversely affect our
licensing and enforcement activities and have an adverse impact on
the execution of our business plan.
Our licensing and
enforcement activities are subject to numerous risks from outside
influences, including new legislation, regulations and rules
related to obtaining or enforcing patents. For instance, the U.S.
has enacted sweeping changes to the U.S. patent system including
changes that transition the U.S. from a
“first-to-invent” to a “first-to-file”
system and that alter the processes for challenging issued patents.
To the extent that we are unable to secure patent protection for
our future technologies and/or our current patents are challenged
such that some or all of our protection is lost, we will suffer
adverse effects to our ability to offer unique products and
technologies. As a result, there would be an adverse impact on our
financial position, results of operations and cash flows and our
ability to execute our business plan.
Our industry is subject to rapid technological
changes which if we are unable to match or surpass, will result in
a loss of competitive advantage and market
opportunity.
Because of the
rapid technological development that regularly occurs in the
wireless technology industry, along with shifting user needs and
the introduction of competing products and services, we have
historically devoted substantial resources to developing and
improving our technology and introducing new product
offerings. As a result of our limited financial
resources, we have ceased our research and development activities
which could result in a loss of future market opportunity which
could adversely affect our future revenue potential.
We are highly dependent on Mr. Jeffrey Parker
as our chief executive officer. If his services were
lost, it would have an adverse impact on the execution of our
business plan.
Because of Mr.
Parker’s leadership position in the company, the
relationships he has garnered in both the industry in which we
operate and the investment community and the key role he plays in
our patent litigation strategies, the loss of his services might be
seen as an impediment to the execution of our business
plan. If Mr. Parker was no longer available to the
company, investors might experience an adverse impact on their
investment. We maintain $5 million in key-employee
life insurance for our benefit for Mr. Parker.
If we are unable to retain key executives and
other highly skilled employees, we will not be able to execute our
current business plans.
Our business is
dependent on having skilled and specialized key executives and
other employees to conduct our business activities. The inability
to retain these key executives and other specialized employees
would have an adverse impact on the technical support activities
and the financial reporting and regulatory compliance activities
that our business requires. These activities are
instrumental to the successful execution of our business
plan.
9
Any disruptions to our information technology
systems or breaches of our network security could interrupt our
operations, compromise our reputation, and expose us to litigation,
government enforcement actions, and costly response measures and
could have a material adverse effect on our business, financial
condition and results of operations.
We rely on
information technology systems, including third-party hosted
servers and cloud-based servers, to keep business, financial, and
corporate records, communicate internally and externally, and
operate other critical functions. If any of our internal systems or
the systems of our third-party providers are compromised due to
computer virus, unauthorized access, malware, and the like, then
sensitive documents could be exposed or deleted, and our ability to
conduct business could be impaired. Cyber incidents can result from
deliberate attacks or unintentional events. These incidents can
include, but are not limited to, unauthorized access to our
systems, computer viruses or other malicious code, denial of
service attacks, malware, ransomware, phishing, SQL injection
attacks, human error, or other events that result in security
breaches or give rise to the manipulation or loss of sensitive
information or assets. Cyber incidents can be caused by various
persons or groups, including disgruntled employees and vendors,
activists, organized crime groups, and state-sponsored and
individual hackers. Cyber incidents can also be caused or
aggravated by natural events, such as earthquakes, floods, fires,
power loss, and telecommunications failures. The risk of
cybersecurity breach has generally increased as the number,
intensity, and sophistication of attempted attacks from around the
world has increased. While we have cyber security procedures in
place, given the evolving nature of these threats, there can be no
assurance that we will not suffer material losses in the future due
to cyber-attacks.
To date, we have
not experienced any material losses relating to cyber-attacks,
computer viruses or other systems failures. Although we
have taken steps to protect the security of data maintained in our
information systems, it is possible that our security measures will
not be able to prevent the systems’ improper functioning or
the improper disclosure of personally identifiable information,
such as in the event of cyber-attacks. In addition to
operational and business consequences, if our cybersecurity is
breached, we could be held liable to our customers or other parties
in regulatory or other actions, and we may be exposed to reputation
damages and loss of trust and business. This could
result in costly investigations and litigation, civil or criminal
penalties, fines and negative publicity.
Risks Relating to our Common
Stock
Our outstanding options and warrants may affect
the market price and liquidity of the common
stock.
At
December 31, 2020, we had 58.6 million shares of common
stock outstanding and had outstanding options and warrants for the
purchase of up to 25.1 million additional shares of common
stock, of which approximately 22.3 million were exercisable as of
December 31, 2020. In addition, as described more fully
below, holders of convertible notes may elect to receive a
substantial number of shares of common stock upon conversion of the
notes and we may elect to pay accrued interest on the notes in
shares of our common stock. All of the shares of common
stock underlying these securities are or will be registered for
sale to the holder or for public resale by the
holder. The amount of common stock reserved for issuance
may have an adverse impact on our ability to raise capital and may
affect the price and liquidity of our common stock in the public
market. In addition, the issuance of these shares of common stock
will have a dilutive effect on current stockholders’
ownership.
10
The conversion of outstanding
convertible notes into shares of common stock, and the issuance of
common stock by us as payment of accrued interest upon the
convertible notes, could materially dilute our current
stockholders.
We have an aggregate
principal amount
of $3.9 million in
convertible notes outstanding at December 31, 2020. The
notes are convertible into shares of our common stock at fixed
conversion prices, which may be less than the market price of our
common stock at the time of conversion. If the entire
principal were
converted into shares of common stock,
we would be required to issue an aggregate of up to
23.6 million shares of common stock. If we issue all of
these shares, the ownership of our current stockholders will be
diluted.
Further, we may elect to pay interest on the
notes, at our option, in shares of common stock, at a price equal
to the then-market price for our common stock. To date,
we have issued approximately 2.5 million shares
of common stock as in-kind interest payments on our convertible
notes. We currently do not believe that we will have the
financial ability to make payments on the notes in cash when due.
Accordingly, we currently intend to make such payments in shares of
our common stock to the greatest extent possible. Such interest
payments could further dilute our current
stockholders.
The price of our common stock may be subject to
substantial volatility.
The trading price
of our common stock has been and may continue to be volatile.
Between January 1, 2019 and March 19, 2021, the reported high and
low sales prices for our common stock ranged between $0.06 and
$1.91 per share. The price of our common stock may continue to be
volatile as a result of a number of factors, some of which are
beyond our control. These factors include, but are not limited to,
developments in outstanding litigation, our performance and
prospects, general conditions of the markets in which we compete,
and economic and financial conditions, and the impact of COVID-19
on global financial markets. Such volatility could materially and
adversely affect the market price of our common stock in future
periods.
Our common stock is quoted on
OTCQB, an over-the-counter market. There can be no assurance that
our common stock will continue to trade on the OTCQB or on another
over-the-counter market or securities exchange.
Our common stock began trading on the OTCQB, an
over-the-counter market, in
August 2018 immediately
following delisting from Nasdaq, under the symbol
“PRKR”. The over-the-counter market is a significantly
more limited market than a
nationally-recognized securities exchange such as
Nasdaq, and the quotation of our
common stock on the over-the-counter market has resulted in a less liquid market available for existing and
potential stockholders to trade shares of our common stock.
Securities
traded in the over-the-counter market generally have less liquidity
due to factors such as the reduced number of investors that will
consider investing in the securities, the reduced number of market
makers in the securities, and the reduced number of securities
analysts that follow such securities. As a result, holders of
shares of our common stock may find it difficult to resell their
shares at prices quoted in the market or at all. We
are
also subject to additional
compliance requirements under applicable state laws relating to the
issuance of our securities. This could have a long-term adverse effect on our
ability to raise capital, which ultimately could adversely affect
the market price of our common stock. We
cannot provide any assurances as to if or when we will be in a
position to relist our common stock on a nationally-recognized
securities exchange.
11
Our common stock is classified
as a “penny stock” under SEC rules, which means
broker-dealers who make a market in our stock will be subject to
additional compliance requirements.
Our common stock is
deemed to be a "penny stock" as defined in the Securities Exchange
Act of 1934 (the “Exchange
Act”). Penny
stocks are stocks (i) with a price of less than five dollars per
share; (ii) that are not traded on a recognized national exchange;
(iii) whose prices are not quoted on an automated quotation system
sponsored by a recognized national securities association; or (iv)
whose issuer has net tangible assets less than $2,000,000 (if the
issuer has been in continuous operation for at least three years);
or $5,000,000 (if continuous operations for less than three years);
or with average revenues of less than $6,000,000 for the last three
years. The Exchange Act requires broker-dealers dealing
in penny stocks to provide potential investors with a document
disclosing the risks of penny stocks and to obtain a manually
signed and dated written receipt of the document before effecting
any transaction in a penny stock for the investor’s
account. Potential investors in our common stock are
urged to obtain and read such disclosure carefully before
purchasing any shares that are deemed to be “penny
stock.” Further, the Exchange Act requires
broker-dealers dealing in penny stocks to approve the account of
any investor for transactions in such stocks before selling any
penny stock to that investor. These procedures require
the broker-dealer to (i) obtain from the investor information
concerning his, her or its financial situation, investment
experience and investment objectives; (ii) reasonably determine,
based on that information, that transactions in penny stocks are
suitable for the investor, and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating
the risks of penny stock transactions; (iii) provide the investor
with a written statement setting forth the basis on which the
broker dealer made the determination in (ii) above; and (iv)
receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the
investor’s financial situation, investment experience and
investment objectives. Compliance with these
requirements may affect the ability or willingness of
broker-dealers to sell our securities, and accordingly would affect
the ability of stockholders to sell their securities in the public
market. These additional procedures could also limit our ability to
raise additional capital in the future.
We do not currently pay
dividends on our common stock and thus stockholders must look to
appreciation of our common stock to realize a gain on their
investments.
We do not currently
pay dividends on our common stock and intend to retain our cash and
future earnings, if any, to fund our business plan. Our
future dividend policy is within the discretion of our board of
directors and will depend upon various factors, including our
business, financial condition, results of operations and capital
requirements. We therefore cannot offer any assurance
that our board of directors will determine to pay special or
regular dividends in the future. Accordingly, unless our
board of directors determines to pay dividends, stockholders will
be required to look to appreciation of our common stock to realize
a gain on their investment. There can be no assurance
that this appreciation will occur.
Provisions in our certificate of incorporation
and by-laws could have effects that conflict with the interest of
shareholders.
Some provisions in
our certificate of incorporation and by-laws could make it more
difficult for a third party to acquire control of
us. For example, our board of directors is divided into
three classes with directors having staggered terms of office, our
board of directors has the ability to issue preferred stock without
shareholder approval, and there are advance notification provisions
for director nominations and submissions of proposals from
shareholders to a vote by all the shareholders under the
by-laws. Florida law also has anti-takeover provisions
in its corporate statute.
12
We have a shareholder protection rights plan
that may delay or discourage someone from making an offer to
purchase the company without prior consultation with the board of
directors and management, which may conflict with the interests of
some of the shareholders.
On
November 17, 2005, as amended on November 20, 2015 and
November 20, 2020, our board of directors adopted a shareholder
protection rights plan which called for the issuance, on
November 29, 2005, as a dividend, of rights to acquire
fractional shares of preferred stock. The rights are
attached to the shares of common stock and transfer with
them. In the future, the rights may become exchangeable
for shares of preferred stock with various provisions that may
discourage a takeover bid. Additionally, the rights have
what are known as “flip-in” and “flip-over”
provisions that could make any acquisition of the company more
costly. The principal objective of the plan is to cause
someone interested in acquiring the company to negotiate with the
board of directors rather than launch an unsolicited
bid. This plan may limit, prevent, or discourage a
takeover offer that some shareholders may find more advantageous
than a negotiated transaction. A negotiated transaction
may not be in the best interests of the shareholders.
Not
applicable.
Until the
expiration of our lease in October 2020, our headquarters were
located in a 3,000 square foot leased facility in Jacksonville,
Florida. Beginning in November 2020, we reverted to
remote worksites for all of our employees in light of the
pandemic. We believe a remote work environment is
currently suitable for the conduct of our business. We have
an additional 7,000 square foot leased facility in Lake Mary,
Florida that was primarily for engineering design activities.
We have ceased use of the Lake Mary facility and are attempting to
sublease the facility for the remaining lease
term. Refer to Note 8 to our consolidated financial
statements included in Item 8 for information regarding our
outstanding lease obligations.
We are a party to a
number of patent enforcement actions initiated by us against others
for the infringement of our technologies, as well as proceedings
brought by others against us in an attempt to invalidate certain of
our patent claims. These patent-related proceedings are
more fully described in Note 12 to our consolidated financial
statements included in Item 8.
Not
applicable.
13
Item 5. Mar ket for the Registrant’s Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Market Information
Since August 17,
2018, our Common Stock has been listed on the OTCQB, an
over-the-counter market, under the ticker symbol
“PRKR”. Over-the-counter market quotations
reflect inter-dealer prices, without retail mark-up, mark-down, or
commission, and may not necessarily represent actual transactions.
Holders
As of March 8,
2021, we had approximately 109 holders of record and we believe
there are approximately 7,200 beneficial holders of our common
stock.
Dividends
We do not currently
pay dividends on our common stock and intend to retain our cash and
future earnings, if any, to fund our business plan. The
payment of cash dividends in the future will be dependent upon our
revenue and earnings, if any, capital requirements and general
financial condition. The payment of any dividends will
be within the discretion of our board of directors.
Purchases of Equity Securities by
Issuer and Affiliated Purchasers
No purchases of our
equity securities have been made by us or affiliated purchasers
within the fourth quarter of the fiscal year ended December 31,
2020.
Not applicable.
Executive
Overview
We are in the
business of innovating fundamental wireless technologies and
products. We have designed and developed proprietary 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 U.S. and
certain foreign jurisdictions. We believe certain
patents protecting our proprietary technologies have been broadly
infringed by others and therefore our business plan primarily
consists of 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, the returns on which
are dependent upon the generation of future revenues for
realization.
In 2018, we
restructured our operations to reduce operating
expenses. As part of that restructuring, we made
significant reductions in our investment in the development and
marketing of a consumer distributed WiFi product line marketed
under the brand name Milo®. Our
cost reduction measures
14
included the
closure of our engineering design center in Lake Mary, Florida and
a reduction in executive and management salaries. In
early 2019, we ceased substantially all ongoing research and
development efforts and, where applicable, repurposed resources to
support our patent enforcement and product sales and support
efforts. We ceased sales of our Milo products in the fourth quarter
of 2019 and are currently focused exclusively on our patent
enforcement litigation and licensing efforts.
We continue to
aggressively pursue licensing opportunities with wireless
communications companies that make, use or sell chipsets and/or
products that incorporate RF. We believe there are a
number of wireless communications companies that can benefit from
the use of the RF technologies we have developed, whether through a
license or, in certain cases, a joint product venture that may
include licensing rights. Our licensing efforts to date have
required litigation in order to enforce and/or defend our
intellectual property rights. Since 2011, we have been
involved in patent infringement litigation against Qualcomm and
others for the unauthorized use of our technology. Refer
to Note 12 to our consolidated financial statements included in
Item 8 for a complete discussion of our legal
proceedings. We have expended significant resources
since 2011 and incurred significant debt for the enforcement and
defense of our intellectual property rights.
Recent
Developments
Equity and Debt
Financings
In January 2021, we
received aggregate proceeds of approximately $1.0 million from the
sale of common stock to accredited investors at a price of $0.35
per share. The securities purchase agreements include
contingent payment rights identical to the unsecured contingent
payment obligations incurred in 2020 (see “Contingent Payment
Obligations” included under Financial
Condition). Approximately $0.4 million in proceeds for
this transaction was received as of December 31, 2020 and recorded
as an accrued liability until the consummation of the
transaction. We entered into registration rights
agreements with the investors pursuant to which we will register
the shares. We have committed to file the registration
statement by April 15, 2021 and to cause the registration statement
to become effective by June 30, 2021. The registration rights
agreements provide for liquidated damages upon the occurrence of
certain events including failure by us to file the registration
statement or cause it to become effective by the deadlines set
forth above. The amount of the 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 approximately $0.06
million.
In March 2021, we
received aggregate proceeds of approximately $4.2 million from the
sale of common stock and warrants to accredited investors at a
price of $1.29 per share of common stock. The
warrants have an exercise price of $1.75 and expire in March
2026. We entered into
registration rights agreements with the investors pursuant to which
we will register the shares. We have committed to file
the registration statement within 30 days and to cause the
registration statement to become effective within 90 days. The
registration rights agreements provide for liquidated damages upon
the occurrence of certain events including failure by us to file
the registration statement or cause it to become effective by the
deadlines set forth above. The amount of the 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
approximately $0.25 million. The majority of the proceeds
from this transaction were used to satisfy our obligations to Mintz
(see “Mintz Agreement” below).
Share Based Compensation
Arrangements
On January 11,
2021, the Board amended the 2019 Long-Term Incentive 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 grants, under the 2019 Plan, of two-year options, with an
exercise price of $0.54 per share, vesting in 8 equal quarterly
installments commencing on March 31, 2021 and expiring
on
15
January 11, 2026.
The grants under the 2019 Plan included an option to purchase
8,000,000 shares granted to Jeffrey Parker, an option to purchase
1,000,000 shares granted to Cynthia French, an option to purchase
380,000 shares to each of the three non-employee directors, and
options to purchase an aggregate of 2,900,000 shares granted to
other key employees.
On January 25, 2021, we amended our business
consulting and retention agreement with Chelsea 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.
On March 9, 2021, we granted approximately
32,000 shares under our 2019 Long-Term Incentive Plan to
a consultant for business communications services over a
one-year term valued at approximately
$0.05 million.
Warrant and Option
Exercises
During the three
months ended March 31, 2021, we received aggregate proceeds of $0.
4 million from the exercise of outstanding options and
warrants at an average exercise price of $0.16 per
share.
Mintz Agreement
As of December 31,
2020, we had approximately $3.1 million in accounts payable to
Mintz and an outstanding balance of approximately $0.03 million on
a secured note payable to Mintz for legal fees and
expenses. In addition, we 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 2019 and accordingly, for which we recognized no expense in the
consolidated financial statements. In March 2021, we
entered into an agreement with Mintz to satisfy our outstanding
obligations and reduce any future contingency fees payable to
Mintz. On March 29, 2021, we paid Mintz a lump-sum
payment of $3.0 million in satisfaction of our outstanding
obligations to Mintz including the Mintz note, our accounts payable
to Mintz, and all disputed and unrecorded
billings. Mintz waived all past defaults on the Mintz
note and agreed to a significant reduction in future success fees
payable to Mintz from patent-related proceeds.
Legal Proceedings
On March 26, 2021,
the district court in the Middle District of Florida, Orlando
Division, issued an order that, among other things, postponed our
trial date in ParkerVision v.
Qualcomm citing
backlog due to the pandemic as a factor. A new trial
date has not yet been set but is unlikely to be scheduled prior to
November or December 2021 according to the
court.
Liquidity
and Capital Resources
We have incurred
significant losses from operations and negative cash flows in every
year since inception, largely as a result of our significant
investments in developing and protecting our intellectual
property. For the year ended December 31, 2020, we
incurred a net loss of approximately $19.6 million and
negative cash flows from operations of approximately
$4.8 million. At December 31, 2020, we had a
working capital deficit of approximately $3.8 million and an
accumulated deficit of approximately $421.4 million. Our
independent registered public accounting firm has included in their
audit report an explanatory paragraph expressing substantial doubt
about our ability to continue as a going concern. See
Note 2 to our consolidated financial statements included in Item 8
for a discussion of our liquidity and our ability to continue as a
going concern.
16
Our working capital
deficit is primarily the result of approximately $4.1 million in
accounts payable related to outstanding litigation fees and
expenses. Our working capital improved by $1.7 million
from 2019 to 2020, primarily as the result of the increase in our
cash and cash equivalents from debt and equity financings. Our use
of cash for operations increased 42%, from $3.4 million in
2019 to $4.8 million in 2020. This increase is primarily
the result of increased legal expenses associated with our patent
enforcement efforts. Our operations in 2020 were
primarily funded through approximately $6.0 million in proceeds
from debt and equity financings, as well as $1.6 million received
from the exercise of warrants. Comparatively, we
received net proceeds of approximately $3.1 million from debt
financings in 2019. We used $1.3 million and $1.2
million in cash to repay outstanding debt obligations in 2020 and
2019, respectively. These debt repayments were primarily related to
a secured note payable with Mintz which had an outstanding balance
of $0.03 million at December 31, 2020 and was repaid in full in the
first quarter of 2021.
At December 31,
2020, we had approximately $0.19 million in current debt
obligations, including $0.07 million related to a Paycheck
Protection Program loan, which we believe will be forgiven, based
on the program criteria. This represents a decrease of
$1.3 million from our current debt obligations at December 31,
2019. The decrease in our current debt repayment obligations
is primarily the result of $1.2 million in repayments made on the
Mintz note in 2020.
We had cash and
cash equivalents of approximately $1.6 million at December 31,
2020. We received an additional $5.6 million in proceeds
from debt and equity financings and warrant and option exercises in
the first quarter of 2021, of which $3.0 million was used to settle
outstanding accounts and notes payable for litigation
costs. Our remaining capital resources will be used to
fund our current obligations and ongoing operating costs; however
these resources may not be sufficient to meet our liquidity needs
for the next twelve months and we may be required to seek
additional capital.
Our ability to meet
our short-term liquidity needs, including our debt repayment
obligations, is dependent upon one or more of (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 Brickell and legal counsel;
and/or (ii) our ability to raise additional capital from the sale
of equity securities or other financing
arrangements.
Significant
portions of our litigation costs to date have been funded by
contingent payment arrangements with legal counsel. Fee
discounts offered by legal counsel in exchange for contingent
payments upon successful outcome in our litigation are not
recognized in expense until such time that the related proceeds on
which the contingent fees are payable are considered
probable. Contingent fees vary based on each
firm’s specific fee agreement. We currently have
contingent fee arrangements in place for all of our active
cases.
In addition to
contingent fee arrangements with legal counsel, we have a
contingent repayment obligation to Brickell that was recorded at
its estimated fair value of $33.1 million at December 31,
2020. Brickell is entitled to a priority, prorated
payment of up to 100% of proceeds received by us from funded
patent-related actions up to a specified minimum
return. Brickell’s minimum return is determined as
a multiple of the outstanding funded amount that increases over
time. The estimated minimum return due to Brickell if
repaid in full at December 31, 2020 is approximately $42 million,
an increase of approximately $3 million, or 8%, from the minimum
return that would have been due to Brickell as of December 31,
2019. In addition, in 2020 we incurred unsecured
contingent payment obligations in connection with various
financings. These unsecured contingent payment
obligations are recorded at an aggregate estimated fair value of
$5.2 million, with a maximum payment obligation of $9.7 million at
December 31, 2020.
17
Although current
working capital will not be used to repay our contingent
arrangements, based on our current outstanding legal
proceedings, funding arrangements and contingent payment
arrangements, we estimate that up to 100% of our initial
future proceeds will be used to repay contingent payment
arrangements until Brickell’s minimum return has been
met. After repayment of Brickell’s minimum return,
we estimate that 45% to 65% of estimated future proceeds from
current actions could be payable to others, depending on the
proceeding and the nature, amount and timing of proceeds, among
other factors.
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 Brickell and legal
counsel, 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 obligation, 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 our ability to
secure sufficient financing to support our business, and our
ability to generate revenues and/or patent-related proceeds
sufficient to offset expenses and meet our contingent payment
obligation and other long-term debt repayment
obligations. Failure to generate sufficient revenues,
raise additional capital through debt or equity financings, and/or
reduce operating costs could have a material adverse effect on our
ability to meet our short and long-term liquidity needs and achieve
our intended long-term business objectives.
Financial
Condition
Intangible Assets
We consider our
intellectual property, including patents, patent applications,
trademarks, copyrights and trade secrets to be significant to our
business. Our intangible assets are pledged as security
for our secured contingent payment obligation with Brickell and our
secured note payable with our litigation counsel. The
net book value of our intangible assets was approximately $2.2
million and $2.9 million as of December 31, 2020 and 2019,
respectively. These assets are amortized using the
straight-line method over their estimated period of benefit,
generally fifteen to twenty years. The decrease in the
carrying value of our intangible assets is primarily the result of
$0.4 million in patent amortization expense recognized in 2020 as
our portfolio matures and a $0.3 million loss on abandonment of
certain patents and patent applications. Management
evaluates the recoverability of intangible assets periodically and
takes into account events or circumstances that may warrant revised
estimates of useful lives or that may indicate impairment
exists. As part of our ongoing patent maintenance
program, we may, from time to time, abandon a particular patent if
we determine fees to maintain the patent exceed its expected
recoverability. For the years ended December 31, 2020
and 2019, we incurred losses of approximately $0.3 million and $0.4
million, respectively, for the write-off of specific patent assets.
These losses are included in operating expenses in the accompanying
consolidated statements of comprehensive loss.
Contingent Payment
Obligations
We have a secured
and unsecured contingent payment obligations recorded at an
aggregate estimated fair value of $38.3 million and $26.7 million
as of December 31, 2020 and 2019, respectively. These
repayment obligations are contingent upon receipt of proceeds from
patent enforcement and other patent monetization actions. As
a result, we have elected to account for these contingent payment
obligations at their estimated fair values which are subject to
significant estimates and assumptions as discussed in
“Critical Accounting Policies” below.
Refer to Note 10 to our consolidated financial
statements
18
included in Item 8
for a discussion of the fair value measurement of our contingent
payment obligation.
Our secured
contingent payment obligation is payable to Brickell under a 2016
funding agreement, as amended from time to time.
Brickell has a right to reimbursement and compensation from gross
proceeds resulting from patent enforcement and other patent
monetization actions on a priority basis. The amount of our
obligation varies based on the magnitude, timing and nature of
proceeds received by us.
In addition, in
2020, we incurred unsecured contingent payment obligations in
connection with various funding arrangements. The
contingent payment obligations are payable from our share of
patent-related proceeds after satisfaction of our obligation to
Brickell and payment of contingent fees to legal
counsel.
The $11.6
million increase in estimated fair value of our contingent payment
obligations from 2019 to 2020 is the result of $3.2 million in new
unsecured payment obligations incurred and an $8.4 million increase
in the estimated fair value of the contingent
obligations. See “Change in Fair Value of
Contingent Obligations” below for a discussion of the
increase in fair value.
Notes Payable
As of December 31,
2020, we had approximately $1.0 million in notes payable, including
an unsecured promissory note payable to Sterne, Kessler, Goldstein,
& Fox, PLLC (“SKGF”), a related party,
of approximately $0.8 million, a secured promissory note payable to
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(“Mintz”) of $0.03 million,
and a loan from the Paycheck Protection Program (PPP) of
approximately $0.2 million. Failure to comply with the
payment terms of each of these notes constitutes an event of
default which, if uncured, will result in the entire unpaid
principal balance of the note and any unpaid, accrued interest to
become immediately due and payable. In addition, an
event of default results in an increase in the interest rate under
the SKGF and Mintz notes to a default rate of 12% per annum. We
were in default on the payment provisions of the Mintz note since
November 2019 and, accordingly, accrued interest at the default
rate. In March 2021, we settled our outstanding
obligations with Mintz (as more fully discussed in “Recent
Developments”) and Mintz waived all past defaults on the note
which has been paid in full. In addition, in March 2021,
we started the application process for forgiveness of the PPP
loan. Based on the PPP loan forgiveness criteria, we
anticipate that we will qualify for forgiveness of the entire
principal amount of this loan.
Deferred Tax Assets and Related
Valuation Allowance
Deferred tax assets
and liabilities are recognized for the expected future tax
consequences of events that have been included in the financial
statements or tax returns. Deferred tax assets and liabilities are
determined based on differences between the financial statement
carrying amounts and the tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences
are expected to reverse. Valuation allowances are
established to reduce deferred tax assets when, based on available
objective evidence, it is more likely than not that the benefit of
such assets will not be realized. As of December 31,
2020, we had net deferred tax assets of approximately $94 million,
primarily related to our NOL carryforwards, which were fully offset
by a valuation allowance due to the uncertainty related to
realization of these assets through future taxable
income. In addition, our ability to benefit from our NOL
and other tax credit carryforwards could be limited under Section
382 as more fully discussed in Note 11 to our consolidated
financial statements included in Item 8.
Results of
Operations for Each of the Years Ended December 31,
2020
and
2019
Revenues and Gross
Margins
We reported no
licensing revenue for the years ended December 31, 2020 or
2019. Although we do anticipate licensing revenue and/or
settlement gains to result from our licensing and patent
enforcement
19
actions, the amount
and timing is highly unpredictable and there can be no assurance
that we will achieve our anticipated results.
We reported no
product revenue during the year ended December 31, 2020 and minimal
product revenue for the year ended December 31, 2019, from the
sales of our Milo-branded products. We discontinued sales of Milo products in the
fourth quarter of 2019 and recognized an impairment charge for our
remaining inventory, resulting in negative gross margins on our
product sales.
Research and Development
Expenses
Research and
development expenses consist primarily of engineering and related
management and support personnel costs; fees for outside
engineering design services which we use from time to time to
supplement our internal resources; depreciation expenses related to
certain assets used in product development; prototype production
and materials costs for both chips and end-user products; software
licensing and support costs, which represent the annual licensing
and support maintenance for engineering design and other software
tools; and rent and other overhead costs for our engineering design
facility. Personnel costs include share-based
compensation which represents the grant date fair value of
equity-based awards to our employees which is attributed to expense
over the service period of the award. Subsequent to
March 31, 2019, we halted substantially all research and
development efforts and, where applicable, repurposed prior
engineering resources to support our patent enforcement programs or
our Milo sales and support.
The
$0.3 million decrease in research and development
expenses from 2019 to 2020 is
primarily the result of $0.2 million in personnel
and related costs being repurposed for selling, general and
administrative purposes, including litigation support and Milo
sales and support as well as a $0.1 million
reduction in research and development personnel
costs.
Selling, General, and Administrative
Expenses
Selling, general
and administrative expenses consist primarily of executive,
director, sales and marketing, and finance and administrative
personnel costs, including share-based compensation, costs incurred
for advertising, insurance, shareholder relations and outside legal
and professional services, including litigation expenses, and
amortization and maintenance expenses related to our patent
assets.
Our selling,
general and administrative expenses were approximately
$10.7 million for the year ended December 31, 2020, as
compared to approximately $7.6 million for the year ended
December 31, 2019, representing an increase of
approximately $3.1 million or 41%. This increase is
primarily due to the recognition of
$2.2 million in noncash charges upon amendment of equity-related
agreements. In addition, we had a $1.3 million increase
in litigation expenses primarily related to preparation of the
infringement case against Qualcomm and Apple in Florida in early
2020 and a $0.6 million increase in share-based
compensation due to executive and Board equity awards granted
in August 2019 and the first quarter of 2020. These
increases were somewhat offset by a decrease of $0.3 million in
board compensation expenses due to the reversal of prior board
compensation expense upon the settlement of previously accrued
board fees in exchange for equity based awards in 2020, a decrease
of $0.2 million in rent and related overhead due to the down-sizing
of our corporate headquarters in July 2019, and a decrease in
depreciation and amortization of $0.3 million resulting from lower
cost bases of fixed assets and patents following disposals during
2019 and 2020.
Change in Fair Value of Contingent
Payment Obligations
20
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.
For the year ended December 31, 2020, we recorded
an increase in the fair value of our secured and unsecured
contingent payment obligations of approximately $8.4
million. The change in fair value estimates are a result
of changes in estimated amounts and timing of projected future cash
flows primarily due to the passage of time and changes in the
probabilities of future cash outflows based on the status of the
funded actions. In addition,
in 2020, increases in fair value resulted from the sharp decrease
in the risk-free interest rate used in the calculation as a result
of the Federal Reserve lowering rates to stimulate economic
activity amidst the COVID-19 pandemic.
Critical Accounting
Policies
We believe that the
following are critical accounting policies and estimates that
significantly impact the preparation of our consolidated financial
statements:
Contingent Payment
Obligations
We have accounted
for our secured and unsecured contingent payment obligations as
long-term debt. Our repayment obligations are
contingent upon the receipt of proceeds from patent enforcement or
other patent monetization actions. We have elected to
measure our contingent payment obligations at their estimated
fair values based on the variable and contingent nature of the
repayment provisions. We have determined that the fair value of our
secured and unsecured contingent payment obligations falls within
Level 3 in the fair value hierarchy, which involves significant
estimates and assumptions including projected future patent-related
proceeds and the risk-adjusted rate for discounting future cash
flows. Actual results could differ from the estimates
made. Changes in fair value, including the component related to
imputed interest, are included in the consolidated statements of
comprehensive loss under the heading “Change in fair value of
contingent payment obligations.” Refer to Note 10
to our consolidated financial statements included in Item 8 for a
discussion of the significant estimates and assumptions used in
estimated the fair value of our contingent payment obligations.
Accounting for Share-Based
Compensation
We calculate the
fair value of share-based equity awards to employees, including
restricted stock, stock options and restricted stock units
(“RSUs”), on the date of
grant and recognize the calculated fair value as compensation
expense over the requisite service periods of the related awards.
The fair value of stock option awards is determined using the
Black-Scholes option valuation model that requires the use of
highly subjective assumptions and estimates including how long
employees will retain their stock options before exercising them
and the volatility of our common stock price over the expected life
of the equity award. Changes in these subjective
assumptions can materially affect the estimate of fair value of
share-based compensation and consequently, the related amount
recognized as expense in the consolidated statements of
comprehensive loss.
New Accounting
Pronouncements
In August 2020, the FASB issued ASU 2020-06 "Debt
- Debt with Conversion and Other Options (Subtopic 470-20) and
Derivatives and Hedging - Contracts in Entity's Own Equity
(Subtopic 815-40): Accounting for Convertible Instruments and
Contracts in an Entity's Own Equity." This ASU
simplifies accounting for convertible instruments by removing major
separation models required under current U.S. GAAP.
Consequently, more convertible debt instruments will be reported as
a single liability instrument with no separate accounting for
embedded conversion features. The ASU removes certain
settlement
21
conditions that are required for equity contracts
to qualify for the derivative scope exception, which will permit
more equity contracts to qualify for the exception. The
ASU also simplifies the diluted earnings per share (EPS)
calculation in certain areas. The ASU is effective for fiscal
years beginning after December 15, 2021 for accelerated filers and
for fiscal years beginning after December 15, 2023, including
interim periods within those fiscal years, for smaller reporting
companies. Early adoption is permitted for fiscal years
beginning after December 15, 2020. The ASU provides for
a modified retrospective method of adoption whereby the guidance is
applied 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.
We plan to adopt ASU 2020-06 as of January 1,
2021. Adoption of ASU 2020-06 will result 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 retained deficit of $0.3 million
resulting from the elimination of the previously recognized
beneficial conversion feature as a debt
discount.
Off-Balance Sheet
Transactions
As of
December 31, 2020, we had outstanding warrants to purchase
12.9 million shares of our common stock. The estimated
grant date fair value of these warrants of approximately $1.7
million is included in shareholders’ deficit in our
consolidated balance sheet for the year ended December 31,
2020. The outstanding warrants have an average exercise
price of $0.45 per share and a weighted average remaining life of
approximately 3 years.
Not
applicable.
22
|
|
|
|
|
|
|
|
|
Index to
Consolidated Financial Statements
|
||
|
|
|
Page
|
|
|
24
|
|
|
|
|
|
|
FINANCIAL
STATEMENTS:
|
|
|
|
|
26
|
|
|
|
27
|
|
|
|
28
|
|
|
|
29
|
|
|
|
30
|
|
|
|
|
|
|
SUPPLEMENTARY
DATA:
|
|
|
|
Not
applicable
|
|
|
23
To the Board of
Directors and Shareholders of ParkerVision, Inc.
Opinion on the Consolidated Financial
Statements
We have audited the
accompanying consolidated balance sheets of ParkerVision, Inc. (the
“Company”) and its subsidiary as of December 31, 2020
and 2019, and the
related consolidated statements of comprehensive loss,
shareholders’ deficit and cash flows for each of the years in
the two-year period ended December 31, 2020, and the related notes
(collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the
financial position of the Company and its subsidiary as of December
31, 2020 and 2019, and the results of their operations and their cash flows for each of the years
in the two-year period ended December 31, 2020 in conformity with
accounting principles generally accepted in the United States of
America.
Basis for Opinion
These consolidated
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion
on the Company’s consolidated financial statements based on
our audits. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the
Company in accordance with U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our
audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material
misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. As a
part of our audits, we are required to obtain an understanding of
internal control over financial reporting, but not for the purpose
of expressing an opinion on the effectiveness of the
Company’s internal control over financial
reporting. Accordingly, we express no such
opinion.
Our audits included
performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or
fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the consolidated financial
statements. We believe that our audits provide a
reasonable basis for our opinion.
24
Emphasis of Matter Regarding Going
Concern
The accompanying
consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note
2 to the consolidated financial statements, the Company
has suffered recurring losses from operations and has a
net capital deficiency that raise substantial doubt about its
ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The
consolidated financial statements do not include any adjustments
that might result from the outcome of this
uncertainty. Our opinion is not modified with respect to
this matter.
Critical Audit Matters
The critical audit
matters communicated below are matters arising from the current
period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that: (1)
relate to accounts or disclosures that are material to the
financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical
audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or
disclosures to which they relate.
As disclosed in
Note 1 of the Company’s consolidated financial statements,
the Company accounts for their secured and unsecured contingent
payment obligations as long-term debt. Their payment obligations
are contingent upon the receipt of proceeds from patent enforcement
and/or patent monetization actions. The Company has
elected to measure their contingent payment obligations at their
estimated fair values. The Company recorded the fair
value of their contingent payment obligations at approximately
$38,279,000 as of December 31, 2020.
Auditing
management’s estimate of the fair value of their contingent
payment obligations involved subjective evaluation and high degree
of auditor judgement due to significant assumptions involved in
estimating the receipt of proceeds from patent enforcement and/or
patent monetization actions.
Addressing the
matter involved performing procedures and evaluating audit evidence
in connection with forming our overall opinion on the consolidated
financial statements. We obtained an understanding and
evaluated the design of internal controls that address the risks of
material misstatement relating to recording the contingent payment
obligations at fair value. We tested the accuracy and
completeness of the underlying data used in calculating the fair
value. We evaluated management’s ability to
accurately estimate the assumptions used to develop the fair value
of the contingent payment obligations. We also involved
an independent legal firm to assist in evaluating the
reasonableness of the assumptions of future litigation outcomes
used by the Company in estimating the receipt of proceeds from
patent enforcement and/or patent monetization
actions.
/s/ MSL,
P.A.
We have served as
the Company’s auditor since 2019.
Fort Lauderdale,
Florida
25
PARKERVISION,
INC.
CONSOLIDATED
BALANCE SHEETS
DECEMBER 31, 2020
AND 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
||
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,627
|
|
$
|
57
|
|
Prepaid
expenses
|
|
599
|
|
|
505
|
|
Other current
assets
|
|
8
|
|
|
117
|
|
Total current
assets
|
|
2,234
|
|
|
679
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
30
|
|
|
70
|
|
Intangible assets,
net
|
|
2,170
|
|
|
2,878
|
|
Operating lease
right-of-use assets
|
|
10
|
|
|
283
|
|
Other assets,
net
|
|
12
|
|
|
16
|
|
Total
assets
|
$
|
4,456
|
|
$
|
3,926
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
Accounts
payable
|
$
|
4,318
|
|
$
|
2,328
|
|
Accrued
expenses:
|
|
|
|
|
|
|
Salaries and
wages
|
|
19
|
|
|
78
|
|
Professional
fees
|
|
128
|
|
|
499
|
|
Statutory court
costs
|
|
251
|
|
|
369
|
|
Other accrued
expenses
|
|
936
|
|
|
1,081
|
|
Related party note
payable, current portion
|
|
100
|
|
|
86
|
|
Secured note
payable, current portion
|
|
26
|
|
|
1,222
|
|
Unsecured notes
payable
|
|
65
|
|
|
225
|
|
Operating lease
liabilities, current portion
|
|
146
|
|
|
250
|
|
Total current
liabilities
|
|
5,989
|
|
|
6,138
|
|
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES:
|
|
|
|
|
|
|
Secured contingent
payment obligation
|
|
33,057
|
|
|
26,651
|
|
Unsecured
contingent payment obligations
|
|
5,222
|
|
|
-
|
|
Convertible notes,
net
|
|
3,018
|
|
|
2,733
|
|
Related party note
payable, net of current portion
|
|
703
|
|
|
793
|
|
Operating lease
liabilities, net of current portion
|
|
159
|
|
|
305
|
|
Other long-term
liabilities
|
|
129
|
|
|
403
|
|
Total long-term
liabilities
|
|
42,288
|
|
|
30,885
|
|
Total
liabilities
|
|
48,277
|
|
|
37,023
|
|
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
DEFICIT:
|
|
|
|
|
|
|
Common stock, $.01 par value, 140,000 and 110,000 shares authorized,
58,591
and
34,097
issued and
outstanding at December 31, 2020 and 2019, respectively
|
|
586
|
|
|
341
|
|
Additional paid-in
capital
|
|
376,954
|
|
|
368,345
|
|
Accumulated
deficit
|
|
(421,361)
|
|
|
(401,783)
|
|
Total shareholders'
deficit
|
|
(43,821)
|
|
|
(33,097)
|
|
Total liabilities
and shareholders' deficit
|
$
|
4,456
|
|
$
|
3,926
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of these consolidated financial
statements.
26
PARKERVISION,
INC.
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019
(in thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
||
|
Product
revenue
|
$
|
-
|
|
$
|
74
|
|
|
|
|
|
|
|
|
|
|
Cost of sales -
product
|
|
-
|
|
|
73
|
|
|
Loss on impairment of
inventory
|
|
-
|
|
|
6
|
|
|
Gross margin
|
|
-
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
Research and development
expenses
|
|
-
|
|
|
334
|
|
|
Selling, general, and
administrative expenses
|
|
10,664
|
|
|
7,602
|
|
|
Total operating
expenses
|
|
10,664
|
|
|
7,936
|
|
|
|
|
|
|
|
|
|
|
Interest and other
income
|
|
-
|
|
|
3
|
|
|
Interest and other
expense
|
|
(547)
|
|
|
(421)
|
|
|
Change in fair value of
contingent payment obligations
|
|
(8,367)
|
|
|
(1,094)
|
|
|
Total interest and
other
|
|
(8,914)
|
|
|
(1,512)
|
|
|
|
|
|
|
|
|
|
|
Net loss before income
tax
|
|
(19,578)
|
|
|
(9,453)
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(19,578)
|
|
|
(9,453)
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income, net
of tax
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
$
|
(19,578)
|
|
$
|
(9,453)
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per
common share
|
$
|
(0.42)
|
|
$
|
(0.30)
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding
|
|
47,019
|
|
|
31,461
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of these consolidated financial
statements.
27
PARKERVISION,
INC.
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ DEFICIT
FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock, Par
Value
|
|
|
Additional Paid-in
Capital
|
|
Accumulated
Deficit |
|
Total
Shareholders' Deficit |
|||
|
Balance as of December 31,
2018
|
|
$
|
287
|
|
|
366,695
|
|
|
(392,292)
|
|
|
(25,310)
|
|
Cumulative effect
of change in accounting principle
|
|
|
-
|
|
|
-
|
|
|
(38)
|
|
|
(38)
|
|
Issuance of common
stock upon exercise of warrants
|
|
|
29
|
|
|
-
|
|
|
-
|
|
|
29
|
|
Issuance of common
stock and warrants for services
|
|
|
6
|
|
|
234
|
|
|
-
|
|
|
240
|
|
Issuance of
convertible debt with beneficial conversion feature
|
|
|
-
|
|
|
550
|
|
|
-
|
|
|
550
|
|
Issuance of common
stock upon conversion and payment of interest in kind on
convertible debt
|
|
|
19
|
|
|
277
|
|
|
-
|
|
|
296
|
|
Share-based
compensation, net of shares withheld for taxes
|
|
|
-
|
|
|
589
|
|
|
-
|
|
|
589
|
|
Net loss for the
year
|
|
|
-
|
|
|
-
|
|
|
(9,453)
|
|
|
(9,453)
|
|
Balance as of December 31,
2019
|
|
|
341
|
|
|
368,345
|
|
|
(401,783)
|
|
|
(33,097)
|
|
Issuance of common
stock and warrants in private offerings, net of issuance
costs
|
|
|
148
|
|
|
4,618
|
|
|
|
|
|
4,766
|
|
Issuance of common
stock upon exercise of warrants
|
|
|
45
|
|
|
1,530
|
|
|
-
|
|
|
1,575
|
|
Issuance of common
stock and warrants for services
|
|
|
7
|
|
|
297
|
|
|
-
|
|
|
304
|
|
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
|
|
|
15
|
|
|
437
|
|
|
-
|
|
|
452
|
|
Issuance of common
stock upon conversion of short-term loans and payables
|
|
|
22
|
|
|
318
|
|
|
-
|
|
|
340
|
|
Share-based
compensation, net of shares withheld for taxes
|
|
|
8
|
|
|
1,236
|
|
|
-
|
|
|
1,244
|
|
Net loss for the
year
|
|
|
-
|
|
|
-
|
|
|
(19,578)
|
|
|
(19,578)
|
|
Balance as of December 31,
2020
|
|
$
|
586
|
|
$
|
376,954
|
|
$
|
(421,361)
|
|
$
|
(43,821)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of these consolidated financial
statements.
28
PARKERVISION,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
DECEMBER 31, 2020 AND 2019
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
||
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net
loss
|
$
|
(19,578)
|
|
$
|
(9,453)
|
|
Adjustments to
reconcile net loss to net cash used in
operating activities: |
|
|
|
|
|
|
Depreciation and
amortization
|
|
632
|
|
|
835
|
|
Share-based
compensation
|
|
1,244
|
|
|
589
|
|
Noncash lease
expense
|
|
61
|
|
|
280
|
|
Change in fair
value of contingent payment obligation
|
|
8,367
|
|
|
1,094
|
|
Loss on
disposal/impairment of equipment and other assets
|
|
487
|
|
|
412
|
|
Noncash expense for
amendment of equity-related agreements
|
|
2,211
|
|
|
-
|
|
Inventory
impairment charges
|
|
-
|
|
|
6
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
-
|
|
|
2
|
|
Finished goods
inventories
|
|
-
|
|
|
81
|
|
Prepaid expenses
and other assets
|
|
292
|
|
|
221
|
|
Accounts payable
and accrued expenses
|
|
1,757
|
|
|
2,790
|
|
Operating lease
liabilities
|
|
(250)
|
|
|
(230)
|
|
Total
adjustments
|
|
14,801
|
|
|
6,080
|
|
Net cash used in
operating activities
|
|
(4,777)
|
|
|
(3,373)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from sale
of property and equipment
|
|
2
|
|
|
30
|
|
Purchases of
property and equipment
|
|
(3)
|
|
|
(5)
|
|
Payments for patent
costs and other intangible assets
|
|
-
|
|
|
(18)
|
|
Net cash (used
in)/provided by investing activities
|
|
(1)
|
|
|
7
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Net proceeds from
issuance of common stock and contingent payment rights in private
offerings
|
|
4,801
|
|
|
-
|
|
Net proceeds from
exercise of warrants
|
|
1,575
|
|
|
29
|
|
Net proceeds from
debt financings
|
|
1,244
|
|
|
3,068
|
|
Debt
repayments
|
|
(1,272)
|
|
|
(1,200)
|
|
Principal payments
on finance lease obligation
|
|
-
|
|
|
(1)
|
|
Net cash provided
by financing activities
|
|
6,348
|
|
|
1,896
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
AND CASH EQUIVALENTS
|
|
1,570
|
|
|
(1,470)
|
|
CASH AND CASH
EQUIVALENTS, beginning of year
|
|
57
|
|
|
1,527
|
|
CASH AND CASH
EQUIVALENTS, end of year
|
$
|
1,627
|
|
$
|
57
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH
FLOW INFORMATION:
|
|
|
|
|
|
|
Cash paid for
interest
|
$
|
61
|
|
$
|
4
|
|
Cash paid for income
taxes
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of these consolidated financial
statements.
29
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,
2020 and 2019
1. SIGNIFICANT ACCOUNTING
POLICIES
ParkerVision, Inc.
and its wholly-owned German subsidiary, ParkerVision GmbH
(collectively “ParkerVision”, “we” or the
“Company”) is in the business of innovating fundamental
wireless hardware technologies and products. We have
determined that our business currently operates under a
single operating and reportable segment.
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, the returns on which
are dependent upon the generation of future revenues for
realization.
In 2018, we
restructured our operations to reduce operating
expenses. As part of that restructuring, we made
significant reductions in our investment in the development and
marketing of a consumer distributed WiFi product line marketed
under the brand name Milo®. In
early 2019, we ceased substantially all ongoing research and
development efforts and, where applicable, repurposed resources to
support our patent enforcement and product sales and support
efforts. We ceased sales of our Milo products in the fourth quarter
of 2019 and are currently focused exclusively on our patent
enforcement litigation and licensing efforts.
Basis of Presentation
Our consolidated
financial statements are prepared in accordance with generally
accepted accounting principles in the U.S. (“GAAP”). Certain
reclassifications have been made to prior period amounts to conform
to the current period presentation. The consolidated
financial statements include the accounts of ParkerVision, Inc. and
our wholly-owned German subsidiary, ParkerVision GmbH, after
elimination of all intercompany transactions and
accounts.
Use of Estimates in the Preparation of
Financial Statements
The preparation of
financial statements in conformity with GAAP requires us to make
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
periods. The more significant estimates made by us
include projected future cash flows and risk-adjusted discount
rates for estimating the fair value of our contingent payment
obligations, the volatility and estimated lives of share-based
awards used in the estimate of the fair market value of share-based
compensation, the assessment of recoverability of long-lived
assets, the amortization periods for intangible and long-lived
assets, and the valuation allowance for deferred
taxes. Actual results could differ from the estimates
made. We periodically evaluate estimates used in the
preparation of the financial statements for continued
reasonableness. Appropriate adjustments, if any, to the
estimates used are made prospectively based upon such periodic
evaluation.
30
Cash and Cash Equivalents
We consider cash
and cash equivalents to include cash on hand, interest-bearing
deposits, overnight repurchase agreements and investments with
original maturities of three months or less when
purchased.
Inventory
Inventory is stated
at the lower of actual cost, as determined under the first-in,
first-out method, or estimated net realizable value. We
review our inventory for estimated obsolescence or unmarketable
inventory and write down inventory for the difference between cost
and estimated market value based upon assumptions about future
demand. Future demand is affected by market conditions,
technological obsolescence, new products and strategic plans, each
of which is subject to change. Due to the decision to
discontinue Milo product sales in the fourth quarter of 2019, a
full reserve was recorded against the remaining inventory on hand
at December 31, 2019. All remaining inventory was
disposed of during the year ended December 31, 2020.
Property and Equipment
Property and
equipment are stated at cost, less accumulated depreciation.
Depreciation is determined using the straight-line method over the
following estimated useful lives:
|
|
|
|
|
|
|
Manufacturing and
office equipment
|
5-7
years
|
|
Leasehold
improvements
|
Shorter of useful
life or remaining life of lease
|
|
Furniture and
fixtures
|
7
years
|
|
Computer equipment
and software
|
3-5
years
|
The cost and
accumulated depreciation of assets sold or retired are removed from
their respective accounts, and any resulting net gain or loss is
recognized in the accompanying consolidated statements of
comprehensive loss. The carrying value of long-lived
assets is reviewed on a regular basis for the existence of facts,
both internally and externally, that may suggest impairment.
Recoverability of assets to be held and used is measured by
comparing the carrying amount of an asset to the estimated
undiscounted future cash flows expected to be generated by the
asset. If the carrying amount of the assets exceeds its
estimated undiscounted future net cash flows, an impairment charge
is recognized in the amount by which the carrying amount of the
asset exceeds the fair value of the assets.
Intangible Assets
We capitalize
outside legal costs and agency filing fees incurred in connection
with securing the rights to our intellectual
property. Patents, copyrights and other intangible
assets are amortized using the straight-line method over their
estimated period of benefit. We estimate the economic
lives of our patents and copyrights to be fifteen to twenty
years. Management evaluates the recoverability of
intangible assets periodically and takes into account events or
circumstances that may warrant revised estimates of useful lives or
that may indicate impairment exists. As part of our
ongoing patent maintenance program, we will, from time to time,
abandon a particular patent if we determine fees to maintain the
patent exceed its expected recoverability. The cost and accumulated
amortization of abandoned intangible assets are removed from their
respective accounts, and any resulting net loss is recognized in
selling, general and administrative expenses in the accompanying
consolidated statements of comprehensive loss.
Contingent Payment
Obligations
We have accounted
for our secured and unsecured contingent payment obligations as
long-term debt in accordance with Accounting Standards Codification
(“ASC”)
470-10-25, “Sales of Future Revenues or Various other
Measures of Income.” Our payment obligations are contingent
upon the receipt of proceeds from patent enforcement and/or patent
monetization actions. We have elected to measure our
contingent payment obligations at their estimated fair values in
accordance with ASC 825, “Financial Instruments” based
on the variable and contingent nature of the repayment provisions.
We have determined that the fair
31
value of our
secured and unsecured contingent payment obligations falls within
Level 3 in the fair value hierarchy, which involves significant
estimates, and assumptions including projected future
patent-related proceeds and the risk-adjusted rate for discounting
future cash flows (see Note 10). Actual results could
differ from the estimates made. Changes in fair value, including
the component related to imputed interest, are included in the
accompanying consolidated statements of comprehensive loss under
the heading “Change in fair value of contingent payment
obligations.”
Leases
We adopted ASC 842,
“Leases” as of January 1, 2019 which requires the
recognition of lease right-of-use (“ROU”) assets and lease
liabilities on our consolidated balance sheets for finance and
operating leases with initial lease terms of more than 12 months.
We elected to use the effective date as the initial application
date. ASC 842 provides a number of practical expedients
in transition and we elected the package of practical expedients
which permits us not to reassess under the new standard our prior
conclusions about lease identification, lease classification and
treatment of initial direct costs. The adoption of this
new standard resulted in the recognition of operating lease ROU
assets and operating lease liabilities of approximately $0.56
million and $0.60 million, respectively, primarily related to our
facilities leases. Refer to Note 8 for additional
disclosures related to our leases.
At inception of a lease, we determine if an
arrangement contains a lease and whether that lease meets the
classification criteria of a finance or operating lease. Some of
our lease arrangements contain lease components (e.g. minimum rent
payments) and non-lease components (e.g. services). For certain
equipment leases, we account for lease and non-lease components
separately based on a relative fair market value basis. For all
other leases, we account for the lease and non-lease components
(e.g. common area maintenance) on a combined
basis.
For operating leases with terms greater than 12
months, we record the ROU asset and lease obligation at the present
value of lease payments over the term using the implicit interest
rate, when readily available, or our incremental borrowing rate for
collateralized debt based on information available at the lease
commencement date. Certain of our leases include rental
escalation clauses, renewal options and/or termination options that
are factored into our determination of lease payments when it is
reasonably certain that the option will be exercised. We
do not recognize ROU assets and lease liabilities for leases with
terms at inception of twelve months or
less.
Finance leases are included in property and
equipment and other accrued expenses on the consolidated balance
sheets. Finance leases are recorded as an asset and an obligation
at an amount equal to the present value of the minimum lease
payments during the lease term. Amortization expense and interest
expense associated with finance leases are included in selling,
general, and administrative expense and interest expense,
respectively, on the consolidated statements of comprehensive
loss.
Convertible Debt
We have issued debt
that is convertible, at the holder’s option, into shares of
our common stock at fixed conversion prices. Certain of
the convertible notes were issued with conversion prices that were
below market value of our common stock on the closing date
resulting in a beneficial conversion feature which we recorded to
equity with a corresponding discount to the debt. The
discount is amortized over the life of the notes as interest
expense.
In August 2020, the Financial Accounting Standards
Board issued ASU 2020-06 "Debt - Debt with Conversion and Other
Options (Subtopic 470-20) and Derivatives and Hedging - Contracts
in Entity's Own Equity (Subtopic 815-40): Accounting for
Convertible Instruments and Contracts in an Entity's Own
Equity." This ASU simplifies accounting for convertible
instruments by removing major separation models required under
current U.S. GAAP. Consequently, more convertible debt
instruments will be
32
reported as a single liability instrument with no
separate accounting for embedded conversion
features. The ASU removes certain settlement conditions
that are required for equity contracts to qualify for the
derivative scope exception, which will permit more equity contracts
to qualify for the exception. The ASU also simplifies
the diluted earnings per share (EPS) calculation in certain areas.
The ASU is effective for fiscal years beginning after
December 15, 2021 for accelerated filers and for fiscal years
beginning after December 15, 2023, including interim periods within
those fiscal years, for smaller reporting
companies. Early adoption is permitted for fiscal years
beginning after December 15, 2020. The ASU provides for
a modified retrospective method of adoption whereby the guidance is
applied 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.
We plan to adopt ASU 2020-06, using the modified
retrospective method, as of January 1, 2021. Adoption of
ASU 2020-06 will result 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 retained deficit of $0.3 million resulting from the
elimination of the previously recognized beneficial conversion
feature as a debt discount.
Revenue Recognition
We account for
revenue under ASC 606, “Revenue from Contracts with
Customers” which implements a common revenue standard that
clarifies the principles for recognizing revenue. This
revenue recognition model provides a five-step analysis in
determining when and how revenue is recognized.
We expect to derive
future revenue from licensing of our intellectual property and
settlements from patent infringement disputes. The
timing of revenue recognition and the amount of revenue recognized
depends upon a variety of factors, including the specific terms of
each arrangement and the nature of our deliverables and
obligations. In general, we recognize revenue when the
performance obligations to our customers have been
met. The consideration received from patent license and
settlement agreements is allocated to the various elements of the
arrangement to the extent the revenue recognition differs between
the elements of the arrangement. Elements related to
past and future royalties as well as elements related to settlement
will be recorded as revenue in our consolidated statements of
comprehensive loss when our performance obligations related to each
element have been met.
For the year ended
December 31, 2019, we recognized revenue from the sale of
products. For product sales, the performance obligation
is generally met at the time product is delivered to the
customer. Estimated product returns are deducted from
revenue and recorded as a liability. Revenue from the
sale of our products includes shipping and handling charged to the
customer. Product revenue is recorded net of sales tax
collected from customers, discounts, and actual and estimated
future returns.
Research and Development
Expenses
Research and
development costs are expensed as incurred and include salaries and
benefits for employees engaged in research and development
activities, costs paid to third party contractors, prototype
expenses, an allocated portion of facilities costs, maintenance
costs for software development tools, and
depreciation.
Accounting for Share-Based
Compensation
We have various
share-based compensation programs which provide for equity awards
including stock options, restricted stock units
(“RSUs”)
and restricted stock awards (“RSAs”). We calculate the
fair value of employee share-based equity awards on the date of
grant and recognize the calculated fair value as compensation
expense over the requisite service periods of the related
awards. We estimate the fair value of stock option
awards using the Black-Scholes option valuation
model. This valuation model requires the use of highly
subjective assumptions and estimates including how long employees
will retain their
33
stock options
before exercising them and the volatility of our common stock price
over the expected life of the equity award. Such
estimates, and the basis for our conclusions regarding such
estimates, are outlined in detail in Note 14. Estimates
of fair value are not intended to predict actual future events or
the value ultimately realized by persons who receive equity
awards. We account for forfeitures of share-based awards
as they occur.
As of January 1,
2019, we adopted ASU 2018-07, "Compensation - Stock Compensation
(Topic 718): Improvements to Nonemployee Share-Based Payment
Accounting." The amendments in this update simplify the accounting
for share-based payments to nonemployees by aligning it with the
accounting for share-based payments to employees, with certain
exceptions. At the time of adoption, we did not have any awards to
nonemployees that would require reassessment and therefore the
adoption of ASU 2018-07 did not impact our consolidated financial
statements.
Income Taxes
The provision for
income taxes is based on loss before taxes as reported in the
accompanying consolidated statements of comprehensive
loss. Deferred tax assets and liabilities are recognized
for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Deferred tax
assets and liabilities are determined based on differences between
the financial statement carrying amounts and the tax basis of
assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to
reverse. Valuation allowances are established to reduce
deferred tax assets when, based on available objective evidence, it
is more likely than not that the benefit of such assets will not be
realized. Our deferred tax assets exclude unrecognized
tax benefits which do not meet a more-likely-than-not threshold for
financial statement recognition for tax positions taken or expected
to be taken in a tax return.
As of January 1,
2019, we adopted ASU 2018-02, “Income Statement - Reporting
Comprehensive Income (Topic 220): Reclassification of Certain Tax
Effects from Accumulated Other Comprehensive Income.” The
amendments in this update allow a reclassification from accumulated
other comprehensive income to retained earnings for stranded tax
effects resulting from the Tax Cuts and Jobs Act. We have no
stranded tax effects included in our other comprehensive loss and
therefore the adoption of ASU 2018-02 did not impact our
consolidated financial statements.
Loss per Common Share
Basic loss per
common share is determined based on the weighted-average number of
common shares outstanding during each year. Diluted loss
per common share is the same as basic loss per common share as all
potential common shares are excluded from the calculation, as their
effect is anti-dilutive.
The number of
shares underlying outstanding options, warrants, unvested RSUs, and
convertible notes at December 31, 2020 and 2019 were as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
||
|
Options
outstanding
|
|
12,240
|
|
|
11,410
|
|
Warrants
outstanding
|
|
12,850
|
|
|
12,150
|
|
Unvested
RSUs
|
|
187
|
|
|
-
|
|
Shares underlying
convertible notes
|
|
23,557
|
|
|
20,846
|
|
|
|
48,834
|
|
|
44,406
|
|
|
|
|
|
|
|
These potential
shares were excluded from the computation of diluted loss per share
as their effect would have been anti-dilutive.
34
2. LIQUIDITY AND GOING
CONCERN
The accompanying
consolidated financial statements as of and for the year ended
December 31, 2020 were prepared assuming we will continue as a
going concern, which contemplates that we will continue in
operation and will be able to realize our assets and settle our
liabilities and commitments in the normal course of business for a
period of at least one year from the issuance date of these
consolidated financial statements. These 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 in every
year since inception and have utilized the proceeds from the sales
of our equity and equity-linked securities and our contingent
funding arrangements with third-parties to fund our operations,
including our litigation costs. For the year ended
December 31, 2020, we incurred a net loss of approximately
$19.6 million and negative cash flows from operations of
approximately $4.8 million. At December 31,
2020, we had a working capital deficit of approximately
$3.8 million and an accumulated deficit of approximately
$421.4 million. These circumstances raise
substantial doubt about our ability to continue to operate as a
going concern for a period of one year after the issuance date of
these consolidated financial statements.
We had cash and
cash equivalents of approximately $1.6 million at December 31,
2020. We received an additional $5.6 million in proceeds
from debt and equity financings and warrant and option exercises in
the first quarter of 2021, of which $3.0 million was used to settle
outstanding accounts and notes payable for litigation costs (see
Note 17). Our remaining capital resources will be used
to fund our current obligations and ongoing operating costs;
however these resources may not be sufficient to meet our liquidity
needs for the next twelve months and we may be required to seek
additional capital.
Our business plan
is currently focused solely on our patent enforcement and
technology licensing objectives. The timing and amount
of proceeds from our patent enforcement actions are difficult to
predict and there can be no assurance we will receive any proceeds
from these enforcement actions.
Our ability to meet
our liquidity needs for the twelve months after the issuance date
of these financial statements is dependent upon one or more of (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 and (ii) our ability
to raise additional capital from the sale of debt or equity
securities or other financing arrangements. We
anticipate that we will continue to invest in patent protection,
licensing, and enforcement of our wireless
technologies. We expect that revenue generated from
patent enforcement actions, and technology licenses over the twelve
months after the issuance date of these financial statements, if
any, after deduction of payment obligations to our third-party
litigation funder and legal counsel, may not be sufficient to cover
our operating expenses. In the event we do not generate revenues,
or other patent-asset proceeds, sufficient to cover our operational
costs and contingent repayment obligation, 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 our ability to
secure sufficient financing to support our business, and our
ability to generate revenues and/or patent-related proceeds
sufficient to offset expenses and meet our contingent payment
obligation and other long-term debt repayment
obligations. Failure to generate sufficient revenues,
raise additional capital through debt or equity financings, and/or
reduce operating costs could have a material adverse effect on our
ability to meet our short and long-term liquidity needs and achieve
our intended long-term business objectives.
35
3. INVENTORIES
As of December 31,
2019, we had $0.55 million in finished goods inventories that were
fully offset by an inventory reserve. All of our
remaining inventories were disposed of in 2020.
The following table
provides a reconciliation of our inventory reserves for the years
ended December 31, 2020 and 2019, respectively (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2020
|
|
2019
|
||
|
Inventory reserves
at beginning of year
|
|
$
|
550
|
|
$
|
982
|
|
Impairment
charges
|
|
|
-
|
|
|
6
|
|
Write down of
impaired inventories
|
|
|
-
|
|
|
(438)
|
|
Disposal of
inventory
|
|
|
(550)
|
|
|
-
|
|
Inventory reserves
at end of year
|
|
$
|
-
|
|
$
|
550
|
|
|
|
|
|
|
|
|
4. PREPAID EXPENSES
Prepaid expenses
consisted of the following at December 31, 2020 and 2019 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
||
|
Prepaid
services
|
$
|
408
|
|
$
|
221
|
|
Prepaid bonds for
German statutory costs
|
|
142
|
|
|
188
|
|
Prepaid
insurance
|
|
21
|
|
|
62
|
|
Prepaid licenses,
software tools and support
|
|
11
|
|
|
17
|
|
Other prepaid
expenses
|
|
17
|
|
|
17
|
|
|
$
|
599
|
|
$
|
505
|
|
|
|
|
|
|
|
5. PROPERTY AND EQUIPMENT,
NET
Property and
equipment, at cost, consisted of the following at December 31,
2020 and 2019 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
||
|
Equipment and
software
|
$
|
218
|
|
$
|
260
|
|
Leasehold
improvements
|
|
19
|
|
|
33
|
|
Furniture and
fixtures
|
|
30
|
|
|
43
|
|
|
|
267
|
|
|
336
|
|
Less accumulated
depreciation
|
|
(237)
|
|
|
(266)
|
|
|
$
|
30
|
|
$
|
70
|
|
|
|
|
|
|
|
Depreciation
expense related to property and equipment was approximately $0.03
million and $0.04 million in 2020 and 2019,
respectively.
In connection with
the relocation of our corporate headquarters in July 2019 and
October 2020, we disposed of a number of assets that were no longer
in use. For the years ended December 31, 2020 and 2019,
we recorded a loss on disposal of fixed assets of approximately
$0.02 million and $0.01 million, respectively.
36
In connection with
the closure of our Lake Mary facility in 2018, we reclassified
equipment with a net book value of approximately $0.07 million to
assets held for sale. We contracted with a third party
for the consignment sale of these assets and completed sales for
several assets in 2019. For the year ended December 31,
2019, we recognized a net loss of approximately $0.04 million on
the sale and/or impairment of assets held for sale. The
gains and losses on the sale or impairment of held for sale assets
is included in selling, general and administrative expenses in the
accompanying statements of comprehensive loss.
6. INTANGIBLE ASSETS
Intangible assets
consisted of the following at December 31, 2020 and 2019 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
||
|
|
|
|
|
|
|
|
Patents and
copyrights
|
$
|
14,948
|
|
$
|
16,612
|
|
Less accumulated
amortization
|
|
(12,778)
|
|
|
(13,734)
|
|
|
$
|
2,170
|
|
$
|
2,878
|
|
|
|
|
|
|
|
Amortization
expense for each of the years ended December 31, 2020 and 2019
was approximately $0.4 million and $0.6 million,
respectively. For the years ended December 31, 2020 and
2019, we recorded losses on the disposal of intangible assets of
approximately $0.3 million and $0.4 million,
respectively.
Future estimated
amortization expense for intangible assets that have remaining
unamortized amounts as of December 31, 2020 is as follows (in
thousands):
|
|
|
|
|
|
|
|
|
2021
|
$
|
358
|
|
2022
|
|
321
|
|
2023
|
|
283
|
|
2024
|
|
270
|
|
2025
|
|
231
|
|
2026 and
thereafter
|
|
707
|
|
Total
|
$
|
2,170
|
|
|
|
|
7. ACCRUED
LIABILITIES
Other accrued
expenses consisted of the following at December 31, 2020 and 2019
(in thousands):
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
||
|
Advances
|
$
|
882
|
|
$
|
500
|
|
Board
compensation
|
|
-
|
|
|
413
|
|
Other accrued
expenses
|
|
54
|
|
|
168
|
|
|
$
|
936
|
|
$
|
1,081
|
|
|
|
|
|
|
|
Advances
include amounts received from litigation counsel as
advanced reimbursement of out-of-pocket expenses expected to be
incurred by us and, at December 31, 2020, includes approximately
$0.4 million received from investors for the purchase of equity
securities in a January 2021 transaction (see Note
17).
37
Board compensation
of $0.4 million at December 31, 2019 represents accrued and
unpaid board fees from prior periods. In 2020, current
and prior board members agreed to accept share-based compensation
awards with an aggregate grant-date fair value of approximately
$0.1 million as partial payment for the outstanding fees and waived
the remaining unpaid fees.
8. LEASES
We lease our office and other facilities and
certain office equipment under long-term, non-cancelable operating
and finance leases. No
new finance or operating leases commenced during the
years ended December 31, 2020 or 2019. During
the year ended December 31, 2020, we recognized an impairment
loss of approximately $0.2 million on the ROU asset
related to our Lake Mary office lease. We ceased use
of this facility in
2018 as part of a restructuring of our operations. The value of our ROU asset
included estimated future sublease income. Due to a
number of factors, including the high vacancy
rate of the building in which the space is located
and the current COVID-19 environment, we determined securing a
sublease for the space would be
unlikely. The
impairment loss recognized in 2020 represented the remaining carrying value of the
asset and is included in selling, general,
and administrative expenses in our consolidated
statements of comprehensive loss.
Lease expense for operating leases is generally
recognized on a straight-line basis over the lease term and is
included in operating expenses on the consolidated statement of
comprehensive loss. We
recognized operating lease costs of $0.1 million
and $0.4 million for the years ended December 31, 2020 and 2019, respectively.
Supplemental Cash Flow
Information
The following table summarizes the supplemental
cash flow information related to leases, including the ROU assets
recognized upon adoption of the new lease standard (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
Year
Ended
|
||
|
|
|
December 31,
|
|
December 31,
|
||
|
|
|
2020
|
|
2019
|
||
|
Cash paid for
amounts included in the measurement of lease
liabilities:
|
|
|
|
|
|
|
|
Operating
cash flows from operating leases
|
|
$
|
315
|
|
$
|
314
|
|
Operating
cash flows from finance leases
|
|
|
-
|
|
|
-
|
|
Financing
cash flows from finance leases
|
|
|
-
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Non-cash
activity
|
|
|
|
|
|
|
|
Right-of-use assets
obtained in exchange for operating lease liabilities
|
|
|
-
|
|
|
563
|
|
Assets obtained in
exchange for finance lease liabilities
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
38
Other Information
The table below
summarizes other supplemental information related to
leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2020
|
|
2019
|
|
Weighted-average
remaining lease term (in years):
|
|
|
|
|
|
Operating
leases
|
|
1.7
|
|
2.7
|
|
Finance
leases
|
|
-
|
|
0.3
|
|
Weighted average
discount rate
|
|
|
|
|
|
Operating
leases (1)
|
|
12.1%
|
|
12.0%
|
|
Finance
leases
|
|
-
|
|
8.7%
|
|
|
|
|
|
|
|
|
(1)
|
|
Upon adoption of the new lease standard, discount
rates used for existing leases were established at January 1,
2019.
|
Undiscounted Cash
Flows
The future maturities of lease liabilities consist
of the following as of December 31, 2020 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Leases
|
|
Finance
Leases
|
||
|
2021
|
|
$
|
175
|
|
$
|
-
|
|
2022
|
|
|
166
|
|
|
-
|
|
2023
|
|
|
4
|
|
|
-
|
|
Thereafter
|
|
|
-
|
|
|
-
|
|
Total undiscounted lease
payments
|
|
|
345
|
|
|
-
|
|
Less: imputed
interest
|
|
|
(40)
|
|
|
-
|
|
Present value of lease
liabilities
|
|
|
305
|
|
|
-
|
|
Less: current obligations under
leases
|
|
|
(146)
|
|
|
-
|
|
Long-term lease
obligations
|
|
$
|
159
|
|
$
|
-
|
|
|
|
|
|
|
|
|
9. LONG-TERM DEBT
Notes
Payable
Note Payable to a Related
Party
We have an unsecured promissory note payable
of $0.8 million to
Sterne, Kessler, Goldstein, & Fox, PLLC
(“SKGF”),
a related party (see Note 15), for
outstanding unpaid fees for
legal services.
The note, as amended, accrues interest
at 4% per annum and
provides for monthly payments of principal and interest of
$10,000 with a final balloon payment of
approximately $0.68
million due at the maturity date
of April 30,
2022.
We are currently in compliance with
all the terms of the note, as
amended. For the years ended December 31,
2020 and 2019, we
recognized interest expense of approximately $0.03
million and $0.04
million,
respectively, related to this
note.
Unsecured Notes
Payable
Unsecured notes payable at December 31, 2020
represents the current portion of our Paycheck Protection Program
loan, as described more fully below. Unsecured notes
payable at December 31, 2019 represents the outstanding principal
balance of unsecured short-term promissory notes with
accredited investors. The short-term promissory notes, as
amended, accrued interest at a rate of 20% per
annum. During the year ended December
31, 2020, we issued an aggregate of 1,740,426 shares of our common stock
as
39
an in-kind repayment of the $0.23 million
in outstanding principal
and $0.04 million of accrued interest on these short-term notes.
For the years ended December 31,
2020 and 2019, we recognized interest expense of
approximately $0.01
million and $0.03 million,
respectively, related to these short-term
notes.
Paycheck Protection Program
Loan
In May 2020, we received
approximately $0.2 million in proceeds from an approved loan
under the Paycheck Protection Program. Interest
accrues on the
outstanding principal balance at a
rate of 1%, computed
on a simple interest basis. The loan principal and
accrued interest are expected
to be eligible for
forgiveness in accordance with
the loan provisions. Payments of principal and interest are deferred
until the date a decision on an application for forgiveness is
made. If no application is submitted,
we will be required to make monthly
repayments of approximately $8,000 per month commencing May 1,
2021 and the loan will mature on May 3, 2022,
at which time any unpaid principal and accrued interest will be due
and payable. We began
the application
process for loan forgiveness in March 2021.
The estimated current and noncurrent portions of this loan are
included in the captions “Unsecured notes payable” and
“Other long-term liabilities” in the consolidated
balance sheet as of December 31, 2020.
Other long-term liabilities at December 31, 2019
represents an advance payment from a potential litigation
funder. This liability was reclassified as an unsecured
contingent payment obligation in 2020 (see “unsecured
contingent payment obligation” below).
Secured Note Payable
We have a note payable to Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C. (“Mintz”)
for outstanding, unpaid attorney’s fees and costs associated
with our patent enforcement program. The Mintz note is non-interest
bearing, except in the event of a default, and is secured by
certain of our U.S. and foreign patents. The note, at Mintz’s
option, accelerates and becomes immediately due and payable in the
case of standard events of default and/or in the event of a sale or
other transfer of substantially all of our assets or a transfer of
more than 50% of
our capital stock in one or a series of transactions or through a
merger or other similar transaction.
We were
in default on the payment terms of the
note at December 31,
2019, and accordingly,
we accrued interest at the default rate
of 12% per annum. During the year
ended December 31, 2020, we repaid $1.2 million of outstanding
principal and interest on the Mintz note, leaving an outstanding
balance of accrued default interest, at December
31, 2020 of approximately $0.03 million. In March 2021, we settled our outstanding
obligations with Mintz (see
Note 17) and Mintz waived all
past defaults on the note which has been paid in
full.
At
December 31, 2020, the aggregate maturities of our notes
payable are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
$
|
191
|
|
2022
|
|
832
|
|
Total
|
$
|
1,023
|
|
|
|
|
The estimated fair
value of our notes payable at December 31, 2020 is approximately
$0.9 million based on a risk-adjusted discount rate.
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 and subject to certain equity
conditions, in either cash, shares of our
40
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 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 is recorded as
a discount on the convertible notes with a corresponding increase
to additional paid in capital.
Convertible notes
payable at December 31, 2020 and 2019, consist of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
Effective
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
|
|
Interest
|
|
|
|
December
31,
|
||||
|
Description
|
|
Rate
|
|
Rate 1
|
|
Maturity
Date
|
|
2020
|
|
2019
|
||
|
Convertible notes
dated September 10, 2018
|
|
$0.40
|
|
23.4%
|
|
September 7,
2023
|
|
$
|
600
|
|
$
|
700
|
|
Convertible notes
dated September 19, 2018
|
|
$0.57
|
|
10.2%
|
|
September 19,
2023
|
|
|
425
|
|
|
425
|
|
Convertible notes
dated February/March 2019
|
|
$0.25
|
|
8.0%
|
|
February 28, 2024
to March 13, 2024
|
|
|
1,300
|
|
|
1,300
|
|
Convertible notes
dated June/July 2019
|
|
$0.10
|
|
8.0%
|
|
June 7, 2024 to
July 15, 2024
|
|
|
340
|
|
|
390
|
|
Convertible notes
dated July 18, 2019
|
|
$0.08
|
|
46.1%
|
|
July 18,
2024
|
|
|
700
|
|
|
700
|
|
Convertible notes
dated September 13, 2019
|
|
$0.10
|
|
25.9%
|
|
September 13,
2024
|
|
|
50
|
|
|
50
|
|
Convertible notes
dated January 8, 2020
|
|
$0.13
|
|
20.3%
|
|
January 8,
2025
|
|
|
450
|
|
|
-
|
|
Total principal
balance
|
|
|
|
|
|
|
|
|
3,865
|
|
|
3,565
|
|
Less unamortized
discount
|
|
|
|
|
|
|
|
|
847
|
|
|
832
|
|
|
|
|
|
|
|
|
|
$
|
3,018
|
|
$
|
2,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
The effective interest rate differs from the stated
rate of interest on the notes as a result of
beneficial
conversion
features recognized as discounts on the debt.
The notes bear interest at a stated rate
of 8% per annum, except for the July 18, 2019
notes which bear interest at a stated rate
of 7.5% per annum. We have the
option to prepay the majority of the notes any time following the
one-year anniversary of the issuance of the notes, subject to a
premium on the outstanding principal prepayment amount of 25% prior
to the two-year anniversary of the note issuance date, 20% prior to
the three-year anniversary of the note issuance date, 15% prior to
the four-year anniversary of the note issuance date, or 10%
thereafter. The notes provide for events of default that
include failure to pay principal or interest when due, breach of
any of the representations, warranties, covenants or agreements
made by us, events of liquidation or bankruptcy, and a change in
control. In the event of default, the interest rate
increases to 12% per annum and the outstanding principal balance of
the notes plus all accrued interest due may be declared immediately
payable by the holders of a majority of the then outstanding
principal balance of the notes.
For the years ended
December 31, 2020 and 2019, we sold five-year convertible
promissory notes with an aggregate face value of $0.45 million and
$2.44 million, respectively and recorded debt discounts in an
amount equal to the beneficial conversion features on these notes
of approximately $0.17 million and $0.55 million,
respectively. For the year ended December 31, 2020,
convertible notes with a face value of $0.15 million were converted
by the holders into 750,000 shares of our common stock at an
average conversion price of $0.20. For the year ended
December 31, 2019, convertible notes with a face value of $0.1
million were converted by the holders into 250,000 shares of our
common stock at a fixed conversion price of $0.40. At
the holders’ option, subject to ownership limitations, the
convertible notes
41
outstanding at
December 31, 2020 could be converted into an aggregate of
approximately 23.6 million shares of our common stock based on the
fixed conversion prices.
For the years ended
December 31, 2020 and 2019, we recognized interest expense of
approximately $0.47 million and $0.32 million, respectively,
including approximately $0.17 million and $0.12 million,
respectively, related to amortization of the discount and $0.3
million and $0.2 million, respectively, related to the contractual
interest which we elected to pay in shares of our common
stock. For the years ended December 31, 2020 and 2019, we
issued approximately 710,000 and 1,600,000 shares of our common
stock, respectively, as interest-in-kind payments on our
convertible notes. The unamortized discount on the
convertible notes will be eliminated upon our adoption of ASU
2020-06 as of January 1, 2021 (see Note
1).
All of the shares
underlying our convertible notes, including shares reserved for
future in-kind interest payments on the notes, have been registered
for resale.
Secured Contingent Payment
Obligation
The following table
provides a reconciliation of our secured contingent payment
obligation measured at estimated fair market value for the years
ended December 31, 2020 and 2019, respectively (in
thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
2020
|
|
|
2019
|
|
Secured contingent
payment obligation, beginning of year
|
|
$
|
26,651
|
|
$
|
25,557
|
|
Change in fair
value
|
|
|
6,406
|
|
|
1,094
|
|
Secured contingent
payment obligation, end of year
|
|
$
|
33,057
|
|
$
|
26,651
|
|
|
|
|
|
|
|
|
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 from time to time (the
“CPIA”). To
date, we have received aggregate proceeds of
$18 million in exchange for Brickell’s right to
reimbursement and compensation from gross proceeds resulting from
patent enforcement and other patent monetization actions. No
proceeds were received from Brickell in 2019 or 2020. To
date, we have repaid an aggregate of $3.3 million under the CPIA
from patent license and settlement proceeds.
Brickell is
entitled to priority payment of 55% to 100% of proceeds received
from all patent-related actions until such time that Brickell has
been paid 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 $42 million and $39 million as of December 31,
2020 and 2019, 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.
Brickell holds a
senior security interest in the majority of our assets until such
time as the specified minimum return is paid, in which case, the
security interest will be released except with respect to the
patents and proceeds related to specific legal
actions. The security interest is enforceable by
Brickell in the event that we are in default under the agreement
which would occur if (i) we fail, after notice, to pay proceeds to
Brickell, (ii) we become insolvent or insolvency proceedings are
commenced (and not subsequently discharged) with respect to us,
(iii) our creditors commence actions against us (which are not
subsequently discharged) that affect our material assets, (iv) we,
without Brickell’s consent, incur indebtedness other than
immaterial ordinary course indebtedness, or (v) there is an uncured
non-
42
compliance of our
obligations or misrepresentations under the
agreement. As of December 31, 2020, we are in
compliance with our obligations under this agreement.
In addition, in the
event of a change in control of the Company, Brickell has the right
to be paid its return as defined under the CPIA based on the
transaction price for the change in control event.
We have elected to
measure our secured contingent payment obligation at its estimated
fair value based on probability-weighted estimated cash outflows,
discounted back to present value using a discount rate determined
in accordance with accepted valuation methods (see Note
10). The secured contingent payment obligation is
remeasured to fair value at each reporting period with changes
recorded in the consolidated statements of comprehensive 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 years ended December 31, 2020 and 2019,
respectively (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
||
|
Unsecured
contingent payment obligations, beginning of period
|
|
$
|
-
|
|
$
|
-
|
|
Reclassification of
other liabilities
|
|
|
1,003
|
|
|
-
|
|
Issuance of
contingent payment rights
|
|
|
2,258
|
|
|
-
|
|
Change in fair
value
|
|
|
1,961
|
|
|
-
|
|
Unsecured
contingent payment obligations, end of period
|
|
$
|
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
(“Termination
Fee”) and (ii) contingent
payment rights (“CPRs”)
issued to accredited investors
primarily in connection
with equity financings. We have
elected to measure these unsecured contingent payment obligations
at their estimated fair value based on probability-weighted
estimated cash outflows, discounted back to present value using a
discount rate determined in accordance with accepted valuation
methods. The unsecured contingent payment obligations
will be remeasured to fair value at each reporting period with
changes recorded in the consolidated statements of comprehensive
loss until the contingency is resolved (see Note
10).
The Termination Fee is a result
of advances
received under a letter agreement with
a third-party funder of
$0.4 million in 2019 and $0.6 million
in 2020. Based on
the terms of the letter agreement, if a final funding arrangement
was not executed by March 31, 2020, we would be obligated to pay,
from future patent-related proceeds, an aggregate termination
payment equal to five times the advances received, or approximately $5.0 million. We did not
consummate a funding
agreement and accordingly the advances, which were initially recorded in other
long-term liabilities, were reclassified to unsecured contingent
payment obligations at March 31, 2020, when the
Termination Fee obligation was incurred. As
of December 31, 2020, the estimated fair value of unsecured
contingent payment obligations related to the Termination Fee
is $2.7 million.
The CPRs represent the estimated fair value of
rights provided to accredited investors who
purchased shares of our common
stock and the fair value of a right issued to a third-party in
connection with a service agreement during the year ended December
31, 2020 (see Note
13). During the year
ended December 31, 2020, we
received aggregate
proceeds of $3.8 million from the sale of common stock with
contingent payment rights, of
which approximately $1.8 million was allocated to the
CPRs. In addition, on May 1, 2020, we
amended certain March 2020 equity
purchase agreements with accredited
43
investors for the purchase of $0.9 million
in common stock to add CPRs. This amendment
resulted in a charge
to expense of $0.4 million for the initial estimated fair value
of the CPRs. The terms of the CPRs provide that we
will pay each investor an allocated portion of our net
proceeds from patent-related actions, after taking into account
fees and expenses payable to law firms representing us and amounts
payable to Brickell. The investors’ allocated
portion of net proceeds will be determined by multiplying the net
proceeds recovered by us (up to $10 million) by the quotient of such
investors’ subscription amount divided
by $10 million, up to an amount equal to each
investor’s subscription amount, or an aggregate
of $4.7 million. As of December 31,
2020, the estimated fair value of our unsecured
contingent payment obligations related to the CPRs
is $2.5 million.
10. FAIR VALUE
MEASUREMENTS
ASC 820,
“Fair Value Measurements” establishes a fair value
hierarchy that prioritizes the inputs to valuation methods used to
measure fair value. The three levels of the fair value
hierarchy are as follows:
|
|
●
|
|
Level 1: Quoted prices for identical
assets or liabilities in active markets which we can
access
|
|
|
●
|
|
Level 2: Observable inputs other than
those described in Level 1
|
|
|
●
|
|
Level 3: Unobservable
inputs
|
The following table summarizes financial assets
and financial liabilities carried at fair value and measured on a
recurring basis as of December 31, 2020 and 2019,
segregated by classification within the fair value hierarchy (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
Measurements
|
||||||||
|
|
Total
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured contingent
payment obligation
|
|
26,651
|
|
|
-
|
|
|
-
|
|
|
26,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31,
2020 and 2019,
respectively, we had no
transfers of assets or liabilities
between the levels of the hierarchy.
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 14.15% at December 31, 2020, based on a
risk-free rate of 0.15% as
adjusted by 8% for
credit risk and 6% for
litigation inherent risk.
44
The following table provides quantitative
information about the significant unobservable inputs used in the
measurement of fair value for both the secured and unsecured
contingent payment obligations at December 31, 2020,
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
|
|
$
|
46.1
|
|
$
|
70.2
|
|
$
|
0.0
|
|
$
|
7.3
|
|
$
|
9.7
|
|
Duration (in
years)
|
|
|
1.0
|
|
|
2.5
|
|
|
3.5
|
|
|
1.0
|
|
|
2.5
|
|
|
3.5
|
|
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
11. INCOME TAXES AND TAX
STATUS
Our net losses
before income taxes for the years ended December 31, 2020 and
2019 are from domestic operations as well as losses from our
wholly-owned German subsidiary. We elected to treat our
German subsidiary as a disregarded entity for purposes of income
taxes and accordingly, the losses from our German subsidiary have
been included in our operating results.
No current or
deferred tax provision or benefit was recorded in 2020 or 2019 as a
result of current losses and fully deferred tax valuation
allowances for all periods. We have recorded a valuation
allowance to state our deferred tax assets at their estimated net
realizable value due to the uncertainty related to realization of
these assets through future taxable income.
A reconciliation
between the provision for income taxes and the expected tax benefit
using the federal statutory rate of 21% for each of the years ended
December 31, 2020 and 2019, respectively are as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
||
|
Tax benefit at
statutory rate
|
$
|
(4,111)
|
|
$
|
(1,985)
|
|
State tax
benefit
|
|
(842)
|
|
|
(407)
|
|
Increase in
valuation allowance
|
|
4,307
|
|
|
2,341
|
|
Other
|
|
646
|
|
|
51
|
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
45
Our deferred tax
assets and liabilities relate to the following sources and
differences between financial accounting and the tax bases of our
assets and liabilities at December 31, 2020 and 2019 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
||
|
Gross deferred tax
assets:
|
|
|
|
|
|
|
Net operating loss
carry-forward
|
$
|
80,848
|
|
$
|
83,865
|
|
Research and
development credit carry-forward
|
|
6,603
|
|
|
7,608
|
|
Stock
compensation
|
|
122
|
|
|
(28)
|
|
Patents and
other
|
|
1,466
|
|
|
1,479
|
|
Contingent payment
obligations
|
|
5,235
|
|
|
3,119
|
|
Inventories
|
|
-
|
|
|
139
|
|
Fixed
assets
|
|
54
|
|
|
3
|
|
Accrued
liabilities
|
|
64
|
|
|
200
|
|
Lease
liabilities
|
|
77
|
|
|
142
|
|
Other
|
|
-
|
|
|
3
|
|
|
|
94,469
|
|
|
96,530
|
|
Less valuation
allowance
|
|
(94,245)
|
|
|
(96,320)
|
|
|
|
224
|
|
|
210
|
|
Gross deferred tax
liabilities:
|
|
|
|
|
|
|
Convertible
debt
|
|
(224)
|
|
|
(210)
|
|
|
|
(224)
|
|
|
(210)
|
|
Net deferred tax
asset
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
Approximately $0.2
million, net of tax effect, of unrecognized tax benefit related to
the beneficial conversion feature of convertible debt would be
recorded as an adjustment to contributed capital rather than a
decrease in earnings, if recognized.
At December 31,
2020, we had cumulative net operating loss (“NOL”) carry-forwards for
income tax purposes of $323.2 million, of which $294.1 million
is subject to expiration in varying amounts from 2021 to
2037. At December 31, 2020, we also had research and
development tax credit carryforwards of $6.6 million, which
expire in varying amounts from 2021 through 2038.
Our ability to
benefit from the tax credit carry-forwards could be limited under
certain provisions of the Internal Revenue Code if there are
ownership changes of more than 50%, as defined by Section 382 of
the Internal Revenue Code of 1986 (“Section
382”). Under Section 382, an ownership
change may limit the amount of NOL, capital loss and R&D credit
carry-forwards that can be used annually to offset future taxable
income and tax, respectively. In general, an ownership
change, as defined by Section 382, results from transactions
increasing the ownership of certain shareholders or public groups
in the stock of a corporation by more than 50 percentage points
over a three-year period. We conduct a study annually of our
ownership changes. Based on the results of our studies,
we have determined that we do not have any ownership changes on or
prior to December 31, 2020 which would result in limitations
of our NOL, capital loss or R&D credit carry-forwards under
Section 382.
Uncertain Tax Positions
We file income tax
returns in the U.S. federal jurisdiction, various state
jurisdictions, and Germany. We have identified our Federal
and Florida tax returns as our only major jurisdictions, as
defined. The periods subject to examination for those returns
are the 2001 through 2020 tax years. The following
table
46
provides a
reconciliation of our unrecognized tax benefits due to uncertain
tax positions for the years ended December 31, 2020 and 2019,
respectively (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
||
|
Unrecognized tax
benefits – beginning of year
|
$
|
927
|
|
$
|
927
|
|
Unrecognized tax
benefits – end of year
|
$
|
927
|
|
$
|
927
|
|
|
|
|
|
|
|
Future changes in
the unrecognized tax benefit will have no impact on the effective
tax rate so long as we maintain a full valuation
allowance.
Our policy is that
we recognize interest and penalties accrued on any unrecognized tax
benefits as a component of our income tax expense. We do not
have any accrued interest or penalties associated with any
unrecognized tax benefits. For the years ended
December 31, 2020 and 2019, we did not incur any income
tax-related interest income, expense or
penalties.
12. COMMITMENTS AND
CONTINGENCIES
Legal Proceedings
From time to time,
we are subject to legal proceedings and claims which arise in the
ordinary course of our business. These proceedings include patent
enforcement actions initiated by us against others for the
infringement of our technologies, as well as proceedings brought by
others against us at the Patent Trial and Appeal Board of the U.S.
Patent and Trademark Office (“PTAB”) and in the Federal
Patent Court in Germany in an attempt to invalidate certain of our
patent claims.
We had several
patent enforcement actions in Germany in which we did not
prevail. Germany has a “loser pay” system
whereby the non-prevailing party is responsible for statutory
attorney fees and costs. All of our German actions were
concluded in 2019. We have recorded an estimated loss
for statutory attorney fees and costs in current liabilities under
the heading “statutory court costs” in the consolidated
balance sheets. As of December 31, 2020 and 2019, we have accrued
an aggregate of $0.25 million and $0.37 million,
respectively, for our concluded cases in Germany. We
also have a bond posted in Germany that upon release will satisfy
$0.14 million of these accrued costs. The bond is
recorded in prepaid expenses (see Note 4).
ParkerVision v. Qualcomm
(Middle District of Florida)
We have a patent infringement complaint pending in
the Middle District of Florida against Qualcomm 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
47
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, LG,
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 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
48
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 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 the court denied in January
2021. 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 fee 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 proceeding for the ‘444 Patent and the
‘474 Patent.
Our response to the instituted
IPRs is due 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
currently 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. We
are represented in each of these cases on a full contingency fee
basis.
13. STOCK AUTHORIZATION AND
ISSUANCE
Preferred Stock
We have
15 million shares of preferred stock authorized for issuance
at the direction of our board of directors (the “Board”). On
November 17, 2005, our Board designated 0.1 million
shares of authorized preferred stock as the Series E Preferred
Stock in conjunction with its adoption of a Shareholder Protection
Rights Agreement. As of December 31, 2020, we had
no outstanding preferred stock.
49
Common Stock
We have
140 million shares of
common stock authorized for issuance as of December 31,
2020. Our
shareholders approved amendments to our articles of incorporation
in November 2019 increasing the number of our
authorized shares of common stock from 75 million to 110 million
shares and in July 2020 increasing the number of our
authorized shares of common stock from 110 million to 140 million
shares.
As of December 31,
2020, we have 25.3 million shares reserved for issuance under
outstanding warrants, options, and RSUs and 23.6 million
shares reserved for issuance upon conversion of our outstanding
convertible notes. In addition, we have 0.2 million
shares reserved for future issuance under equity compensation plans
and 7.5 million shares reserved for the payment of interest in-kind
on our convertible notes.
Stock and Warrant Issuances – Equity
Based Financings
During the year
ended December 31, 2019, we did not issue any stock or warrants in
financing transactions. The following table presents a
summary of completed equity-based financing transactions for the
year ended December 31, 2020 (in thousands, except for per share
amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
Transaction
|
|
# of Common Shares/
Units Sold
|
|
Average Price per
Share/Unit
|
|
# of Warrants
Issued
(in 000’s) |
|
Average Exercise
Price per Warrant
|
|
|
Net Proceeds
(1)
|
|
January
2020
|
Private placement
of common stock
|
|
1,335
|
|
$0.13
|
|
-
|
|
-
|
|
$
|
177
|
|
February
2020
|
Warrant
amendment
|
|
-
|
|
-
|
|
5,000
|
|
$0.74
|
|
$
|
-
|
|
March
2020
|
Private placement
of common stock, amended to add CPR
|
|
2,571
|
|
$0.35
|
|
-
|
|
-
|
|
$
|
900
|
|
April 2020
to December
2020
|
Private placement
of common stock with CPRs
|
|
10,858
|
|
$0.35
|
|
-
|
|
-
|
|
$
|
3,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
After deduction of applicable offering
costs.
|
Private
Placements
In January 2020, we entered into securities
purchase agreements with accredited investors for an aggregate
of 1,169,232 shares of our common stock at a price
of $0.13 per
share and 166,667 shares of our common stock
at $0.15 per
share for aggregate proceeds of
approximately $0.2 million.
In March 2020, we entered into securities purchase
agreements with accredited investors for an aggregate
of 2,571,432 shares of our common stock at a price
of $0.35 per
share for aggregate proceeds of $0.9 million. The
securities purchase agreements for the March 2020
transactions
were amended on May 1, 2020, in
order to add a contingent payment right whereby we will
pay each investor an allocated portion of our share
of proceeds from patent-related actions, after
taking into account fees and expenses payable to law firms
representing the Company and amounts payable to Brickell, up
to an amount equal to the investors’ aggregate subscription
amount, or $0.9 million (see “unsecured
contingent payment obligations” in Note
9). The shares were
registered for resale on a registration statement that was declared
effective on April 28, 2020 (File No.
333-237762).
From April to December 2020, we entered into
securities purchase agreements with accredited investors for an
aggregate of 10,857,876 shares of our common stock at a price
of $0.35 per
share for aggregate proceeds of $3.8 million. The securities purchase
agreements include contingent payment rights. Approximately $1.8 million
of the proceeds were allocated to unsecured contingent payment
obligations
50
based on the initial fair value estimate of the
CPRs (see Note 9). The shares sold from April to August, totaling
5,871,584 shares, were
registered for resale on a registration statement that was declared
effective on September 2, 2020 (File No. 333-248242).
For the shares
sold subsequent to August 2020,
we entered into registration rights agreements with the
investors pursuant to which we will register the
shares. We have committed to file the registration
statement by April 15, 2021 and to cause the registration statement
to become effective by June 30, 2021. The registration rights
agreements provide for liquidated damages upon the occurrence of
certain events including failure by us to file the registration
statement or cause it to become effective by the deadlines set
forth above. The amount of the 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 approximately $0.1
million.
Warrant
Amendment
On February 28, 2020, we entered into a
warrant amendment agreement (the “Warrant Amendment
Agreement”) with Aspire
Capital Fund, LLC (“Aspire”),
with respect to warrants issued in July and September 2018 (the
“2018
Warrants”) that are
exercisable, collectively, into 5,000,000 shares of our common
stock. The Warrant Amendment Agreement provided for a
reduction in the exercise price for the 2018 Warrants
from $0.74 to $0.35 per
share and the issuance of a new warrant for the purchase
of 5,000,000 shares of our common stock at an
exercise price of $0.74 per
share (“New Aspire
Warrant”). The
New Aspire Warrant expires February 28, 2025 and is subject to
adjustment in the event of certain stock dividends and
distributions, stock splits, stock combinations, reclassifications
or similar events affecting our common
stock and
upon any distributions of assets to
our stockholders. The New Aspire Warrant contains
provisions that prohibit exercise if the holder, together with its
affiliates, would beneficially own in excess
of 9.99% of
the number of shares of common stock outstanding
immediately after giving effect to such exercise. The holder of the
New Aspire Warrant may increase (up to 19.99%) or
decrease this percentage by providing at least 61 days’
prior notice to the Company. In the event of certain corporate
transactions, the holder of the New Aspire Warrant will be entitled
to receive, upon exercise of such New Aspire Warrant, the kind and
amount of securities, cash or other property that the holder would
have received had they exercised the New Aspire Warrant immediately
prior to such transaction. The New Aspire Warrant does not contain
voting rights or any of the other rights or privileges as a holder
of our common stock.
We recognized $1.78 million of non-cash warrant expense in
connection with the Warrant Amendment Agreement based on the
difference between the Black-Scholes value of the warrants
immediately before and after the
amendment. The
Warrant Amendment Agreement added a call provision to the 2018
Warrants whereby we may, after December 31, 2020, call for
cancellation of all or any portion of the 2018 Warrants for which
an exercise notice has not yet been received, in exchange for
consideration equal to $0.001 per warrant share and subject to certain
conditions. All other terms of the 2018 Warrants
remained unchanged, including the original expiration dates of July
and September 2023. The shares underlying the New Aspire Warrant
were registered for resale on a registration
statement that was declared effective on April 28,
2020 (File No. 333-237762). The shares underlying
the 2018 Warrants are currently registered for
resale pursuant to a registration statement on Form S-1 (File
No. 333-226738).
In connection with the Warrant Amendment
Agreement, Aspire exercised 1,430,000 shares of the 2018 Warrants for aggregate
proceeds to us of $0.5 million. An
additional 3,070,000 shares of the 2018 Warrants were exercised
during the year ended December
31, 2020 for aggregate
additional proceeds to us of approximately $1.1 million. We did not exercise the call provision and the
Aspire exercised the remaining 2018 Warrants in January 2021 (see
Note 17).
51
Stock and Warrant Issuances – Payment for
Services
On February 10, 2020, we entered into a business
consulting and retention agreement with Chelsea Investor Relations
(“Chelsea”)
to provide business advisory services to us. As
consideration for services to be provided under
the 24-month term of the consulting agreement, we
issued 500,000 shares of unregistered common
stock in exchange for a nonrefundable retainer for services
valued at approximately $0.15 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 28, 2020 (File No. 333-237762).
The agreement was amended in
January 2021 (see Note 17).
On March 16, 2020, we entered into an agreement
with Tailwinds Research Group LLC (“Tailwinds”)
to provide digital marketing services to us. As
consideration for services to be provided under
the twelve-month term of the agreement, we issued warrants for
the purchase up to 200,000 shares of our common stock with an
exercise price of $1.00 per
share in exchange for a nonrefundable retainer for services,
valued using the Black-Scholes method, at
approximately $0.06 million. The value of the
warrants is being recognized as expense over the term of the
agreement. The Tailwinds warrants are exercisable
immediately after issuance, expire March 16, 2023, and are subject
to adjustment in the event of certain stock dividends and
distributions, stock splits, stock combinations, reclassifications
or similar events affecting our common stock. The
shares underlying the warrant were registered for
resale on a registration statement that was declared effective
on April 28, 2020 (File No.
333-237762).
On June 8, 2020, we entered into an agreement with
a third party to provide media advisory services. As
consideration for services provided under the term of the
agreement, which extended through
December 31, 2020, we issued 30,000 shares of unregistered common stock for a
nonrefundable retainer for services valued at
approximately $0.01 million. The value of the stock
issued was recognized as a consulting expense over the term
of the agreement. We are not obligated to register the
shares for resale.
On October 30, 2020, we entered into a consulting
services agreement with a third-party to provide shareholder
relations services. As consideration for services
provided under the twelve-month term of the agreement, we
issued 70,000
shares of unregistered common stock
for a non-refundable retainer for services valued at
approximately $0.02
million. The agreement
included a CPR to receive up to $0.02 million
from patent-related proceeds. The CPR was recorded as
debt at its estimated fair value of approximately
$0.1 million (see “unsecured contingent payment
obligations” in Note 9).
During the year ended December 31,
2020, we
issued an aggregate
of 100,000 shares of our unregistered common stock,
valued at approximately $0.05 million, as compensation for shareholder
awareness services provided by a third party. The
agreement provides for future issuances of 50,000 shares for up to two successive three-month periods over the term
of the agreement, unless the services are terminated in accordance
with the agreement. In January 2021, we issued 50,000 shares
valued at approximately $0.03 million
as the third quarterly payment under this
agreement.
Common Stock Warrants
As of
December 31, 2020 and 2019, we had outstanding warrants for
the purchase of up to 12.9 million shares and 12.2 million
shares of our common stock, respectively. The estimated
grant date fair value of these warrants of $1.7 million and
$1.3 million at December 31, 2020 and 2019, respectively, is
included in shareholders’ deficit in our consolidated balance
sheets. As of December 31, 2020, our outstanding
warrants have an average exercise price of $0.45 per share and a
weighted average remaining life of approximately three
years.
52
Shareholder Protection Rights
Agreement
On November 20,
2020, we adopted a second amendment to our Shareholder Protection
Rights Agreement (“Rights Agreement”) dated
November 21, 2005, as amended. The amendment
extends the expiration date of the Rights Agreement from
November 20, 2020 to November 20, 2023 and decreases the
exercise price of the rights from $14.50 to $8.54.
The Rights
Agreement provided for the issuance, on November 29, 2005, as
a dividend, rights to acquire fractional shares of Series E
Preferred Stock. We did not assign any value to the
dividend, as the value of these rights is not believed to be
objectively determinable. The principal objective of the
Rights Agreement is to cause someone interested in acquiring us to
negotiate with our Board rather than launch an unsolicited or
hostile bid. The Rights Agreement subjects a potential
acquirer to substantial voting and economic
dilution. Each share of common stock issued by
ParkerVision will include an attached right.
The rights
initially are not exercisable and trade with the common stock of
ParkerVision. In the future, the rights may become
exchangeable for shares of Series E Preferred Stock with various
provisions that may discourage a takeover
bid. Additionally, the rights have what are known as
“flip-in” and “flip-over” provisions that
could make any acquisition of us more costly to the potential
acquirer. The rights may separate from the common stock
following the acquisition of 15% or more of the outstanding shares
of common stock by an acquiring person. Upon separation,
the holder of the rights may exercise their right at an exercise
price of $8.54 per right (the “Exercise Price”), subject
to adjustment and payable in cash. Upon payment of the
Exercise Price, the holder of the right will receive from us that
number of shares of common stock having an aggregate market price
equal to twice the Exercise Price, as adjusted. The
Rights Agreement also has a flip over provision allowing the holder
to purchase that number of shares of common/voting equity of a
successor entity, if we are not the surviving corporation in a
business combination, at an aggregate market price equal to twice
the Exercise Price. We have the right to substitute for
any of our shares of common stock that we are obligated to issue,
shares of Series E Preferred Stock at a ratio of one ten-thousandth
of a share of Series E Preferred Stock for each share of common
stock. The Series E Preferred Stock, if and when issued,
will have quarterly cumulative dividend rights payable when and as
declared by the Board, liquidation, dissolution and winding up
preferences, voting rights and will rank junior to other securities
of ParkerVision unless otherwise determined by the Board. The
rights may be redeemed upon approval of the Board at a redemption
price of $0.01. As of December 31, 2020, there are no Series
E preferred shares outstanding.
14. SHARE-BASED COMPENSATION
The following table
presents share-based compensation expense included in our
consolidated statements of comprehensive loss for the years ended
December 31, 2020 and 2019, respectively (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
||
|
Research and
development expense
|
$
|
-
|
|
$
|
5
|
|
Selling, general,
and administrative expense
|
|
1,244
|
|
|
584
|
|
Total
share-based compensation expense
|
$
|
1,244
|
|
$
|
589
|
|
|
|
|
|
|
|
We did not
capitalize any expense related to share-based
payments. As of December 31, 2020, there was
$0.36 million of total unrecognized compensation cost related
to all non-vested share-based compensation awards. That
cost is expected to be recognized over a weighted-average period of
approximately 0.5 years.
53
Stock Incentive Plans
2019 Long-Term Incentive Equity
Plan
We adopted a
long-term incentive equity plan in August 2019 that provides for
the grant of stock-based awards to employees, officers, directors
and consultants, not to exceed 12.0 million shares of common stock
(the “2019
Plan”). The 2019 Plan provides for benefits in
the form of nonqualified stock options, stock appreciation rights,
restricted stock awards, and other stock based awards.
Forfeited and expired options under the 2019 Plan become available
for reissuance. The plan provides that non-employee
directors may not be granted awards that exceed the lesser of 1.0
million shares or $175,000 in value, calculated based on grant-date
fair value. At December 31, 2020, 155,000 shares
of common stock were available for future grants under the 2019
Plan. The 2019 Plan was amended in January 2021 (see Note
17).
2011 Long-Term Incentive Equity
Plan
We adopted a
long-term incentive equity plan in September 2011 that, as amended
in 2014, 2016 and 2017, provides for the grant of stock-based
awards to employees, officers, directors and consultants, not to
exceed 3.0 million shares of common stock (the
“2011
Plan”). The 2011 Plan provides for benefits in
the form of incentive stock options, nonqualified stock options,
stock appreciation rights, restricted stock awards, and other stock
based awards. Forfeited and expired options under the 2011
Plan become available for reissuance. The plan provides
that no participant may be granted awards in excess of 150,000
shares in any calendar year. At December 31, 2020,
25,627 shares of common stock were available for future
grants under the 2011 Plan.
2008 Equity Incentive Plan
We adopted an
equity incentive plan in August 2008 (the “2008
Plan”). The 2008 Plan provides for the
grant of stock-based awards to employees (excluding named
executives), directors and consultants, not to exceed 50,000 shares
of common stock. The 2008 Plan provides for benefits in
the form of incentive stock options, nonqualified stock options,
stock appreciation rights, restricted stock awards, and other stock
based awards. Forfeited and expired options under the 2008
Plan become available for reissuance. The plan provides
that no participant may be granted awards in excess of 5,000 shares
in any calendar year. At December 31, 2020,
20,473 shares of common stock were available for future
grants under the 2008 Plan.
Restricted Stock Awards
RSAs are issued as
executive and employee incentive compensation and as payment for
services to others. The value of the award is based on
the closing price of our common stock on the date of
grant. RSAs are generally immediately
vested.
Restricted Stock Units
RSUs are issued as
incentive compensation to executives, employees, and non-employee
directors. Each RSU represents a right to one share of
our common stock, upon vesting. The RSUs are not
entitled to voting rights or dividends, if any, until
vested. RSUs generally vest over a one to three year
period for employee awards and a one year period for
non-employee director awards. The fair value of RSUs is
generally based on the closing price of our common stock on the
date of grant and is amortized to share-based compensation expense
over the estimated life of the award, generally the vesting period.
54
RSAs and RSUs
The following table
presents a summary of RSA and RSU activity under the 2000, 2008,
2011, and 2019 Plans (collectively, the “Stock Plans”) as of
December 31, 2020 (shares in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-vested
Shares
|
|||
|
|
Shares
|
|
Weighted-Average
Grant Date Fair Value |
|
|
Non-vested at
beginning of year
|
-
|
|
$
|
-
|
|
Granted
|
1,016
|
|
|
0.31
|
|
Vested
|
(829)
|
|
|
0.31
|
|
Forfeited
|
-
|
|
|
-
|
|
Non-vested at end
of year
|
187
|
|
$
|
0.33
|
|
|
|
|
|
|
The total fair value of RSAs and RSUs vested under the Stock Plans for
the year ended December 31, 2020 was approximately
$0.3 million.
Stock Options
Stock options are
issued as incentive compensation to executives, employees and
non-employee directors. Stock options are generally
granted with exercise prices at or above fair market value of the
underlying shares at the date of grant. The fair value of
options granted is estimated using the Black-Scholes option pricing
model. Generally, fair value is determined as of the
grant date. Options for employees, including executives and
non-employee directors, are generally granted under the Stock
Plans.
The following table
presents a summary of option activity under the Stock Plans for the
year ended December 31, 2020 (shares in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Weighted-
Average Exercise Price |
|
Weighted-Average
Remaining Contractual Term |
|
Aggregate
Intrinsic Value ($) |
|||
|
Outstanding at
beginning of year
|
11,410
|
|
$
|
0.33
|
|
|
|
|
|
|
|
Granted
|
843
|
|
|
0.31
|
|
|
|
|
|
|
|
Exercised
|
-
|
|
|
-
|
|
|
|
|
|
|
|
Forfeited/Expired
|
(13)
|
|
|
38.86
|
|
|
|
|
|
|
|
Outstanding at end
of year
|
12,240
|
|
|
0.28
|
|
5.5
|
years
|
|
$
|
3,401
|
|
Vested at end of
year
|
9,490
|
|
$
|
0.31
|
|
5.5
|
years
|
|
$
|
2,578
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted
average per share fair value of options granted during the years
ended December 31, 2020 and 2019 was $0.27 and $0.14,
respectively. The total fair value of option shares
vested was $0.9 million and $0.5 million for the year ended
December 31, 2020 and 2019, respectively.
55
The fair value of
option grants under the Stock Plans for the years ended
December 31, 2020 and 2019, respectively, was estimated using
the Black-Scholes option-pricing model with the following
assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December
31,
|
||
|
|
2020
|
|
2019
|
|
Expected option
term 1
|
5
years
|
|
5
years
|
|
Expected volatility
factor 2
|
127.4% to
135.3%
|
|
119.1%
|
|
Risk-free interest
rate 3
|
0.33% to
1.63%
|
|
1.6%
|
|
Expected annual
dividend yield
|
0%
|
|
0%
|
|
|
|
|
|
1
The expected term was generally determined based on historical
activity for grants with similar terms and for similar groups of
employees and represents the period of time that options are
expected to be outstanding. For employee options, groups
of employees with similar historical exercise behavior are
considered separately for valuation purposes.
2
The stock volatility for each grant is measured using the weighted
average of historical daily price changes of our common stock over
the most recent period equal to the expected option life of the
grant.
3
The risk-free interest rate for periods equal to the expected term
of the share option is based on the U.S. Treasury yield curve in
effect at the measurement date.
Options by Price Range
The options
outstanding at December 31, 2020 under all plans have exercise
price ranges, weighted average contractual lives, and weighted
average exercise prices as follows (weighted average lives in years
and shares in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
Outstanding
|
|
Options
Vested
|
||||||||||
|
Range of Exercise
Prices
|
|
Number Outstanding
at December 31, 2020
|
|
Wtd. Avg. Exercise
Price
|
|
Wtd. Avg. Remaining
Contractual Life
|
|
Number Exercisable
at December 31, 2020
|
|
Wtd. Avg. Exercise
Price
|
|
Wtd. Avg. Remaining
Contractual Life
|
||
|
$0.171 -
$0.33
|
|
11,318
|
|
$
|
0.18
|
|
5.6
|
|
8,624
|
|
$
|
0.18
|
|
5.6
|
|
$0.50 -
$0.60
|
|
513
|
|
|
0.59
|
|
5.0
|
|
457
|
|
|
0.60
|
|
4.8
|
|
$1.98 -
$2.13
|
|
381
|
|
|
2.02
|
|
3.4
|
|
381
|
|
|
2.02
|
|
3.4
|
|
$13.80
|
|
28
|
|
|
13.80
|
|
0.5
|
|
28
|
|
|
13.80
|
|
0.5
|
|
|
|
12,240
|
|
$
|
0.28
|
|
5.5
|
|
9,490
|
|
$
|
0.31
|
|
5.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upon exercise of
options under all plans, we issue new shares of our common
stock. For shares issued upon exercise of equity awards
granted under the Stock Plans, the shares of common stock are
registered. For shares issued upon exercise of non-plan
awards, the shares are not registered unless they have been
subsequently registered by us on a registration
statement. We had no option exercises for the years
ended December 31, 2020 or 2019.
15.
RELATED PARTY
TRANSACTIONS
We paid
approximately $0.01 million and $0.02 million in 2020 and
2019, respectively, for patent-related legal services to SKGF, of
which Robert Sterne, one of our directors since September 2006, is
a partner. In addition, we paid approximately
$0.1 million in 2020 for principal and interest on the SKGF
Note (refer to “Note Payable to a Related Party”
included Note 9). No payments were made in 2019 on
the
56
SKGF
Note. The SKGF Note has an outstanding balance,
including accrued interest, of approximately $0.8 million at
December 31, 2020.
In January 2020, we
issued 500,000 in unregistered shares of our common stock as an
in-kind payment of approximately $0.08 million in outstanding
amounts payable to Stacie Wilf, sister to Jeffrey
Parker.
16.
CONCENTRATIONS OF
CREDIT RISK
Financial
instruments that potentially subject us to a concentration of
credit risk principally consist of cash and cash
equivalents. Cash and cash equivalents are primarily
held in bank accounts and overnight investments. At
times our cash balances on deposit with banks may exceed the
balance insured by the F.D.I.C.
17. SUBSEQUENT EVENTS
Equity and Debt Financings
In January 2021, we
consummated the sale, on a private placement basis, of 2,976,430
shares of our common stock at a price of $0.35 per share to
accredited investors for aggregate proceeds of approximately $1.0
million. The securities purchase agreements include
contingent payment rights identical to the CPRs issued in 2020 (see
“unsecured contingent payment obligations” at Note
9). Approximately $0.4 million in proceeds for this
transaction was received as of December 31, 2020 and recorded as an
accrued liability until the consummation of the transaction (see
Note 7). We
entered into registration rights agreements with the investors
pursuant to which we will register the shares. We have
committed to file the registration statement by April 15, 2021 and
to cause the registration statement to become effective by June 30,
2021. The registration rights agreements provide for liquidated
damages upon the occurrence of certain events including failure by
us to file the registration statement or cause it to become
effective by the deadlines set forth above. The amount of the
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 approximately $0.06 million.
In March 2021, we
consummated the sale, on a private placement basis of 3,230,942
shares of our common stock and 1,619,289 warrants at a price of
$1.29 per common share to accredited investors for aggregate
proceeds of approximately $4.2 million. The
warrants have an exercise price of $1.75 per share and expire in
March 2026. We entered
into registration rights agreements with the investors pursuant to
which we will register the shares. We have committed to
file the registration statement within 30 days and to cause the
registration statement to become effective within 90 days. The
registration rights agreements provide for liquidated damages upon
the occurrence of certain events including failure by us to file
the registration statement or cause it to become effective by the
deadlines set forth above. The amount of the 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
approximately $0.25 million. The majority of the proceeds
from this transaction were used to satisfy our obligations to Mintz
(see “Mintz Agreement” below).
Share Based Compensation
Arrangements
On January 11,
2021, the Board amended the 2019 Long-Term Incentive 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 grants, under the 2019 Plan, of two-year options, with an
exercise price of $0.54 per share, vesting in 8 equal quarterly
installments commencing on March 31, 2021 and expiring on January
11, 2026. The grants under the 2019 Plan included an option to
purchase 8,000,000 shares granted to Jeffrey Parker, an option to
purchase 1,000,000 shares granted to Cynthia French, an option
to
57
purchase 380,000
shares to each of the three non-employee directors, and options to
purchase an aggregate of 2,900,000 shares granted to other key
employees.
On January 25, 2021, we amended our business
consulting and retention agreement with Chelsea 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.
On March 9, 2021, we granted approximately
32,000 shares under our 2019 Long-Term Incentive Plan to
a consultant for business communications services over a
one-year term valued at approximately
$0.05 million.
Warrant and Option
Exercises
During the three
months ended March 31, 2021, we received aggregate proceeds of $0.
4 million from the exercise of outstanding options and
warrants at an average exercise price of $0.16 per
share.
Mintz Agreement
As of December 31,
2020, we had approximately $3.1 million in accounts payable to
Mintz and an outstanding balance of approximately $0.03 million on
a secured note payable to Mintz for legal fees and
expenses. In addition, we 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 2019 and accordingly, for which we recognized no expense in the
consolidated financial statements. In March 2021, we
entered into an agreement with Mintz to satisfy our outstanding
obligations and reduce any future contingency fees payable to
Mintz. On March 29, 2021, we paid Mintz a lump-sum
payment of $3.0 million in satisfaction of our outstanding
obligations to Mintz including the Mintz note, our accounts payable
to Mintz, and all disputed and unrecorded
billings. Mintz waived all past defaults on the Mintz
note and agreed to a significant reduction in future success fees
payable to Mintz from patent-related proceeds.
Legal Proceedings
On March 26, 2021,
the district court in the Middle District of Florida, Orlando
Division, issued an order that, among other things, postponed our
trial date in ParkerVision v.
Qualcomm citing
backlog due to the pandemic as a factor. A new trial
date has not yet been set but is unlikely to be scheduled prior to
November or December 2021 according to the court.
58
None.
Evaluation of Disclosure Controls and
Procedures
Under Rules
13a-15(e) and 15d-15(e) of the Exchange Act, “disclosure
controls and procedures” are controls and other procedures
that are designed to ensure that the
information we are required to disclose in reports that we file or
submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified under the rules and
forms of the SEC. Disclosure controls and procedures
include, without limitation, controls and procedures designed to
ensure that such information is accumulated and communicated to our
management, including our chief executive officer and our chief
financial officer, as appropriate to allow timely decisions
regarding required disclosures. Our management, with
the participation of our chief executive officer and our chief
financial officer, has evaluated the effectiveness of our
disclosure controls and procedures as of December 31,
2020. Based on such evaluation, our chief executive
officer and our chief financial officer have concluded that as of
December 31, 2020, our disclosure controls and procedures were
effective.
Management’s Report on Internal
Control over Financial Reporting
Our management is
responsible for establishing and maintaining adequate internal
control over financial reporting and for the assessment of the
effectiveness of internal control over financial reporting. Under
Rules 13a-15(f) and 15d-15(f) of the Exchange Act, “internal
control over financial reporting’’ is defined as a
process designed by, or under the supervision of, our chief
executive officer and our chief financial officer, and effected by
our board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of our financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles.
Internal control
over financial reporting includes policies and procedures that
pertain to the maintenance of records, that in reasonable detail,
accurately and fairly reflect our transactions and our dispositions
of assets; provide reasonable assurance that transactions are
recorded as necessary to permit preparation of our financial
statements in accordance with generally accepted accounting;
provide reasonable assurance that receipts and
expenditures of the company are made only in accordance with
authorizations of management and directors; and provide reasonable
assurance regarding the prevention or the timely detection of the
unauthorized acquisition, use or disposition of the company’s
assets that could have a material effect on our financial
statements. Because of its inherent limitations, internal control
over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies and procedures may
deteriorate.
Management, with
the participation of our chief executive officer and our chief
financial officer, conducted an evaluation of the effectiveness of
our internal control over financial reporting as of
December 31, 2020 using the criteria established in
Internal
Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission in
2013. Based on this evaluation, management concluded that our
internal control over financial reporting was effective as of
December 31, 2020.
59
Changes in Internal Control over
Financial Reporting
There were no
changes in our internal control over financial reporting during the
fiscal quarter ended December 31, 2020 that materially
affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
In accordance with and satisfaction of the
requirements of Form 8-K, we include the following
disclosure:
On March
29, 2021, we entered
into securities purchase agreements (the “Purchase
Agreements”) with the accredited investors identified on
Exhibit 10.87 hereof (the
“Investors”) for the sale of an aggregate of
3,230,942 shares of common stock, $0.01 par value
(“Shares”) and
1,619,289 warrants (“Warrants) at a
price of $1.29 per Share for aggregate proceeds of $4.2 million.
The Warrants are
exercisable for a period of five years at an exercise price of $1.75 per share.
The Purchase Agreements also contain
customary representations and warranties of the Investors. Proceeds of $3.0 million were
used to satisfy outstanding obligations with one of our litigation
firms, including a reduction in future success fees owed to that
firm. The remaining proceeds will be used for general
working capital purposes.
We entered
into registration rights agreements (the “Registration Rights
Agreement”) with the Investors pursuant to which
we will register the Shares and Warrant shares. We
have committed to file the
registration statement within
30 days and to cause the
registration statement to become effective within 60 days (or, 90
days in the case of a review by
the Commission). The
Registration Rights Agreement provides for liquidated damages upon
the occurrence of certain events including our failure 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 upon the occurrence of the event, and monthly
thereafter, up to a maximum of 6%.
The Shares and
Warrants were offered and sold
to the 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 Purchase
Agreement, the Registration Rights Agreement
and the Warrants are qualified in their entirety by reference to
the full text of the agreements, which are attached as Exhibits
10.84, 10.85 and 10.86 hereto and
are incorporated herein by reference.
60
Directors
Our Board is
divided into three classes with only one class of directors
typically being elected in each year and each class serving a
three-year term. Our current directors, including their
backgrounds and qualifications are as follows:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position with the
Company
|
|
Frank N.
Newman
|
|
78
|
|
Class II Director,
Audit Committee Member
|
|
Jeffrey L.
Parker
|
|
64
|
|
Class I Director,
Chairman of the Board and Chief Executive Officer
|
|
Paul A.
Rosenbaum
|
|
78
|
|
Class III Director,
Audit Committee Chair
|
|
Robert G.
Sterne
|
|
69
|
|
Class III
Director
|
|
|
|
|
|
|
Frank N. Newman
Frank Newman has
been a director of ours since December 2016. Mr. Newman has
been the chief executive officer and co-founder of PathGuard, Inc.
(or its predecessors), a company offering hardware-based
cybersecurity, since 2015. From 2011 until December
2018, Mr. Newman served as chairman of Promontory Financial Group
China Ltd., an advisory group for financial institutions and
corporations in China. From 2005 to 2010, he served as
chairman and chief executive officer of Shenzhen Development Bank,
a national bank in China. Prior to 2005, Mr. Newman
served as chairman, president, and chief executive officer of
Bankers Trust and chief financial officer of Bank of America and
Wells Fargo Bank. Mr. Newman served as Deputy Secretary
of the U.S. Treasury from 1994 to 1995 and as Under Secretary of
Domestic Finance from 1993 to 1994. He has authored two
books and several articles on economic matters, published in the
U.S., mainland China, and Hong Kong. Mr. Newman has served as
director of Aspirational Consumer Lifestyle Corp (NYSE: ASPL), a
special purpose acquisition company, since September
2020. He also serves as audit committee chair and a
member of the compensation committee for ASPL. Mr. Newman has
previously served as a director for major public companies in the
U.S., United Kingdom, and China, and as a member of the Board of
Trustees of Carnegie Hall. He earned his BA, magna cum laude, in
economics at Harvard. Mr. Newman brings a substantial
knowledge of international banking and business relationships to
the Board. His financial background adds an important
expertise to the Board with regard to financing future business
opportunities.
Jeffrey L. Parker
Jeffrey Parker has
been the Chairman of our Board and our Chief Executive Officer
since our inception in August 1989 and was our president from April
1993 to June 1998. From March 1983 to August 1989, Mr. Parker
served as executive vice president for Parker Electronics, Inc., a
joint venture partner with Carrier Corporation performing research,
development, manufacturing, and sales and marketing for the
heating, ventilation and air conditioning industry. Mr. Parker is a
named inventor on 31 U.S. patents. Among other qualifications, as
Chief Executive Officer, Mr. Parker has relevant insight into our
operations, our industry, and related risks as well as experience
bringing disruptive technologies to market.
Paul A. Rosenbaum
Paul A. Rosenbaum
has been a director of ours since December 2016 and a member of our
Audit Committee since September 2018. Mr. Rosenbaum has
extensive experience as a director and executive officer for both
public and private companies in a number of
industries. Since 1994, Mr. Rosenbaum has served as
chief executive of SWR Corporation, a privately-held corporation
that designs, sells, and markets specialty industrial
chemicals. In September 2017, Mr. Rosenbaum was appointed to
the Board of Commissioners for the Oregon Liquor Control Commission
and has served as chairman since March 2018. Since 2009,
Mr.
61
Rosenbaum has been
a member of the Providence St. Vincent Medical Foundation Council
of Trustees, and previously served as president of the
Council. In addition, from September 2000 until June
2009, Mr. Rosenbaum served as chairman and chief executive officer
of Rentrak Corporation (“Rentrak”), a Nasdaq
publicly traded company that provides transactional media
measurement and analytical services to the entertainment and media
industry. From June 2009 until July 2011, Mr. Rosenbaum
served in a non-executive capacity as chairman of
Rentrack. From 2007 until 2016, Mr. Rosenbaum served on
the Board of Commissioners for the Port of Portland, including as
vice chairman from 2012 to 2016. Mr. Rosenbaum was chief
partner in the Rosenbaum Law Center from 1978 to 2000 and served in
the Michigan Legislature from 1972 to 1978, during which time he
chaired the Michigan House Judiciary Committee, was legal counsel
to the Speaker of the House of the state of Michigan and wrote and
sponsored the Michigan Administrative Procedures Act. Additionally,
Mr. Rosenbaum served on the National Conference of Commissioners on
Uniform State Laws, as vice chairman of the Criminal Justice and
Consumer Affairs Committee of the National Conference of State
Legislatures, and on a committee of the Michigan Supreme Court
responsible for reviewing local court rules. Among other
qualifications, Mr. Rosenbaum has extensive experience as a
director and executive officer of a publicly held corporation and
has relevant insights into operations and our litigation
strategies.
Robert G. Sterne
Robert Sterne has
been a director of ours since September 2006 and also served as a
director of ours from February 2000 to June 2003. Since 1978, Mr.
Sterne has been a partner of the law firm of Sterne, Kessler,
Goldstein & Fox PLLC, specializing in patent and other
intellectual property law. Mr. Sterne provides legal services to us
as one of our patent and intellectual property
attorneys. Mr. Sterne has co-authored numerous
publications related to patent litigation strategies. He
has received multiple awards for contributions to intellectual
property law including Law 360’s 2016 Top 25 Icons of IP and
the Financial Times 2015 Top 10 Legal Innovators in North
America. Among other qualifications, Mr. Sterne has an
in-depth knowledge of our intellectual property portfolio and
patent strategies and is considered a leader in best practices and
board responsibilities concerning intellectual
property.
Information About Our Executive
Officers
Our current
executive officers are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position with the
Company
|
|
Jeffrey
Parker
|
|
64
|
|
Chairman of the
Board and Chief Executive Officer (“CEO”)
|
|
Cynthia
French
|
|
54
|
|
Chief Financial
Officer and Corporate Secretary (“CFO”)
|
|
|
|
|
|
|
The background for
Mr. Jeffrey Parker is included above under the heading
“Directors”.
Cynthia French (formerly Poehlman)
Cynthia French has
been our chief financial officer since June 2004 and our corporate
secretary since August 2007. From March 1994 to June
2004, Ms. French was our controller and our chief accounting
officer. Ms. French has been a certified public
accountant in the state of Florida since 1989.
Former Executive Officers
Messrs. David
Sorrells and Gregory Rawlins both served as our Chief Technology
Officers (“CTO”) through March 2020,
at which time, given our reduced scope of operations, in particular
our research and development activities, our Board determined to
eliminate the Chief Technology Officer role. Both Mr.
Sorrells and Mr. Rawlins remain employed by us in technical support
roles.
62
Family
Relationships
There are no family
relationships among our officers or directors.
Delinquent Section 16(a)
Reports
Section 16(a) of
the Exchange Act requires our officers, directors and persons who
beneficially own more than ten percent of our common stock to file
reports of ownership and changes in ownership with the
SEC. Based solely upon a review of such forms and
written representations received by the Company from certain
reporting persons, we believe that during the year ended December
31, 2020 all Section 16(a) filing requirements were complied with
in a timely manner, with the following exception: Messrs. Parker
and Newman each inadvertently failed to timely file one Form 4
report disclosing the November 9, 2020 acquisition of shares of our
common stock upon vesting of an RSU award. The relevant
Form 4 reports were filed on February 10, 2021.
Code of Ethics
The Board has
adopted a code of ethics applicable to all of our directors,
officers and employees, including our chief executive officer and
our chief financial and accounting officer, that is designed to
deter wrongdoing and to promote honest and ethical conduct, full,
fair, accurate, timely and understandable disclosure in reports
that we file or submit to the SEC and in our other public
communications, compliance with applicable government laws, rules
and regulations, prompt internal reporting of violations of the
code to an appropriate person designated in the code and
accountability for adherence to the code. A copy of the
code of ethics may be found on our website at
www.parkervision.com.
Shareholder
Nominations
There have been no
material changes to the procedures by which security holders may
recommend nominees to our Board.
Audit Committee and Financial
Expert
Messrs. Paul Rosenbaum and Frank Newman serve as
the members of our audit committee. Our audit
committee is governed by a Board-approved charter which, among
other things, establishes the audit committee’s membership
requirements and its powers and responsibilities. Our Board
has determined that Mr. Rosenbaum and Mr. Newman are audit
committee financial experts within the meaning of the rules and
regulations of the SEC.
63
Summary Compensation
Table
The following table
summarizes the total compensation of each of our “named
executive officers” as defined in Item 402(m) of Regulation
S-K (the “Executives”) for the
fiscal years ended December 31, 2020 and 2019. Given the complexity
of disclosure requirements concerning executive compensation, and
in particular with respect to the standards of financial accounting
and reporting related to equity compensation, there is a difference
between the compensation that is reported in this table versus that
which is actually paid to and received by the Executives. The
amounts in the Summary Compensation Table that reflect the full
grant date fair value of an equity award, do not necessarily
correspond to the actual value that has been realized or will be
realized in the future with respect to these awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
||||||
|
Name and Principal
Position
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)(1)
|
|
Option
Awards
($)(1)
|
|
All Other
($) |
|
Total
($) |
||||||
|
Jeffrey Parker,
CEO
|
2020
|
|
$
|
270,000
|
|
$
|
-
|
|
$
|
99,000
|
|
$
|
-
|
|
$
|
24,923
|
2
|
$
|
393,923
|
|
|
2019
|
|
|
260,000
|
|
|
-
|
|
|
-
|
|
|
845,766
|
|
|
24,000
|
2
|
|
1,129,766
|
|
Cynthia French,
CFO
|
2020
|
|
|
186,923
|
|
|
-
|
|
|
-
|
|
|
42,750
|
|
|
-
|
|
|
229,673
|
|
|
2019
|
|
|
180,000
|
|
|
-
|
|
|
-
|
|
|
140,961
|
|
|
-
|
|
|
320,961
|
|
David Sorrells,
Former CTO
|
2020
|
|
|
176,150
|
|
|
-
|
|
|
49,500
|
|
|
-
|
|
|
-
|
|
|
225,650
|
|
|
2019
|
|
|
158,577
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
158,577
|
|
Gregory Rawlins,
Former CTO Heathrow
|
2020
|
|
|
207,692
|
|
|
-
|
|
|
49,500
|
|
|
-
|
|
|
-
|
|
|
257,192
|
|
|
2019
|
|
|
200,000
|
|
|
-
|
|
|
-
|
|
|
105,721
|
|
|
-
|
|
|
305,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
There were 27 biweekly pay periods in 2020 compared to
26 in 2019 resulting in an increase in
reported base salaries.
|
|
|
2.
|
|
The amounts represented in
columns (e) and (f) represents the full grant date fair value of
equity awards in accordance with ASC 718. Refer to Note
14 to the consolidated financial statements for the year ended
December 31, 2020 included in Item 8 for the assumptions made in
the valuation of equity awards.
|
|
|
3.
|
|
Represents an automobile
allowance in the amount of $24,000, paid
biweekly. The
additional amount in 2020 is the result of 27 pay periods in 2020
compared to 26 in 2019.
|
In February 2020, our Board approved equity awards
under our 2019 Long Term Incentive Plan including 300,000 RSUs to
Mr. Parker, 150,000 RSUs to each of Messrs. Rawlins and Sorrells
and 150,000 share options at an exercise price of $0.33 per share
to Ms. French. These
awards vest over five quarters through May 2021.
These awards were, in part, in
consideration of continuing voluntary salary reductions by our
Executives.
We do not have employment agreements with any of
our Executives. We have non-compete arrangements in
place with all of our employees, including our Executives, that
impose post-termination restrictions on (i) employment or
consultation with competing companies or customers, (ii)
recruiting or hiring employees for a competing company, and (iii)
soliciting or accepting business from our customers. We
also have a tax-qualified defined contribution 401(k) plan for all
of our employees, including our Executives. We did not
make any employer contributions to the 401(k) plan in
2020 or 2019.
64
Outstanding Equity Awards at Fiscal
Year End
The following table
summarizes information concerning the outstanding equity awards,
including unexercised options, unvested stock and equity incentive
awards, as of December 31, 2020 for each of our
Executives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
Stock
Awards
|
||||||||||
|
|
|
Number of
securities underlying unexercised options (#) exercisable |
|
Number of
securities underlying unexercised options (#) unexercisable |
Option
Exercise Price ($) |
|
Option
Expiration Date |
|
Number of
shares or units of stock that have not vested (#) |
|
Market Value
of shares or units of stock that have not vested ($)(1) |
||
|
Name
|
|
(a)
|
|
(b)
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
||
|
Jeffrey
Parker
|
|
20,000
|
1
|
-
|
|
1.98
|
|
8/15/2024
|
|
75,000
|
4
|
$
|
36,000
|
|
|
|
4,500,000
|
2
|
1,500,000
|
2
|
0.17
|
|
8/7/2026
|
|
-
|
|
|
-
|
|
Cynthia
French
|
|
20,000
|
1
|
-
|
|
1.98
|
|
8/15/2024
|
|
-
|
|
|
-
|
|
|
|
750,000
|
2
|
250,000
|
2
|
0.17
|
|
8/7/2026
|
|
|
|
|
|
|
|
|
131,250
|
3
|
18,750
|
3
|
0.33
|
|
2/9/2027
|
|
-
|
|
|
-
|
|
David
Sorrells
|
|
20,000
|
1
|
-
|
|
1.98
|
|
8/15/2024
|
|
37,500
|
4
|
$
|
18,000
|
|
Gregory
Rawlins
|
|
20,000
|
1
|
-
|
|
1.98
|
|
8/15/2024
|
|
37,500
|
4
|
$
|
18,000
|
|
|
|
562,500
|
2
|
187,500
|
2
|
0.17
|
|
8/7/2026
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Options vested over four equal
quarterly periods from August 31, 2017 to May 31,
2018.
|
|
|
2
|
|
Options vest over eight equal
quarterly periods from September 1, 2019 to June 1,
2021.
|
|
|
3
|
|
Options vested 50% on grant date
and the remaining 50% over four equal quarterly periods beginning
May 9, 2020.
|
|
|
4
|
|
Unvested RSUs vest 50% on
February 9, 2021 and 50% on May 9, 2021.
|
Director
Compensation
Since September 2018, the Board compensation
program has consisted exclusively of equity-based compensation,
generally awarded annually, in the form of nonqualified stock
options, RSUs, or a combination thereof. Unvested
director equity compensation awards are forfeited if the director
resigns or is removed from the Board for cause prior to the vesting
date. Nonqualified stock options generally expire seven
year from grant date.
In February 2020, our non-employee directors were
awarded, at their option, either 150,000 nonqualified stock options
at an exercise price of $0.33 per share or an RSU for 150,000
shares. Messrs. Rosenbaum and Sterne opted to receive
options, each with a grant-date fair value of approximately
$43,000. Mr. Newman opted to receive a RSU with a grant
date fair value of approximately $50,000. Each of the
awards vest 50% upon grant with the remaining portion vesting in
four equal quarterly installments from
65
May 2020 through
February 2021. In addition, in February 2020, Mr. Sterne
was awarded an immediately vested nonqualified stock option for the
purchase of 100,000 shares at $0.33 per share, with an estimated
grant-date fair value of approximately $29,000, as partial payment
of accrued and unpaid fees for board and committee service prior to
2019. Mr. Sterne waived approximately $70,000 in
additional accrued and unpaid fees.
We reimburse our
non-employee directors for their reasonable expenses incurred in
attending meetings and we encourage participation in relevant
educational programs for which we reimburse all or a portion of the
costs incurred for these purposes.
Directors who are
also our employees are not compensated for serving on our
Board.
The following table
summarizes the compensation of our non-employee directors for the
year ended December 31, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Stock
Awards($)
1
|
|
Option
Awards($)
1
|
|
Total
($) |
|||
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|||
|
Frank Newman
2
|
|
$
|
49,500
|
|
$
|
-
|
|
$
|
49,500
|
|
Paul Rosenbaum
3
|
|
|
-
|
|
|
42,750
|
|
|
42,750
|
|
Robert Sterne
4
|
|
|
-
|
|
|
71,250
|
|
|
71,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
The amounts represented in
columns (b) and (c) represent the full grant date fair value of
share-based awards in accordance with ASC 718. Refer to Note
14 of the consolidated financial statements included in Item 8 for
the assumptions made in the valuation of stock
awards.
|
|
|
2.
|
|
At December 31, 2020, Mr. Newman
has an aggregate of 18,750 unvested RSUs and 975,000 nonqualified
stock options outstanding, of which 775,000 are
exercisable.
|
|
|
3.
|
|
At December 31, 2020, Mr.
Rosenbaum has an aggregate of 1,125,000 nonqualified stock options
outstanding, of which 906,250 are exercisable.
|
|
|
4.
|
|
At December 31, 2020, Mr. Sterne
has 1,277,270 nonqualified stock options outstanding, of which
1,058,520 are exercisable.
|
66
Item 12. Sec urity Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters.
Equity Compensation Plan
Information
The following table
gives information as of December 31, 2020 about shares of our
common stock authorized for issuance under all of our equity
compensation plans (in thousands, except for per share
amounts):
|
|
|
|
|
|
|
|
|
|
|
Plan
Category
|
Number of securities to
be issued upon exercise of outstanding options, warrants and rights |
Weighted-average
exercise price of outstanding options, warrants and rights |
Number of securities
remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|
|
(a)
|
|
(c)
|
|
Equity compensation
plans approved by security holders 1,3
|
1,240
|
$1.24
|
46
|
|
Equity compensation
plans not approved by security holders 2,3
|
11,187
|
0.18
|
155
|
|
Total
|
12,427
|
|
201
|
|
|
|
|
|
|
|
1.
|
|
Includes the 2000 Plan, the 2008
Plan, and the 2011 Plan.
|
|
|
2.
|
|
Includes the 2019
Plan.
|
|
|
3.
|
|
The types of awards that may be
issued under each of these plans is discussed more fully in Note 14
to our consolidated financial statements included in Item
8.
|
67
Security Ownership of Certain
Beneficial Holders
The following table
sets forth certain information as of March 19, 2021 with respect to
the stock ownership of (i) those persons or groups who beneficially
own more than 5% of our common stock, (ii) each of our directors,
(iii) each of our executive officers, and (iv) all of our directors
and executive officers as a group (based upon information furnished
by those persons).
As of March 19,
2021, 66,347,539 shares of our common stock were issued and
outstanding.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Beneficial
Owner
|
|
Amount and
Nature of Beneficial Ownership |
|
Percent
of Class1 |
|
>5% HOLDERS (EXCLUDING
EXECUTIVE OFFICERS AND DIRECTORS)
|
|
|
|
|
|
GEM Partners,
LP
|
|
7,010,080
|
2
|
9.99%
|
|
Thomas Staz
Revocable Trust
|
|
4,015,429
|
3
|
6.05%
|
|
|
|
|
|
|
|
EXECUTIVE OFFICERS AND
DIRECTORS
|
|
|
|
|
|
Jeffrey Parker
10
|
|
3,315,583
|
4
|
4.78%
|
|
Cynthia French
10
|
|
1,220,193
|
5
|
1.81%
|
|
Frank Newman
10
|
|
1,125,000
|
6
|
1.67%
|
|
Paul Rosenbaum
10
|
|
1,850,602
|
7
|
2.73%
|
|
Robert Sterne
10
|
|
1,273,035
|
8
|
1.88%
|
|
All directors and
executive officers as a group (5 persons)
|
|
8,784,413
|
9
|
11.87%
|
|
|
|
|
|
|
|
|
1
|
|
Percentage is calculated based on
all outstanding shares of common stock plus, for each person or
group, any shares of common stock that the person or the group has
the right to acquire within 60 days pursuant to options, warrants,
conversion privileges or other rights. Unless otherwise
indicated, each person or group has sole voting and dispositive
power over all such shares of common stock.
|
|
|
2
|
|
GEM Investment Advisors, LLC
(“GEM
Advisors”) is the general partner
of GEM Partners LP (“GEM”)
and Flat Rock Partners LP (“FlatRock”). Mr.
Daniel Lewis is the controlling person of GEM
Advisors. GEM Advisors and Mr. Lewis have shared voting
and dispositive power. Beneficial ownership includes (i)
4,899 shares held by FlatRock, (ii) 6,600 shares held by Mr. Lewis,
(iii) 3,181,658 shares held by GEM, and (iv) 3,091,103 shares
underlying convertible notes held by GEM, but
excludes 6,685,000 shares underlying convertible notes held by
GEM that are not convertible within 60 days due to exercise
limitations. The principal business address of
GEM Advisors, FlatRock, and Mr. Lewis is 100 State Street, Suite
2B, Teaneck, NJ 07666. Information derived from a
Schedule 13G/A filed by GEM Advisors on March 9,
2021.
|
|
|
3
|
|
Thomas Staz is the trustee of the Thomas Staz
Revocable Trust. The principal business address of
the Thomas Staz Revocable Trust is 1221 Brickell Avenue, Suite 2660,
Miami, Florida 33131. Information provided by
beneficial holder on February 22, 2021.
|
|
|
4
|
|
Includes 2,970,000 shares of
common stock issuable upon currently exercisable options, 190,824
shares held by Mr. Parker directly, 117,259 shares held by Jeffrey
Parker and Deborah Parker Joint Tenants in Common, over which Mr.
Parker has shared voting and dispositive power, and 37,500 RSUs
subject to vest within 60 days. Excludes 7,750,000
shares of
common stock issuable upon options that may become exercisable in
the future.
|
|
|
5
|
|
Includes 1,170,000 shares of
common stock issuable upon currently exercisable options and
excludes 1,000,000 shares of common stock issuable upon
options that
may become exercisable in the future.
|
|
|
6
|
|
Includes 922,500 shares of common
stock issuable upon currently exercisable options and excludes
432,500 shares of common stock issuable upon
options that
may become exercisable in the future.
|
|
|
7
|
|
Includes 1,072,500 shares of
common stock issuable upon currently exercisable options and
250,000 shares of common stock issuable upon conversion of
convertible notes. Excludes 432,500 shares of common
stock
68
|
|
issuable upon options that may
become exercisable in the future.
|
|
|
8
|
|
Includes 1,224,770 shares of
common stock issuable upon currently exercisable options and
excludes 432,500 shares of common stock issuable upon options that
may become exercisable in the future.
|
|
|
9
|
|
Includes 7,359,770 shares of
common stock issuable upon currently exercisable
options,
37,500 RSUs subject to vest within 60 days, and 250,000 shares of common
stock issuable upon conversion of convertible notes held by
directors and officers and excludes 10,047,500 shares of common stock
issuable upon options that may become exercisable in the future
(see notes 4, 5, 6, 7 and 8 above).
|
|
|
10
|
|
The person’s address is
4446-1A Hendricks Avenue, Suite 354, Jacksonville, Florida
32207.
|
Related Party
Transactions
We paid approximately $11,000 and
$22,000 in 2020 and
2019, respectively for patent-related legal services
to SKGF, of which Robert Sterne, is a partner. In
addition, we paid approximately $110,000 in
2020 for principal and interest on an
unsecured note payable to
SKGF. The
note was issued in 2016 to convert outstanding
unpaid legal fees to an unsecured promissory
note. The note was
amended multiple times in 2018
and 2019 to defer principal
payments. The note, as
amended, allows for interest at
4% per annum, monthly
installments of $10,000 per month beginning January
2020, with a final balloon payment due on
April 30, 2022. At December
31, 2020, the outstanding balance of the note, including
unpaid interest is approximately $803,000.
In January 2020, we issued 500,000 in unregistered
shares of our common stock as an in-kind payment of approximately
$0.08 million in outstanding amounts payable to Stacie Wilf, sister
to Jeffrey Parker.
Director
Independence
We follow the rules of Nasdaq in determining if a
director is independent. The Board also consults with
our counsel to ensure that the Board’s determination is
consistent with those rules and all relevant securities and other
laws and regulations regarding the independence of
directors. The Board has affirmatively determined that
Messrs. Newman, Rosenbaum, and Sterne are independent
directors.
The firm of MSL, P.A. acts as our
principal accountants. From April 2018 to September
2019, the firm of BDO USA, LLP acted as our principal accountants
(“Prior
Accountants”). The
following is a summary of fees paid to the principal accountants
and Prior Accountants for services rendered.
Audit Fees.
For the years ended
December 31, 2020 and
2019, the aggregate fees billed
by our principal accountants for professional services rendered for
the audit of our annual financial statements, the review of our
financial statements included in our quarterly reports, and
services provided in connection with regulatory filings were
approximately $148,300
and $101,200,
respectively. In
addition, for the years
ended December 31, 2020 and 2019,
the aggregate fees billed by our Prior Accountants for professional
services rendered in connection with the audit of our annual
financial statements, the review of our financial statements
included in our quarterly reports, and services provided in
connection with regulatory filings were approximately
$70,000 and $188,700,
respectively.
Audit Related
Fees. For the years ended
December 31, 2020
and 2019, there were
no fees billed for professional services by our principal
accountants or Prior Accountants for assurance and related
services.
69
Tax Fees. For the years ended
December 31, 2020 and 2019, there were no fees billed for
professional services rendered by our principal accountants for tax
compliance, tax advice or tax planning.
All Other Fees. For the years
ended December 31, 2020 and 2019, there were no fees billed for
other professional services by our principal
accountants.
All the services
discussed above were approved by our audit committee. The audit
committee pre-approves the services to be provided by our principal
accountants, including the scope of the annual audit and non-audit
services to be performed by the principal accountants and the
principal accountants’ audit and non-audit fees.
70
(a) Documents filed
as part of this report:
(1) Financial
statements:
Consolidated
Balance Sheets as of December 31, 2020 and 2019
Consolidated
Statements of Comprehensive Loss for the years ended
December 31, 2020 and 2019
Consolidated
Statements of Shareholders’ Deficit for the years ended
December 31, 2020 and 2019
Consolidated
Statements of Cash Flows for the years ended December 31, 2020
and 2019
Notes to
Consolidated Financial Statements for the years ended
December 31, 2020 and 2019
(2) Financial
statement schedules:
Not
applicable.
(3)
Exhibits.
|
|
|
|
|
|
|
|
|
Exhibit
Number |
|
Description
|
|
|
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
3.3
|
|
|
|
3.4
|
|
|
|
3.5
|
|
|
|
3.6
|
|
|
|
3.7
|
|
|
|
3.8
|
|
|
|
3.9
|
|
71
|
4.1
|
|
|
|
4.2
|
|
|
|
4.3
|
|
|
|
4.5
|
|
|
|
4.6
|
|
|
|
4.7
|
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
10.4
|
|
|
|
10.5
|
|
|
|
10.6
|
|
|
|
10.7
|
|
|
|
10.8
|
|
|
|
10.9
|
|
|
|
10.10
|
|
|
|
10.11
|
|
|
|
10.12
|
|
|
|
10.13
|
|
72
|
10.14
|
|
|
|
10.15
|
|
|
|
10.16
|
|
|
|
10.17
|
|
|
|
10.18
|
|
|
|
10.19
|
|
|
|
10.20
|
|
|
|
10.21
|
|
|
|
10.22
|
|
|
|
10.23
|
|
|
|
10.24
|
|
|
|
10.25
|
|
|
|
10.26
|
|
|
|
10.27
|
|
|
|
10.28
|
|
|
|
10.29
|
|
|
|
10.30
|
|
|
|
10.31
|
|
|
|
10.32
|
|
|
|
10.33
|
|
|
|
10.34
|
|
73
|
10.35
|
|
|
|
10.36
|
|
|
|
10.37
|
|
|
|
10.38
|
|
|
|
10.39
|
|
|
|
10.40
|
|
|
|
10.41
|
|
|
|
10.42
|
|
|
|
10.43
|
|
|
|
10.44
|
|
|
|
10.45
|
|
|
|
10.46
|
|
|
|
10.47
|
|
|
|
10.48
|
|
|
|
10.49
|
|
|
|
10.50
|
|
|
|
10.51
|
|
|
|
10.52
|
|
|
|
10.53
|
|
74
|
10.54
|
|
|
|
10.55
|
|
|
|
10.56
|
|
|
|
10.57
|
|
|
|
10.58
|
|
|
|
10.59
|
|
|
|
10.60
|
|
|
|
10.61
|
|
|
|
10.62
|
|
|
|
10.63
|
|
|
|
10.64
|
|
|
|
10.65
|
|
|
|
10.66
|
|
|
|
10.67
|
|
|
|
10.68
|
|
|
|
10.69
|
|
|
|
10.70
|
|
|
|
10.71
|
|
75
|
10.72
|
|
|
|
10.73
|
|
|
|
10.74
|
|
|
|
10.75
|
|
|
|
10.76
|
|
|
|
10.77
|
|
|
|
10.78
|
|
|
|
10.79
|
|
|
|
10.80
|
|
|
|
10.81
|
|
|
|
10.82
|
|
|
|
10.83
|
|
|
|
10.84
|
|
|
|
10.85
|
|
|
|
10.86
|
|
|
|
10.87
|
|
|
|
21.1
|
|
|
|
23.1
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
76
|
|
|
|
|
101.INS
|
|
XBRL Instance Document*
|
|
101.SCH
|
|
XBRL Taxonomy Extension
Schema*
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation
Linkbase*
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition
Linkbase*
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label
Linkbase*
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation
Linkbase*
|
* Filed
herewith
** Management
contract or compensatory plan or arrangement.
None.
77
Pursuant to the
requirements of Section 13 of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
|
|
|
|
Date: March 31,
2021
|
|
|
|
|
PARKERVISION, INC.
|
|
|
|
By:
/s/ Jeffrey L.
Parker
|
|
|
|
Jeffrey L.
Parker
|
|
|
|
Chief Executive
Officer
|
|
Pursuant to the
requirements of the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
|
|
|
|
|
Signature
|
Title
|
Date
|
|
|
|
|
|
By:
/s/ Jeffrey L.
Parker
|
Chief Executive
Officer and
|
March 31,
2021
|
|
Jeffrey L.
Parker
|
Chairman of the
Board (Principal
|
|
|
|
Executive
Officer)
|
|
|
|
|
|
|
By:
/s/ Cynthia L.
French
|
Chief Financial
Officer (Principal
|
March 31,
2021
|
|
Cynthia L.
French
|
Financial Officer
and Principal
|
|
|
|
Accounting Officer)
and Corporate Secretary
|
|
|
|
|
|
|
By:
/s/ Frank N.
Newman
|
Director
|
March 31,
2021
|
|
Frank N.
Newman
|
|
|
|
|
|
|
|
By: /s/
Paul A. Rosenbaum
|
Director
|
March 31,
2021
|
|
Paul A.
Rosenbaum
|
|
|
|
|
|
|
|
By:
/s/ Robert G.
Sterne
|
Director
|
March 31,
2021
|
|
Robert G.
Sterne
|
|
|
78
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