(Mark One)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
For the transition period from ________to__________
Commission file number 000-22904
PARKERVISION, INC.
(Exact Name of Registrant as Specified in its Charter)
Florida
(State of Incorporation)
59-2971472
(I.R.S. Employer ID No.)
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:
Title of Each Class
Common Stock, $.01 par value
Common Stock Rights
Trading
Symbol(s)
PRKR
Name of Each Exchange on Which Registered
OTCQB
OTCQB
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.
Large accelerated filer ( )
Non-accelerated filer (X)
Accelerated filer ( )
Smaller reporting company (X)
Emerging growth company ( )
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
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, 2021, the aggregate market value of the registrant’s common stock, $.01 par value, held by non-affiliates of the registrant was approximately $101,605,881
(based upon $1.42 share last sale price on that date, as reported by OTCQB).
As of March 15, 2022, 77,766,448 shares of the Issuer's Common Stock were outstanding.
INTRODUCTORY NOTE
PART I
TABLE OF CONTENTS
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
SIGNATURES
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdiction that Prevents Inspections
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
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INTRODUCTORY NOTE
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.
Item 1. Business.
PART I
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.
We spent the majority of 2021 supporting our current patent enforcement actions. We have two patent enforcement cases pending against
Qualcomm in the Middle District of Florida. Both cases experienced trial delays in 2020 and 2021 as a result of the COVID-19 pandemic.
We are currently awaiting a trial
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date in the first of these cases, which is expected to be scheduled in 2022 pending the court’s rulings on a few outstanding pre-trial motions.
The second case which is pending against Qualcomm and Apple has been stayed pending the outcome of the first case.
In 2021, we entered into two patent settlement and licensing agreements as a result of patent enforcement actions initiated in the Western
District of Texas in 2020. We have additional enforcement actions ongoing in Texas including against Intel Corporation (“Intel”) which is
scheduled for trial in 2022. 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 and Licenses
During 2021, we did not offer any products for sale, but rather focused exclusively on our patent enforcement and licensing efforts. This
resulted in two licensees of our technologies in 2021 including Buffalo, Inc. (“Buffalo”) and Zyxel Communications Corporation (“Zyxel”).
Each of these licenses resulted from a settlement and patent license agreement following initiation of patent enforcement actions by us. See
“Revenue” in Note 3 to our consolidated financial statements included in Item 8 for additional details.
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 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 patent-protected technologies.
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, 2021, we had approximately 81 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 2022 to 2036.
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Employees
As of December 31, 2021, we had seven full-time employees and one part-time employee. 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.
Item 1A. Risk Factors.
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.
Our financial condition raises substantial doubt as to our ability to continue as a going concern.
Financial and Operating Risks
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, 2021, was approximately $433.4 million. Our net losses for the years ended December 31, 2021 and 2020 were approximately
$12.3 million and $19.6 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, 2021, a
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statement with respect to substantial doubt about our ability to continue as a going concern. Note 2 to our 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 2022, 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 are not
sufficient to sustain our operations through 2022. 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 and unsecured contingent debt obligations. Our capital resources
include cash and cash equivalents of $1.0 million at December 31, 2021. Our business plan will continue to require expenditures for patent
protection and enforcement and general operations. For the years ended December 31, 2021 and 2020, we used $7.7 million and
$4.8 million, respectively in cash for operations which was funded primarily through the sale of convertible debt and equity securities. Our
current capital resources will not be sufficient to meet our working capital needs for the twelve months after the issuance of our consolidated
financial statements and we will 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 will 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 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
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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 $2.9 million in outstanding principal under convertible notes at December 31, 2021. 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 $313.2 million at December 31, 2021, of which
$276.6 million is subject to expiration in varying amounts from 2022 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 Key Investments LP (“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.
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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, in 2019, the Federal Patent Court in Munich invalidated one of our patents that was the subject of infringement
cases against LG and Apple in Germany following a nullity action 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
uncertain and cannot be predicted, including new information which may emerge concerning the severity
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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 highly skilled employees, we will not be able to execute our current business plans.
Our business is dependent on having skilled and specialized key employees to conduct our business activities. The inability to retain these
key 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.
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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, 2021, we had 77.0 million shares of common stock outstanding and had outstanding options and warrants for the purchase
of up to 33.6 million additional shares of common stock, of which approximately 27.0 million were exercisable as of December 31, 2021. 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 currently 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.
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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 $2.9 million in convertible notes outstanding at December 31, 2021. 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 20.2
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. As of December 31, 2021, we have issued approximately 2.7 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, 2020 and March 15, 2022, the reported
high and low sales prices for our common stock ranged between $0.15 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, 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.
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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.
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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.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties.
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 secured a sublease tenant in
2021 for the duration of the lease term through November 2022. Refer to Note 8 to our consolidated financial statements included in Item 8
for information regarding our outstanding lease obligations.
Item 3. Legal Proceedings.
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.
Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our Common Stock is 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 15, 2022, we had approximately 83 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, 2021.
Item 6. [Reserved].
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
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 based on those technologies, and we license our technologies to others for use in wireless communication
products. We have expended significant financial and other resources to research and develop our RF technologies and to obtain patent
protection for those technologies in the 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.
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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
On March 22, 2022, the United States District Court in the Middle District of Florida (Orlando Division) issued an order granting
Qualcomm’s motion for summary judgment ruling that Qualcomm does not infringe the three patents that are the subject of our infringement
case against them. This ruling, which is a final determination of the district court, follows a March 9, 2022 order granting a Qualcomm
motion to strike and exclude the opinions of our experts regarding the alleged infringement and validity issues. We intend to appeal both of
these decisions. Refer to ParkerVision v. Qualcomm (Middle District of Florida) included in Note 12 to our consolidated financial statements
included in Item 8 for a complete discussion of these legal proceedings.
In February 2022, our two patent infringement cases against Intel in the Western District of Texas were reconfigured whereby the first case
would assert an aggregate of six patents against Intel cellular products and the second case would assert the same six patents along with a
seventh patent against Intel WiFi and Bluetooth products. As a result of the restructuring of the cases, the trial date for the first Intel case was
moved from June 2022 to October 24, 2022. In March 2022, as a result of discovery delays, the trial date was moved to a start date of
December 5, 2022. The second case against Intel is currently scheduled for trial commencing in May 2023, however that date may change in
lieu of the revised schedule in the first Intel case. Refer to ParkerVision v. Intel (Western District of Texas) and ParkerVision v. Intel II
(Western District of Texas) included in Note 12 to our consolidated financial statements included in Item 8 for a complete discussion of these
legal proceedings.
In January 2022, the Patent Trial and Appeal Board (“PTAB”) issued its final decisions on two Inter Partes Reviews (“IPRs”) filed by Intel
against two of the patents asserted in the ParkerVision v. Intel infringement cases. The PTAB ruled in our favor with respect to the seven
challenged claims of one of the two patents and ruled in Intel’s favor with respect to the one challenged claim of the second patent. We have
one additional IPR filed by Intel against a patent asserted in our second case, and the PTAB is expected to issue its final decision in July
2022. Refer to Intel v. ParkerVision (PTAB) included in Note 12 to our consolidated financial statements included in Item 8 for a complete
discussion of these IPR proceedings.
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, and have utilized the proceeds from sales of debt and equity
securities and contingent funding arrangements with third-parties to fund our operations, including the cost of litigation.
For the year ended December 31, 2021, we incurred a net loss of approximately $12.3 million and negative cash flows from operations of
approximately $7.7 million. At December 31, 2021, we had cash
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and cash equivalents of approximately $1.0 million and an accumulated deficit of approximately $433.4 million. Additionally, a significant
amount of future proceeds that we may receive from our patent enforcement and licensing programs will first be utilized to repay borrowings,
legal fees and litigation expenses under our contingent funding arrangements. 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.
We used cash for operations of approximately $7.7 million and $4.8 million for the years ended December 31, 2021 and 2020, respectively.
The increase in cash used for operations from 2020 to 2021 is primarily due to the use of approximately $3.9 million in cash for the reduction
of accounts payable and accrued expenses during the year ended December 31, 2021, as compared to a $1.8 million increase in accounts
payable and accrued expenses during the year ended December 31, 2020. Our accounts payable decreased $3.6 million from December 31,
2020 to December 31, 2021 primarily as result of a $3.0 million payment to a law firm in settlement of our outstanding fees and expenses and
in exchange for an agreed-upon reduction in potential success fees payable to the firm from future patent-related proceeds. This increase in
use of cash from 2020 to 2021 was somewhat offset by a reduction in cash-based operating costs from 2020 to 2021, largely as a result of
decreased litigation fees and expenses. As a result of the decrease in our current liabilities from 2020 to 2021, our working capital improved
by approximately $3.7 million.
For the year ended December 31, 2021, we received aggregate net proceeds from the sale of debt and equity securities, including the exercise
of outstanding options and warrants, of approximately $7.2 million compared to approximately $7.6 million in proceeds received for the year
ended December 31, 2020. We repaid approximately $0.1 million and $1.3 million, respectively in debt obligations during the years ended
December 31, 2021 and 2020.
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 debt or 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 our
contingent fee agreements with legal counsel, we have secured and unsecured contingent payment obligations to litigation funders that have
priority payments due from patent-related proceeds as discussed more fully under “Financial Condition-Contingent Payment Obligations”
below.
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 the minimum return under our secured contingent payment obligation has been met. After repayment
of minimum returns on litigation financing, we estimate that 45% to 68% of remaining 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.
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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 2022, if any, after deduction of contingent payment obligations, may not be sufficient to cover our operating expenses.
In the event we do not generate revenues, or other patent-related proceeds, sufficient to cover our operational costs and contingent repayment
obligations, we will be required to raise additional working capital through the sale of debt or 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 obligations 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. The net book value of
our intangible assets was approximately $1.8 million and $2.2 million as of December 31, 2021 and 2020, 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 2021. 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, 2021 and 2020, we incurred losses of approximately $0.03 million and $0.3 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 secured and unsecured contingent payment obligations recorded at an aggregate estimated fair value of $43.1 million and $38.3
million as of December 31, 2021 and 2020, 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 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 as a result of $18 million in borrowings under a 2016 funding agreement, as
amended from time to time. We have repaid Brickell an aggregate of $3.3 million to date under this agreement. The contingent payment
obligation to Brickell is recorded at its estimated fair market value of $37.4 million at December 31, 2021, an increase of $4.3 million or 13%
from the estimated fair market value 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 aggregate minimum return due to Brickell if repaid in full
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at December 31, 2021 is approximately $48.8 million, an increase of approximately $6.8 million, or 16%, from the minimum return that
would have been due to Brickell as of December 31, 2020.
In addition, in 2020 and 2021, we incurred unsecured contingent payment obligations in connection with various funding arrangements.
These contingent payment obligations are payable from our share of patent-related proceeds after satisfaction of our obligation to Brickell
and payment of contingent fees to legal counsel. These unsecured contingent payment obligations are recorded at an aggregate estimated fair
value of $5.7 million at December 31, 2021, representing an increase of $0.5 million from the estimated fair market value at December 31,
2020. This increase is primarily the result of $0.4 million in new unsecured contingent payment obligations incurred in 2021. The maximum
payment obligation for our unsecured contingent payment obligations is $10.8 million at December 31, 2021.
See “Change in Fair Value of Contingent Obligations” included in “Results of Operations” below for a discussion of the increase in the
estimated fair value of our secured and unsecured contingent payment obligations.
Note Payable
As of December 31, 2021, we have a $0.7 million unsecured note payable to Sterne, Kessler, Goldstein, & Fox, PLLC (“SKGF”), a related
party. We are obligated to make principal and interest payments totaling $0.12 million in 2022 under this note. The remaining outstanding
balance of the note is subject to payment in full by April 30, 2023. Failure to comply with the payment terms of this note constitutes an event
of default which, if uncured, will result in the entire unpaid principal balance of the note and any unpaid, accrued interest to become
immediately due and payable. In addition, an event of default results in an increase in the interest rate under the notes to a default rate of
12% per annum. Notes payable are discussed more fully in Note 9 to our consolidated financial statements included in Item 8.
Convertible Notes
As of December 31, 2021, we have $2.9 million in notes that are convertible, at the holders’ option, into shares of our common stock at fixed
conversion prices ranging from $0.08 to $0.57 per share. These notes mature at varying dates from September 2023 to January 2025. The
majority of the notes bear interest at a stated rate of 8%, payable quarterly. We have the option, subject to certain conditions, to pay the
quarterly interest in-kind with shares of our common stock based on market price at the interest payment date. To date, all of the interest
payments under these convertible notes have been paid in-kind and we anticipate that future payments of interest will also be paid in-kind.
The notes provide for events of default that include failure to pay principal or interest when due, breach of any of the representations made by
us, events of liquidation or bankruptcy, and a change in control. 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 notes. Our convertible notes payable are more fully discussed in Note 9 to our consolidated financial statements
included in Item 8.
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, 2021, we had net deferred tax assets of approximately $93
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
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and other tax credit carryforwards could be limited under Section 382 as more fully discussed in “Risk Factors” and in Note 11 to our
consolidated financial statements included in Item 8.
Results of Operations for Each of the Years Ended December 31, 2021 and 2020
Revenues and Gross Margins
Licensing revenue was $0.14 million for the year ended December 31, 2021. We reported no licensing revenue for the year ended December
31, 2020. We entered into patent licensing and settlement agreements with Buffalo and Zyxel in May 2021 and September 2021,
respectively. We recognized revenue from these contracts during the year ended December 31, 2021 when the parties’ performance
obligations were met. Cost of sales related to the licensing revenue consists of amortization expense related to the patents covered under the
license agreements.
Our licensing proceeds were fully offset against out-of-pocket expenses recognized under our contingent fee agreement with counsel and
therefore did not impact our cash flows. These out-of-pocket expenses are included in selling, general and administrative expenses.
Although we do anticipate additional revenue to result from our licensing and patent enforcement actions, the amount and timing is highly
unpredictable and there can be no assurance that we will achieve our anticipated results.
We reported no product revenue during the years ended December 31, 2021 or 2020.
Selling, General, and Administrative Expenses
Selling, general and administrative expenses consist primarily of executive, director, technical support, and finance and administrative
personnel costs, including share-based compensation, costs incurred for insurance, shareholder relations and outside legal and professional
services, including litigation expenses, and amortization and maintenance expenses related to our patent assets.
Our selling, general and administrative expenses were approximately $8.1 million for the year ended December 31, 2021, as compared to
approximately $10.7 million for the year ended December 31, 2020, representing a decrease of approximately $2.6 million or 24%. This
decrease results, in part, from a number of one-time, noncash charges in 2020 including $1.8 million associated with an amendment to a
warrant agreement, $0.4 million from an amendment to our March 2020 equity transactions, and $0.2 million for impairment of the right-of-
use asset associated with our Lake Mary lease. In addition, our litigation fees and expenses decreased by approximately $2.3 million as a
result of the stay in the Qualcomm case in Jacksonville, Florida. These decreases were partially offset by a $2.1 million increase in share-
based compensation attributed to nonqualified stock options awarded to executives, key employees, and nonemployee directors in January
2021 as more fully discussed in Note 14 to our consolidated financial statements included in Item 8.
Change in Fair Value of Contingent Payment Obligations
We have elected to measure our secured and unsecured contingent payment obligations at fair value which is based on significant
unobservable inputs. We estimated the fair value of our secured contingent payment obligations using a probability-weighted income
approach based on the estimated present value of projected future cash outflows using a risk-adjusted discount rate. Increases or decreases in
the significant unobservable inputs could result in significant increases or decreases in fair value.
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For the year ended December 31, 2021, we recorded an increase in the fair value of our secured and unsecured contingent payment
obligations of approximately $4.4 million. The majority of the change in fair value is attributable to an increase in the estimated fair value of
the secured contingent obligation with Brickell as a result of changes in estimated amounts and timing of projected future cash flows.
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
We adopted Accounting Standards Update (“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" as of January 1, 2021. ASU 2020-06 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 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 calculation in certain areas. For smaller reporting companies, the ASU is effective for fiscal years
beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption 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. Adoption of ASU 2020-06 resulted in an increase to our long-term debt of approximately $0.8
million, a decrease in
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additional paid-in-capital of approximately $1.1 million and an adjustment to our beginning accumulated deficit of $0.3 million resulting
from the elimination of the previously recognized beneficial conversion feature as a debt discount.
Off-Balance Sheet Transactions
As of December 31, 2021, we had outstanding warrants to purchase 10.3 million shares of our common stock. The estimated grant date fair
value of these warrants of approximately $3.2 million is included in shareholders’ deficit in our consolidated balance sheet for the year ended
December 31, 2021. The outstanding warrants have an average exercise price of $0.75 per share and a weighted average remaining life of
approximately 3 years.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
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Item 8. Financial Statements and Supplementary Data.
Index to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (for the years ended December 31, 2021 and
2020) (PCAOB ID: 569)
FINANCIAL STATEMENTS:
Consolidated Balance Sheets – December 31, 2021 and 2020
Consolidated Statements of Comprehensive Loss - for the years ended December 31, 2021 and 2020
Consolidated Statements of Shareholders’ Deficit - for the years ended December 31, 2021 and 2020
Consolidated Statements of Cash Flows - for the years ended December 31, 2021 and 2020
Notes to Consolidated Financial Statements - December 31, 2021 and 2020
SUPPLEMENTARY DATA:
Not applicable
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
ParkerVision, Inc.
Jacksonville, Florida
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,
2021 and 2020, 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, 2021, 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, 2021 and 2020, and the results of their operations and their cash flows for each of the years in the two-year
period ended December 31, 2021 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.
23
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.
Estimation of Fair Value of Contingent Payment Obligations
As disclosed in Note 1 of the Company’s consolidated financial statements, the Company accounts for their secured and unsecured
contingent payment obligations as long-term debt. Their payment obligations are contingent upon the receipt of proceeds from patent
enforcement and/or patent monetization actions. The Company has elected to measure their contingent payment obligations at their
estimated fair values. The Company recorded the fair value of their contingent payment obligations at approximately $43,063,000 as of
December 31, 2021.
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
March 29, 2022
24
PARKERVISION, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2021 AND 2020
(in thousands)
$
$
$
2021
2020
1,030 $
574
25
1,629
7
1,785
7
12
3,440 $
706 $
27
109
-
555
94
-
-
155
1,646
37,372
5,691
2,895
609
4
-
46,571
48,217
1,627
599
8
2,234
30
2,170
10
12
4,456
4,318
19
128
251
936
100
26
65
146
5,989
33,057
5,222
3,018
703
159
129
42,288
48,277
CURRENT ASSETS:
Cash and cash equivalents
Prepaid expenses
Other current assets
Total current assets
Property and equipment, net
Intangible assets, net
Operating lease right-of-use assets
Other assets, net
Total assets
CURRENT LIABILITIES:
Accounts payable
Accrued expenses:
Salaries and wages
Professional fees
Statutory court costs
Other accrued expenses
Related party note payable, current portion
Secured note payable, current portion
Unsecured notes payable
Operating lease liabilities, current portion
Total current liabilities
LONG-TERM LIABILITIES:
Secured contingent payment obligation
Unsecured contingent payment obligations
Convertible notes, net
Related party note payable, net of current portion
Operating lease liabilities, net of current portion
Other long-term liabilities
Total long-term liabilities
Total liabilities
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT:
Common stock, $0.01 par value, 150,000 and 140,000 shares authorized, 76,992 and 58,591 issued
and outstanding at December 31, 2021 and 2020, respectively
Additional paid-in capital
Accumulated deficit
Total shareholders' deficit
Total liabilities and shareholders' deficit
770
387,865
(433,412)
(44,777)
$
3,440 $
586
376,954
(421,361)
(43,821)
4,456
The accompanying notes are an integral part of these consolidated financial statements.
25
PARKERVISION, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(in thousands, except per share amounts)
Licensing revenue
Cost of sales
Gross margin
Selling, general, and administrative expenses
Total operating expenses
Interest and other income
Interest and other expense
Change in fair value of contingent payment obligations
Total interest and other
Net loss before income tax
Income tax expense
Net loss
Other comprehensive income, net of tax
Comprehensive loss
Basic and diluted net loss per common share
Weighted average common shares outstanding
$
$
$
2021
2020
144 $
(5)
139
8,088
8,088
242
(251)
(4,372)
(4,381)
-
-
-
10,664
10,664
-
(547)
(8,367)
(8,914)
(12,330)
(19,578)
-
-
(12,330)
(19,578)
-
-
(12,330) $
(19,578)
(0.17) $
71,299
(0.42)
47,019
The accompanying notes are an integral part of these consolidated financial statements.
26
PARKERVISION, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(in thousands)
Common
Stock, Par
Value
Additional Paid-
in Capital
Accumulated
Deficit
Total
Shareholders'
Deficit
Balance as of December 31, 2019
Issuance of common stock and warrants in public and private offerings, net
of issuance costs and initial fair value of contingent payment rights
Issuance of common stock upon exercise of warrants
Issuance of common stock and warrants for services
Issuance of convertible debt with beneficial conversion feature
Issuance of common stock upon conversion and payment of interest in kind
on convertible debt
Issuance of common stock upon conversion of short-term loans and
payables
Share-based compensation, net of shares withheld for taxes
Net loss for the year
Balance as of December 31, 2020
Cumulative effect of change in accounting principle
Issuance of common stock and warrants in public and private offerings, net
of issuance costs and initial fair value of contingent payment rights
Issuance of common stock upon exercise of options and warrants
Issuance of common stock and warrants for services
Issuance of common stock upon conversion and payment of interest in kind
on convertible debt
Share-based compensation, net of shares withheld for taxes
Net loss for the year
Balance as of December 31, 2021
$
$
341
148
45
7
-
15
22
8
-
586
-
73
63
9
37
2
-
770 $
368,345
(401,783)
(33,097)
4,618
1,530
297
173
437
318
1,236
-
376,954
(1,126)
5,701
959
863
1,201
3,313
-
387,865 $
-
-
-
-
-
-
(19,578)
(421,361)
279
-
-
-
-
(12,330)
(433,412) $
4,766
1,575
304
173
452
340
1,244
(19,578)
(43,821)
(847)
5,774
1,022
872
1,238
3,315
(12,330)
(44,777)
The accompanying notes are an integral part of these consolidated financial statements.
27
PARKERVISION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization
Share-based compensation
Noncash lease expense
Change in fair value of contingent payment obligations
Loss on disposal/impairment of equipment and other assets
Loan forgiveness
Noncash expense for amendment of equity-related agreements
Changes in operating assets and liabilities:
Prepaid expenses and other assets
Accounts payable and accrued expenses
Operating lease liabilities
Total adjustments
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment
Purchases of property and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock, including contingent payment rights, in private
offerings
Net proceeds from exercise of options and warrants
Net proceeds from debt financings
Debt repayments
Net cash provided by financing activities
NET CHANGE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, beginning of year
CASH AND CASH EQUIVALENTS, end of year
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest
Cash paid for income taxes
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
28
2021
2020
$
(12,330) $
(19,578)
368
3,315
3
4,372
43
(194)
-
784
(3,917)
(146)
4,628
(7,702)
-
(3)
(3)
6,186
1,022
-
(100)
7,108
(597)
1,627
1,030 $
17 $
- $
632
1,244
61
8,367
487
-
2,211
292
1,757
(250)
14,801
(4,777)
2
(3)
(1)
4,801
1,575
1,244
(1,272)
6,348
1,570
57
1,627
61
-
PARKERVISION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
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 based on those technologies, and
we license our technologies to others for use in wireless communication products. We have expended significant financial and other
resources to research and develop our RF technologies and to obtain patent protection for those technologies in the United States of America
(“U.S.”) and certain foreign jurisdictions. We believe certain patents protecting our proprietary technologies have been broadly infringed by
others, and therefore the primary focus of our business plan is the enforcement of our intellectual property rights through patent infringement
litigation and licensing efforts. We currently have patent enforcement actions ongoing in various U.S. district courts against providers of
mobile handsets, smart televisions and other WiFi products and, in certain cases, their chip suppliers for the infringement of a number of our
RF patents. We have made significant investments in developing and protecting our technologies, the returns on which are dependent upon
the generation of future revenues for realization.
Basis of Presentation
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). 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.
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.
29
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
Leasehold improvements
Furniture and fixtures
Computer equipment and software
5-7 years
Shorter of useful life or remaining life of lease
7 years
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 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 have accounted for our finance and operating leases in accordance with ASC 842, “Leases” 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. 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
30
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.
Refer to Note 8 for additional disclosures related to our leases.
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 that was amortized over the life of the
notes as interest expense.
Effective January 1, 2021, we adopted Accounting Standards Update (“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 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 calculation in certain areas. For smaller reporting companies, the ASU is effective for
fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption 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.
Adoption of ASU 2020-06 resulted in an increase to our long-term debt of approximately $0.8 million, a decrease in additional paid-in-
capital of approximately $1.1 million, and an adjustment to our beginning accumulated deficit of $0.3 million resulting from the elimination
of the previously recognized beneficial conversion feature as a debt discount.
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. These steps
31
include (1) identifying the contract with the customer, (2) identifying the performance obligations, (3) determining the transaction price, (4)
allocating the transaction price to the performance obligations, and (5) recognizing revenue as the entity satisfies the performance
obligation(s).
Our revenue is derived from patent licensing and settlement agreements. We have an active monitoring and enforcement program with
respect to our intellectual property rights that includes seeking appropriate compensation from third parties that utilize or have utilized our
intellectual property without a license. As a result, we may receive payments as part of a settlement or in the form of court-awarded damages
for a patent infringement dispute. The timing and amount of revenue recognized from each licensee depend upon a variety of factors,
including the specific terms of each agreement and the nature of the deliverables and obligations. Such agreements are often complex and
may include multiple performance obligations. These agreements can include performance obligations related to the settlement of past patent
infringement liabilities, royalties on future covered products sold by licensees, access to a portfolio of technology as it exists at a point in
time, and/or promises to provide technology updates to the portfolio during the term of the license.
Refer to Note 3 for additional disclosures related to our revenue.
Cost of Sales
Cost of sales includes amortization of intangible assets directly linked with revenue generating licensing activities. Amortization expense for
intangible assets that are not directly related to revenue generating licensing activities are included in selling, general, and administrative
expenses in our consolidated statements of comprehensive loss.
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 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 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.
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.
32
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, 2021 and 2020 were
as follows (in thousands):
Options outstanding
Warrants outstanding
Unvested RSUs
Shares underlying convertible notes
2021
2020
23,215
10,346
-
20,157
53,718
12,240
12,850
187
23,557
48,834
These potential shares were excluded from the computation of diluted loss per share as their effect would have been anti-dilutive.
2. LIQUIDITY AND GOING CONCERN
The accompanying consolidated financial statements as of and for the year ended December 31, 2021 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, 2021, we incurred a net loss of approximately $12.3 million and negative
cash flows from operations of approximately $7.7 million. At December 31, 2021, we had an accumulated deficit of approximately
$433.4 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 $1.0 million at December 31, 2021. Our remaining capital resources will be used to fund
our current obligations and ongoing operating costs; however these resources will not be sufficient to meet our liquidity needs for the next
twelve months and we will 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. Refer to Note 12 for a complete discussion of our patent enforcement proceedings.
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
33
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.
3. REVENUE
During the year ended December 31, 2021, we recognized $0.14 million of revenue derived from contracts with two licensees. The contracts
provide access to specified patented technologies as they exist at a point in time and we have no obligation to provide any future updates.
The consideration received by us was negotiated as part of a settlement of patent litigation where no prior license agreement existed. The
performance obligations were satisfied upon our dismissal of patent enforcement actions with each licensee which was contingent upon our
receipt of the negotiated and agreed-upon lump-sum payments from the licensees. The contracts included no variable consideration. All
consideration received was recorded to licensing revenue as there were no other material components of the contracts. No contract assets or
liabilities exist as of December 31, 2021.
We recognized no revenue during the year ended December 31, 2020.
4. PREPAID EXPENSES
Prepaid expenses consisted of the following at December 31, 2021 and 2020 (in thousands):
Prepaid services
Prepaid bonds for German statutory costs
Prepaid insurance
Prepaid licenses, software tools and support
Other prepaid expenses
$
$
2021
2020
523 $
-
23
16
12
574 $
408
142
21
11
17
599
Prepaid services at December 31, 2021 and 2020 include approximately $0.5 million and $0.1 million, respectively, of consulting services
paid in shares of stock or warrants to purchase shares of stock in the future.
34
5. PROPERTY AND EQUIPMENT, NET
Property and equipment, at cost, consisted of the following at December 31, 2021 and 2020 (in thousands):
Equipment and software
Leasehold improvements
Furniture and fixtures
Less accumulated depreciation
$
$
2021
2020
221 $
19
-
240
(233)
7 $
218
19
30
267
(237)
30
Depreciation expense related to property and equipment was approximately $0.01 million and $0.03 million in 2021 and 2020, respectively.
For the years ended December 31, 2021 and 2020, we recorded a loss on disposal of fixed assets of approximately $0.01 million and $0.02
million, respectively.
6. INTANGIBLE ASSETS
Intangible assets consisted of the following at December 31, 2021 and 2020 (in thousands):
Patents and copyrights
Less accumulated amortization
2021
2020
$
$
14,755 $
(12,970)
1,785 $
14,948
(12,778)
2,170
Amortization expense for the years ended December 31, 2021 and 2020 was approximately $0.35 million and $0.45 million, respectively.
For the years ended December 31, 2021 and 2020, we recorded losses on the disposal of intangible assets of approximately $0.03 million and
$0.3 million, respectively.
Future estimated amortization expense for intangible assets that have remaining unamortized amounts as of December 31, 2021 is as follows
(in thousands):
2022
2023
2024
2025
2026
2027 and thereafter
Total
$
$
309
278
265
226
155
552
1,785
35
7. ACCRUED LIABILITIES
Other accrued expenses consisted of the following at December 31, 2021 and 2020 (in thousands):
Advances
Other accrued expenses
$
$
2021
2020
500 $
55
555 $
882
54
936
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 13).
8. LEASES
We lease our office and other facilities and certain office equipment under long-term, non-cancelable operating leases. No new finance or
operating leases commenced during the years ended December 31, 2021 or 2020 except with respect to a sublease agreement for our Lake
Mary facility in 2021 as discussed more fully below.
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 original 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 pandemic, 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. During the year ended December 31, 2021, we entered into a sublease agreement for this facility for the
remaining term of our original lease, through November 2022. The sublease is accounted for as an operating lease.
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 $0.04 million and $0.1 million for the years
ended December 31, 2021 and 2020, respectively. Rental income recognized of $0.05 million for the year ended December 31, 2021, is
included in “Interest and other income” in the accompanying consolidated statements of comprehensive loss.
36
Supplemental Cash Flow Information
The following table summarizes the supplemental cash flow information related to leases (in thousands):
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Cash received for amounts included in the measurement of sublease assets:
Operating cash flows from operating subleases
Other Information
The table below summarizes other supplemental information related to leases:
Weighted-average remaining lease term (in years):
Operating leases
Operating subleases
Weighted average discount rate
Operating leases (1)
Year Ended
December 31,
2021
Year Ended
December 31,
2020
$
181 $
44
315
-
December 31,
2021
December 31,
2020
0.9
0.9
12.2%
1.7
-
12.1%
(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 and sublease receivables consist of the following as of December 31, 2021 (in thousands):
2022
2023
Thereafter
Total undiscounted lease payments (receipts)
Less: imputed interest
Present value of lease liabilities (receivables)
Less: current portion
Long-term lease obligations
Operating Leases
Operating Subleases
$
$
166
4
-
170
(11)
159
(155)
4
$
$
(120)
-
-
(120)
-
(120)
120
-
37
9. LONG-TERM DEBT
Notes Payable
Note Payable to a Related Party
We have an unsecured promissory note payable of $0.7 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 $0.59 million due at the maturity date of April
30, 2023. We are currently in compliance with all the terms of the note, as amended. For each of the years ended December 31, 2021 and
2020, we recognized interest expense of approximately $0.03 million related to this note.
Unsecured Notes Payable
Unsecured notes payable at December 31, 2020 represents the current portion of our Paycheck Protection Program loan. In May 2020, we
received approximately $0.2 million in proceeds from an approved loan under the Paycheck Protection Program. The loan was eligible for
forgiveness provided that (i) we used the loan proceeds exclusively for allowed costs including payroll, employee group health benefits, rent
and utilities and (ii) employee and compensation levels were maintained during the coverage period. We applied for loan forgiveness in
April 2021 and the loan was forgiven in June 2021. The forgiveness of the loan was recognized as income and is included in “Interest and
other income” in the accompanying consolidated statements of comprehensive loss for the year ended December 31, 2021.
Secured Note Payable
Our secured note payable as of December 31, 2020 represented default interest accrued related to a note payable to Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C. (“Mintz”) for outstanding fees and expenses. Additionally, as of December 31, 2020, we had approximately
$3.1 million in accounts payable to Mintz for outstanding fees and expenses. We also had approximately $3.6 million in disputed legal fees
and expenses billed by Mintz that we treated as a loss contingency that was not probable as of December 31, 2020 and accordingly, for which
we recognized no expense in the consolidated financial statements. On March 29, 2021, we entered into an agreement with Mintz to satisfy
our outstanding obligations to Mintz. Under the terms of the agreement, (i) Mintz waived all past defaults on the note resulting in a reversal
of previously accrued interest, (ii) we paid Mintz a lump-sum payment of $3.0 million in satisfaction of all outstanding obligations including
our accounts payable to Mintz and all disputed and unrecorded billings, and (iii) Mintz agreed to a significant reduction in future success fees
that might be payable to Mintz from future patent-related proceeds.
At December 31, 2021, the aggregate maturities of our notes payable are as follows (in thousands):
2022
2023
Total
$
$
94
609
703
The estimated fair value of our notes payable at December 31, 2021 is approximately $0.63 million based on a risk-adjusted discount rate.
38
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 common stock, or a combination thereof. The number of shares issued for interest is determined by
dividing the interest payment amount by the closing price of our common stock on the trading day immediately prior to the scheduled interest
payment date.
To date, all interest payments on the convertible notes have been made in shares of our common stock. We have recognized the convertible
notes as debt in our consolidated financial statements. The fixed conversion prices of certain of the notes were below the market value of our
common stock on the closing date resulting in the recognition of a beneficial conversion feature that was recorded as a discount on the
convertible notes with a corresponding increase to additional paid in capital. Upon our adoption of ASU 2020-06 on January 1, 2021, the
previously recognized beneficial conversion feature was eliminated resulting in an increase in convertible notes of $0.8 million (see Note 1).
Convertible notes payable at December 31, 2021 and 2020, consist of the following (in thousands):
Description
Convertible notes dated September 10, 2018
Convertible notes dated September 19, 2018
Convertible notes dated February/March 2019
Convertible notes dated June/July 2019
Convertible notes dated July 18, 2019
Convertible notes dated September 13, 2019
Convertible notes dated January 8, 2020
Total principal balance
Less unamortized discount
Fixed
Conversion
Rate
$0.40
$0.57
$0.25
$0.10
$0.08
$0.10
$0.13
Interest
Rate
8.0%
8.0%
8.0%
8.0%
7.5%
8.0%
8.0%
Maturity Date
September 10, 2023 $
September 19, 2023
February 28, 2024 to
March 13, 2024
June 7, 2024 to July 15,
2024
July 18, 2024
September 13, 2024
January 8, 2025 1
$
December 31,
2021
2020
200
425
750
320
700
50
450
2,895
-
2,895
$
$
600
425
1,300
340
700
50
450
3,865
847
3,018
1 The maturity date may be extended by one-year increments for up to an additional five years at the holder’s option at a reduced interest rate of 2%.
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.
39
For the year ended December 31, 2021, convertible notes with a face value of $0.97 million were converted by the holders into 3.4 million
shares of our common stock at an average conversion price of $0.29. For the year ended December 31, 2020, convertible notes with a face
value of $0.15 million were converted by the holders into 0.75 million shares of our common stock at an average conversion price of $0.20.
At the holders’ option, subject to ownership limitations, the convertible notes outstanding at December 31, 2021 could be converted into an
aggregate of approximately 20.2 million shares of our common stock based on the fixed conversion prices.
For the years ended December 31, 2021 and 2020, we recognized interest expense of approximately $0.26 million and $0.47 million,
respectively. Interest expense for the year ended December 31, 2020 included approximately $0.17 million related to amortization of the
discount that was subsequently eliminated upon our adoption of ASU 2020-06. We have elected to pay contractual interest in shares of our
common stock. For the years ended December 31, 2021 and 2020, we issued approximately 272,000 and 710,000 shares of our common
stock, respectively, as interest-in-kind payments on our convertible notes.
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.
At December 31, 2021, we estimate our convertible notes have an aggregate fair value of approximately $2.3 million and would be
categorized within Level 2 of the fair value hierarchy.
Secured Contingent Payment Obligation
The following table provides a reconciliation of our secured contingent payment obligation measured at estimated fair market value for the
years ended December 31, 2021 and 2020, respectively (in thousands).
Secured contingent payment obligation, beginning of year
Change in fair value
Secured contingent payment obligation, end of year
2021
2020
$
$
33,057 $
4,315
37,372 $
26,651
6,406
33,057
Our secured contingent payment obligation represents the estimated fair value of our repayment obligation to Brickell Key Investments, LP
(“Brickell”) under a February 2016 funding agreement, as amended 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 2020 or 2021. 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 100% of proceeds received by us, after reimbursement of out-of-pocket expenses and legal
contingent fees, 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
$48.8 million and $42 million as of December 31, 2021 and 2020, respectively. In addition, Brickell is entitled to a pro rata portion of
proceeds from specified legal actions to the extent aggregate proceeds from those actions exceed the minimum return.
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
40
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-compliance of our obligations or misrepresentations under the agreement. As of
December 31, 2021, 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, 2021 and 2020, respectively (in thousands):
Unsecured contingent payment obligations, beginning of period
Reclassification of other liabilities
Issuance of contingent payment rights
Change in fair value
Unsecured contingent payment obligations, end of period
2021
2020
$
$
5,222 $
-
412
57
5,691 $
-
1,003
2,258
1,961
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 were recorded as an unsecured
contingent payment obligation at March 31, 2020, when the Termination Fee obligation was incurred. As of December 31, 2021, the
estimated fair value of unsecured contingent payment obligations related to the Termination Fee is $2.6 million.
41
The CPRs represent the estimated fair value of rights provided to accredited investors who purchased shares of our common stock in 2020
and 2021 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 years ended December 31, 2021 and 2020, we received aggregate proceeds of $1.1 million and $3.8 million,
respectively from the sale of common stock with contingent payment rights, of which approximately $0.4 million and $1.8 million,
respectively was allocated to the CPRs. In addition, on May 1, 2020, we amended certain March 2020 equity purchase agreements with
accredited 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 $5.8 million. As of December 31, 2021, the estimated fair value of our unsecured
contingent payment obligations related to the CPRs is $3.1 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:
(cid:0) Level 1: Quoted prices for identical assets or liabilities in active markets which we can access
(cid:0) Level 2: Observable inputs other than those described in Level 1
(cid:0) 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, 2021 and 2020, segregated by classification within the fair value hierarchy (in thousands):
Quoted Prices in
Active Markets
(Level 1)
Fair Value Measurements
Significant Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Total
December 31, 2021:
Liabilities:
Secured contingent payment obligation
Unsecured contingent payment obligations
$
37,372 $
5,691
December 31, 2020:
Liabilities:
Secured contingent payment obligation
Unsecured contingent payment obligations
33,057
5,222
- $
-
-
-
- $
-
37,372
5,691
-
-
33,057
5,222
For the years ended December 31, 2021 and 2020, respectively, we had no transfers of assets or liabilities between the levels of the hierarchy.
42
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 14.85% at December 31, 2021, based on a risk-free rate of 0.85% as
adjusted by 8% for credit risk and 6% for litigation inherent risk.
The following table provides quantitative information about the significant unobservable inputs used in the measurement of fair value for
both the secured and unsecured contingent payment obligations at December 31, 2021, including the lowest and highest undiscounted payout
scenarios as well as a weighted average payout scenario based on relative undiscounted fair value of each cash flow scenario.
Unobservable Inputs
Secured Contingent Payment Obligation
Weighted
Average
High
Low
Unsecured Contingent Payment Obligations
Weighted
Average
High
Low
Estimated undiscounted cash outflows (in millions)
Duration (in years)
Estimated probabilities
$
$
0.0
0.5
7%
$
51.8
2.3
23%
$
79.6
3.5
25%
$
0.0
1.5
25%
$
8.1
2.5
25%
10.8
3.5
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, 2021 and 2020 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 2021 or 2020 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, 2021 and 2020, respectively are as follows (in thousands):
Tax benefit at statutory rate
State tax benefit
Increase in valuation allowance
Other
2021
2020
$
$
(2,589) $
(530)
3,368
(249)
- $
(4,111)
(842)
4,307
646
-
43
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, 2021 and 2020 (in thousands):
Gross deferred tax assets:
Net operating loss carry-forward
Research and development credit carry-forward
Stock compensation
Patents and other
Contingent payment obligations
Fixed assets
Accrued liabilities
Lease liabilities
Less valuation allowance
Gross deferred tax liabilities:
Convertible debt
Net deferred tax asset
2021
2020
78,600 $
6,028
356
1,470
6,341
53
-
38
92,886
(92,886)
-
-
-
- $
80,848
6,603
122
1,466
5,235
54
64
77
94,469
(94,245)
224
(224)
(224)
-
$
$
Upon adoption of ASU 2020-06 on January 1, 2021 (see “Convertible Notes” in Note 9), the difference between the financial accounting and
tax bases, net of tax effect, of unrecognized tax benefit related to the beneficial conversion feature of convertible debt was eliminated.
At December 31, 2021, we had cumulative net operating loss (“NOL”) carry-forwards for income tax purposes of $313.2 million, of which
$276.6 million is subject to expiration in varying amounts from 2022 to 2037. At December 31, 2021, we also had research and development
tax credit carryforwards of $6.0 million, which expire in varying amounts from 2022 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, 2021 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 2002 through
2021 tax years. The following table
44
provides a reconciliation of our unrecognized tax benefits due to uncertain tax positions for the years ended December 31, 2021 and 2020,
respectively (in thousands):
Unrecognized tax benefits – beginning of year
Reduction as a result of lapse of statute of limitations
Unrecognized tax benefits – end of year
2021
2020
$
$
927 $
(274)
653 $
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, 2021 and
2020, 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.
The majority of our litigation, including our PTAB proceedings, is being paid for through contingency fee arrangements with our litigation
counsel as well as third-party litigation financing. In general, litigation counsel is entitled to recoup on a priority basis, from litigation
proceeds, any out-of-pocket expenses incurred. Following reimbursement of out-of-pocket expenses, litigation counsel is generally entitled
to a percentage of remaining proceeds based on the terms of the specific arrangement between us, counsel and our third-party litigation
funder.
We were liable for costs assessed on infringement and validity cases in Germany in which we did not prevail. A portion of this liability was
covered by bonds posted in Germany. As of December 31, 2021, our bonds have been fully released and all outstanding statutory court costs
have been satisfied in full. We have no remaining litigation or related liabilities in Germany.
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
45
Circuit upheld the PTAB’s decision with regard to the ‘940 Patent and, in January 2019, the court lifted the stay in this case. In July 2019,
the court issued an order that granted our proposed selection of patent claims from four asserted patents, including the ‘940 Patent, and
denied Qualcomm’s request to limit the claims and patents. The court also agreed that we may elect to pursue accused products that were at
issue at the time the case was stayed, as well as new products that were released by Qualcomm during the pendency of the stay. In
September 2019, Qualcomm filed a motion for partial summary judgement in an attempt to exclude certain patents from the case, including
the ‘940 Patent. The court denied this motion in January 2020.
In April 2020, the court issued its claim construction order in which the court adopted our proposed construction for seven of the ten disputed
terms and adopted slightly modified versions of our proposed construction for the remaining terms. Due to the impact of COVID-19, a
number of the scheduled deadlines in this case were moved including the trial commencement date which was rescheduled from December
2020 to May 2021. In October 2020, our damages expert submitted a report supporting our damages ask of $1.3 billion for Qualcomm’s
unauthorized use of our technology. Such amount excludes additional amounts requested by us for interest and enhanced damages for willful
infringement. Ultimately, the amount of damages, if any, will be determined by the court. Discovery was expected to close in December
2020; however, the court allowed us to designate a substitute expert due to medical issues with one of our experts in the case. Accordingly,
the close of discovery was delayed until January 2021. As a result of these delays, the court rescheduled the trial commencement date
from May 3, 2021 to July 6, 2021.
In March 2021, the court further delayed the trial date citing backlog due to the pandemic, among other factors. A new trial date has not yet
been set. 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. Joint pre-trial statements were submitted in May 2021. In March 2021, the court
granted Qualcomm’s motion to strike certain of our 2020 infringement contentions. We filed a motion to clarify the court’s order and in July
2021, based on the court’s response to our motion to clarify, we filed a joint motion for entry of a judgement of non-infringement of our
Patent No. 7,865,177 (“the ‘177 Patent”), subject to appeal. A number of outstanding motions are pending decisions by the court. In January
2022, the court held a hearing to allow the parties to present their respective positions on three outstanding motions. The court indicated that
upon its ruling on these motions, a pre-trial conference will be scheduled and a trial date set. On March 9, 2022, the court ruled with respect
to one of these motions granting Qualcomm’s motion to strike and exclude opinions regarding the alleged infringement and validity issues.
This court order prevents the presentation of infringement and validity opinions by both of our experts at trial. In addition, on March 22,
2022, the court issued an order granting Qualcomm’s motion for summary judgment ruling that Qualcomm does not infringe the remaining
three patents in this case. This is a final judgment and the next step is an appeal of both the March 22, 2022 and the March 9, 2022 rulings
(see Note 17). 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
46
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 disputed 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.
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 in the Middle District of Florida. As
part of this stay, LG has agreed to be bound by the final claim construction decision in that case.
ParkerVision v. Intel (Western District of Texas)
In February 2020, we filed a patent infringement complaint in the Western District of Texas against Intel Corporation (“Intel”) alleging
infringement of eight of our patents. The complaint was amended in May 2020 to add two additional patents. In June 2020, we requested
that one of the patents be dropped from this case and filed a second case in the Western District of Texas that included this dismissed patent
(see ParkerVision v. Intel II below). Intel’s response to our complaint was filed in June 2020 denying infringement and claiming invalidity of
the patents. Intel also filed a motion to transfer venue which the court denied. In July 2020 and September 2020, Intel filed IPR petitions
against two of the patents in this case and in January 2021, the PTAB instituted proceedings with regard to these two petitions (see Intel v.
ParkerVision (PTAB) below).
The court issued its claim construction ruling in January 2021 in which the majority of the disputed claim terms were decided in our favor.
The case was scheduled for trial beginning February 7, 2022. In April 2021, we filed an amended complaint to include additional Intel chips
and products, including WiFi devices, to the complaint. The court suggested that, given the number of patents at issue, the case would be
separated into two trials and, as a result of the added products, the first trial date was moved to June 2022.
In January 2022, the PTAB issued its ruling on the IPRs (see Intel v. ParkerVision (PTAB) below). In February 2022, the parties filed a joint
motion with respect to both Intel cases whereby the first case would be narrowed to six total patents asserted against Intel cellular products.
These same six patents would be also asserted in the second Intel case, along with one additional patent from the second case, against Intel
WiFi and Bluetooth products. As a result of the restructuring of the two cases, the trial date was moved to October 2022. In March 2022,
due to discovery delays, the court agreed to move the trial commencement date to December 5, 2022. Discovery is ongoing in this case. We
are represented in this case on a full contingency fee basis.
ParkerVision v. Intel II (Western District of Texas)
In June 2020, to reduce the number of claims in ParkerVision v. Intel, we filed a second patent infringement complaint in the Western District
of Texas against Intel that included a single patent that we voluntarily dismissed from the original case. In July 2020, we amended our
complaint adding two more
47
patents to the case. Intel responded to the complaint denying infringement and claiming invalidity of the patents.
In January 2021, Intel filed a petition for IPR against one of the patents in this case and in July 2021, the PTAB instituted proceedings with
regard to this petition (see Intel v. ParkerVision (PTAB) below). We filed an amended complaint in 2021 adding Intel WiFi and Bluetooth
products to the case. Two claim construction hearings were held in June 2021 and July 2021 and the court’s claim construction ruling was
largely decided in our favor. The case was scheduled for trial in October 2022. In February 2022, the parties filed a joint motion which
provided that the Intel II case would assert the same six patents from the first Intel case, provided none of the patents were invalidated in the
first case, as well as one additional patent, depending on the outcome of the pending IPR proceeding. As a result of the restructuring of the
cases, the trial date for this case is rescheduled for May 2023 although this date may change in lieu of the schedule changes in the first Intel
case. We are represented in this case on a full contingency fee basis.
Additional Patent Infringement Cases – Western District of Texas
ParkerVision filed a number of additional patent cases in the Western District of Texas in September and October 2020 including cases
against (i) TCL Industries Holdings Co., Ltd, a Chinese company, TCL Electronics Holdings Ltd., Shenzhen TCL New Technology Co., Ltd,
TCL King Electrical Appliances (Huizhou) Co., Ltd., TCL Moka Int’l Ltd. and TCL Moka Manufacturing S.A. DE C.V. (collectively
“TCL”), (ii) Hisense Co., Ltd. and Hisense Visual Technology Co., Ltd (collectively “Hisense”), a Chinese company, (iii) Buffalo Inc., a
Japanese company (“Buffalo”) and (iv) Zyxel Communications Corporation, a Chinese multinational electronics company headquartered in
Taiwan, (“Zyxel”). Each case alleges infringement of the same ten patents by products that incorporate modules containing certain WiFi
chips manufactured by Realtek and/or MediaTek. Each of the defendants have filed responses denying infringement and claiming invalidity
of the patents, among other defenses.
In May 2021, we filed a patent infringement case against LG Electronics (“LGE”), a South Korean company, in the Western District of
Texas alleging infringement of the same ten patents. A second action was filed against Hisense in June 2021 in the Western District of Texas
for infringement of two additional patents. In September 2021, we dismissed the cases against Buffalo and Zyxel following satisfaction of
the parties’ obligations under settlement and license agreements entered into in May 2021 and September 2021, respectively.
In May 2021, TCL and Hisense filed petitions for IPR against two of the ten patents asserted against them, including U.S. Patent 7,110,444
(“the ‘444 Patent”) which was challenged by Intel (see TCL, et. al. v. ParkerVision (PTAB) below). In December 2021, LGE filed nearly
identical petitions for IPR against the same two patents along with a joinder motion requesting to join the existing petitions.
The court held a combined Markman hearing on October 27, 2021 for the cases against Hisense and TCL. The court issued its claim
construction recommendations on October 29, 2021, in which nearly all of the claim terms were decided in our favor. The Hisense and TCL
cases currently have a trial date scheduled for December 12, 2022. The LGE case currently has a claim construction hearing scheduled for
April 25, 2022 and a trial scheduled to commence on April 24, 2023. We are represented in each of these cases 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”), and the ‘444 Patent which were both
asserted in ParkerVision v. Intel. Intel also filed a petition for IPR against U.S. patent 8,190,108 (“the ‘108 patent”) which is asserted in
ParkerVision v. Intel II. In January 2021, the PTAB issued its decision to institute IPR proceedings for the ‘444 Patent and the ‘474 Patent.
An oral hearing was held on November 1, 2021 and final decisions from the PTAB on the ‘474 Patent and
48
the ‘444 Patent were issued in January 2022. The PTAB ruled against us with respect to the single challenged claim of the ‘444 Patent and
ruled in our favor with respect to the seven challenged claims of the ‘474 Patent. The ‘444 Patent has subsequently been excluded from the
narrowed claims asserted in ParkerVision v. Intel.
In July 2021, the PTAB issued its decision to institute IPR proceedings for the ‘108 Patent. We filed our response to this petition in October
2021 and an oral hearing is scheduled for April 2022. A final decision from the PTAB with respect to the ‘108 Patent is expected by July
2022. Depending on the PTAB’s ruling with respect to the ‘108 Patent, we have the option to include or exclude this patent from the patents
being asserted in the Intel II case.
TCL, et. al. v. ParkerVision (PTAB)
In May 2021, TCL, along with Hisense, filed petitions for Inter Partes Review (“IPR”) against U.S. patent 7,292,835 (“the ‘835 Patent”) and
the ‘444 Patent, both of which are asserted in the infringement cases against these parties in the Western District of Texas. In November
2021, the PTAB issued its decision to implement IPR proceedings for these two patents. In December 2021, LGE filed nearly identical
petitions against the same two patents along with a joinder motion requesting to join the existing petitions filed by TCL and Hisense. Oral
hearings are scheduled for these IPRs in September 2022 with a final decision expected in November 2022.
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, 2021, we had no outstanding preferred stock.
Common Stock
We have 150 million shares of common stock authorized for issuance as of December 31, 2021. Our shareholders approved amendments to
our articles of incorporation in July 2020 increasing the number of our authorized shares of common stock from 110 million to 140 million
shares and in September 2021 increasing the number of our authorized shares of common stock from 140 million to 150 million shares.
As of December 31, 2021, we have 33.6 million shares reserved for issuance under outstanding warrants and options and 20.2 million shares
reserved for issuance upon conversion of our outstanding convertible notes. In addition, we have 2.0 million shares reserved for future
issuance under equity compensation plans and 3.2 million shares reserved for future issuance upon payment of interest in-kind on our
convertible notes.
49
Stock and Warrant Issuances – Equity Based Financings
The following table presents a summary of completed equity-based financing transactions for the years ended December 31, 2020 and 2021
(in thousands, except for per share amounts):
The following table presents
a summary of completed
equity-based financing
transactions for the years
ended December 31, 2020
and 2021 (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
February 2020
March 2020
April 2020 to December
2020
January 2021
March 2021
December 2021
Private placement of common stock
Warrant amendment
Private placement of common stock,
amended to add CPR
Private placement of common stock with
CPRs
Private placement of common stock with
CPRs
Private placement of common stock with
warrants
Private placement of common stock with
warrants
1,335
-
2,571
10,858
2,976
3,231
1,053
$0.13
-
$0.35
$0.35
$0.35
-
5,000
$0.74
-
-
-
- $
$
- $
- $
- $
$1.29
1,619
$1.75
$
$0.95
526
$1.00
$
177
-
900
3,724
1,040
4,156
1,000
(1)After deduction of applicable offering costs. Net proceeds are inclusive of the value of the CPRs that are classified as long-term debt (see
Note 9).
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 us
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 based on the initial fair value estimate of the CPRs (see “Unsecured Contingent Payment Obligations” in 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). The shares sold from August to December, totaling 4,986,292 shares, were registered for resale
on a registration statement that was declared effective on April 26, 2021 (File No. 333-255217).
50
In January 2021, we entered into securities purchase agreements with accredited investors for the sale of an aggregate of 2,976,430 shares of
our common stock at a price of $0.35 per share for aggregate proceeds of $1.0 million. The securities purchase agreements include
contingent payment rights. Approximately $0.4 million of the proceeds were allocated to unsecured contingent payment obligations based on
the initial fair value estimate of the CPRs (see “Unsecured Contingent Payment Obligations” in Note 9). The shares were registered for
resale on a registration statement that was declared effective on April 26, 2021 (File No. 333-255217).
In March 2021, we entered into securities purchase agreements with accredited investors for the sale of 3,230,942 shares of our common
stock and 1,619,289 warrants at a price of $1.29 per common share for aggregate proceeds of approximately $4.2 million. The warrants have
an exercise price of $1.75 per share and expire in March 2026. The shares, including the shares underlying the warrants, were registered for
resale on a registration statement that was declared effective on April 26, 2021 (File No. 333-255217). We used $3.0 million of the proceeds
from this transaction to satisfy our obligations to Mintz (see “Secured Note Payable” in Note 9).
In December 2021, we entered into a securities purchase agreement with an accredited investor for the sale of 1,052,631 shares of our
common stock and 526,315 warrants at a price of $0.95 per common share for aggregate proceeds of $1.0 million. The warrants have an
exercise price of $1.00 per share and expire in December 2026. The shares, including the shares underlying the warrants, were registered for
resale on a registration statement that was declared effective on January 24, 2022 (File No. 333-262147).
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 could, 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
51
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).
Upon execution of the Warrant Amendment Agreement, Aspire exercised 1,430,000 shares of the 2018 Warrants for aggregate proceeds to us
of $0.5 million. For the years ended December 31, 2021 and 2020, Aspire exercised 500,000 and 3,070,000 shares of the 2018 Warrants for
aggregate additional proceeds to us of approximately $0.2 and $1.1 million, respectively.
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). In January
2021, we amended the 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. The shares were registered for resale on a registration statement that was
declared effective on April 26, 2021 (File No. 333-255217).
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 was recognized as expense over the
twelve-month 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 May 22, 2020, we entered into an agreement with Intro-Act to provide research and shareholder relations services. As consideration for
services under the agreement, we issued 50,000 shares of unregistered common stock on each of July 14, 2020, October 30, 2020, January
12, 2021 and April 6, 2021 with an aggregate value of approximately $0.05 million for the year ended December 31, 2020 and $0.1 million
for the year ended December 31, 2021. In June 2021, we extended our agreement with Intro-Act and issued 100,000 shares of unregistered
common stock valued at approximately $0.12 million as consideration for services to be provided over the twelve-month extended term of
the agreement. The value of the shares will be recognized as consulting expense over the term of the agreement. We are not obligated to
register the shares for resale.
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. The shares were registered for resale on a registration statement that was declared effective on April
26, 2021 (File No. 333-255217).
52
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). In April 2021, we amended the consulting services agreement and extended the
term through December 31, 2021. We issued 35,000 shares of our unregistered common stock valued at approximately $0.04 million as
compensation over the remaining term of the agreement. The value of the shares issued were recognized as consulting expense over the term
of the agreement.
In addition, from time to time, we issue restricted stock awards under our approved equity plans to third party consultants as share-based
compensation. During the year ended December 31, 2021, we issued 217,143 RSAs valued at $0.3 million under our 2019 long-term
incentive equity plan to nonemployees as compensation under consulting agreements (see Note 14).
Common Stock Warrants
As of December 31, 2021 and 2020, we had outstanding warrants for the purchase of up to 10.3 million shares and 12.9 million shares of our
common stock, respectively. The estimated grant date fair value of these warrants of $3.2 million and $1.7 million at December 31, 2021 and
2020, respectively, is included in shareholders’ deficit in our consolidated balance sheets. As of December 31, 2021, our outstanding
warrants have an average exercise price of $0.75 per share and a weighted average remaining life of approximately three years.
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
53
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, 2021, there are no Series E preferred shares outstanding.
14. SHARE-BASED COMPENSATION
For the years ended December 31, 2021 and 2020 we recognized share-based compensation expense of approximately $3.3 million and $1.2
million, respectively. Share-based compensation is included in selling, general, and administrative expenses in our consolidated statements
of comprehensive loss. From time to time, we issue fully vested share-based compensation awards to third parties as prepaid retainers for
services over a specified period. The cost of these awards is recorded as a prepaid asset and expensed to selling, general and administrative
expense over the service period (see Note 4).
As of December 31, 2021, there was $3.0 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 1.0 year.
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. In January 2021, the Board amended
the 2019 Plan to increase the number of shares of common stock reserved for issuance under the 2019 Plan from 12 million to 27 million
shares. At December 31, 2021, 1,897,857 shares of common stock were available for future grants under the 2019 Plan.
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, 2021, 61,302 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, 2021, 20,473 shares of common stock
were available for future grants under the 2008 Plan.
54
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.
RSAs and RSUs
The following table presents a summary of RSA and RSU activity under the 2008, 2011, and 2019 Plans (collectively, the “Stock Plans”) as
of December 31, 2021 (shares in thousands):
Non-vested at beginning of year
Granted
Vested
Forfeited
Non-vested at end of year
Non-vested Shares
Shares
Weighted-Average
Grant Date Fair Value
187
217
(404)
-
-
$
$
0.33
1.34
0.87
-
-
The awards granted under the Stock Plans in 2021 were all RSAs awarded to non-employees as compensation in connection with consulting
agreements.
The total fair value of RSAs and RSUs vested under the Stock Plans for the year ended December 31, 2021 was approximately $0.6 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.
55
The following table presents a summary of option activity under the Stock Plans for the year ended December 31, 2021 (shares in thousands):
Outstanding at beginning of year
Granted
Exercised
Forfeited/Expired
Outstanding at end of year
Vested at end of year
Shares
12,240 $
13,040
(2,029)
(36)
23,215
16,676 $
Weighted-
Average
Exercise Price
Weighted-Average
Remaining
Contractual Term
Aggregate
Intrinsic
Value ($)
0.28
0.54
0.17
11.18
0.42
0.37
4.2 years
4.3 years
$
$
11,988
9,503
In January 2021, the Board awarded 11.9 million nonqualified stock options to executives and other key employees and an aggregate of 1.1
million nonqualified stock options to non-employee directors under the 2019 Plan. The options are exercisable at $0.54 per share, vest in
eight equal quarterly installments commencing March 31, 2021, and expire on January 11, 2026.
The weighted average per share fair value of options granted during the years ended December 31, 2021 and 2020 was $0.46 and $0.27,
respectively. The total fair value of option shares vested was $3.4 million and $0.9 million for the year ended December 31, 2021 and 2020,
respectively.
The fair value of option grants under the Stock Plans for the years ended December 31, 2021 and 2020, respectively, was estimated using the
Black-Scholes option-pricing model with the following assumptions:
Expected option term 1
Expected volatility factor 2
Risk-free interest rate 3
Expected annual dividend yield
Year ended December 31,
2021
4 years
141.1%
0.36%
0%
2020
5 years
127.4% to 135.3%
0.33% to 1.63%
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.
56
Options by Price Range
The options outstanding at December 31, 2021 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):
Range of Exercise Prices
$0.171 - $0.33
$0.50 - $0.75
$1.98 - $2.97
Options Outstanding
Options Vested
Number
Outstanding at
December 31,
2021
Wtd. Avg. Exercise
Price
9,289 $
13,553
373
23,215 $
0.18
0.54
2.02
0.42
Wtd. Avg.
Remaining
Contractual Life
4.6
4.0
2.5
4.2
Number
Exercisable at
December 31,
2021
Wtd. Avg. Exercise
Price
9,289 $
7,014
373
16,676 $
0.18
0.54
2.02
0.37
Wtd. Avg.
Remaining
Contractual Life
4.6
4.0
2.5
4.3
We issue new shares of our common stock upon exercise of options or vesting of RSUs or RSAs under the Stock Plans. The shares
underlying the Stock Plans are registered. Cash received from option exercises for the year ended December 31, 2021, was $0.3 million. We
had no option exercises for the year ended December 31, 2020.
15. RELATED PARTY TRANSACTIONS
We paid approximately $0.1 million and $0.01 million in 2021 and 2020, 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 both 2021 and
2020 for principal and interest on the SKGF Note (refer to “Note Payable to a Related Party” included in Note 9). The SKGF Note has an
outstanding balance, including accrued interest, of approximately $0.7 million at December 31, 2021.
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
On March 22, 2022, the United States District Court in the Middle District of Florida (Orlando Division) issued an order granting
Qualcomm’s motion for summary judgment ruling that Qualcomm does not infringe the three patents that are the subject of our infringement
case against them. This ruling, which is a final determination of the district court, follows a March 9, 2022 order granting a Qualcomm
motion to strike and exclude the opinions of our experts regarding the alleged infringement and validity issues. We intend to appeal both of
these decisions. See ParkerVision v. Qualcomm (Middle District of Florida) included in Note 12 for a complete discussion of these legal
proceedings.
57
In February 2022, our two patent infringement cases against Intel in the Western District of Texas were reconfigured whereby the first case
would assert an aggregate of six patents against Intel cellular products and the second case would assert the same six patents along with a
seventh patent against Intel WiFi and Bluetooth products. As a result of the restructuring of the cases, the trial date for the first Intel case was
moved from June 2022 to October 24, 2022. In March 2022, as a result of discovery delays, the trial date was moved to a start date of
December 5, 2022. The second case against Intel is currently scheduled for trial commencing in May 2023, however that date may change in
lieu of the revised schedule in the first Intel case. See ParkerVision v. Intel (Western District of Texas) and ParkerVision v. Intel II (Western
District of Texas) included in Note 12 for a complete discussion of these legal proceedings.
In January 2022, the Patent Trial and Appeal Board (“PTAB”) issued its final decisions on two Inter Partes Reviews (“IPRs”) filed by Intel
against two of the patents asserted in the ParkerVision v. Intel infringement cases. The PTAB ruled in our favor with respect to the seven
challenged claims of one of the two patents and ruled in Intel’s favor with respect to the one challenged claim of the second patent. We have
one additional IPR filed by Intel against a patent asserted in our second case, and the PTAB is expected to issue its final decision in July
2022. Refer to Intel v. ParkerVision (PTAB) included in Note 12 for a complete discussion of these IPR proceedings.
58
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
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, 2021. Based on such evaluation, our chief executive officer and
our chief financial officer have concluded that as of December 31, 2021, 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, 2021 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, 2021.
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, 2021 that materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
In accordance with and satisfaction of the requirements of Form 8-K, we include the following disclosure:
On March 29, 2022, we issued a press release announcing our results of operations and financial condition for the year ended December 31,
2021. The press release is attached hereto as Exhibit 99.1. The foregoing information, including the exhibit related thereto, is furnished in
response to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, nor shall it be deemed
incorporated by reference in any disclosure document of the Registrant, except as shall be expressly set forth by specific reference in such
document.
Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevents Inspections.
Not applicable.
60
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
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
Frank N. Newman
Jeffrey L. Parker
Paul A. Rosenbaum
Robert G. Sterne
Age
79
65
79
70
Position with the Company
Class II Director, Audit Committee Member
Class I Director, Chairman of the Board and Chief Executive Officer
Class III Director, Audit Committee Chair
Class III Director
Frank N. Newman
Frank Newman has been a director of ours since December 2016 and a member of our audit committee since April 2020. 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
61
of Commissioners for the Oregon Liquor Control Commission and has served as chairman since March 2018. Since 2009, Mr. 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
Jeffrey Parker
Cynthia French
Age
65
55
Position with the Company
Chairman of the Board and Chief Executive Officer (“CEO”)
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, 2021 all
Section 16(a) filing requirements were complied with in a timely manner.
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
Item 11. Executive Compensation.
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, 2021 and 2020. 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)
Name and Principal Position
Jeffrey Parker, CEO
Cynthia French, CFO
David Sorrells, Former CTO 4
Gregory Rawlins, Former
CTO Heathrow 4
Year
2021 $
2020
2021
2020
Salary
($)
260,000
270,000
180,000
186,923
2020
176,150
2020
207,692
(e)
Stock Awards
($)(2)
-
99,000
-
-
$
$
(f)
Option Awards
($)(2)
3,640,000
-
455,000
42,750
Bonus ($)
$
1
-
-
-
-
1
-
-
49,500
49,500
-
-
(g)
All Other
($)
24,000 3 $
24,923 3
$
-
-
-
-
(h)
Total
($)
3,924,000
393,923
635,000
229,673
225,650
257,192
1. There were 27 biweekly pay periods in 2020 compared to 26 in 2021 resulting in an decrease 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, 2021 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 2021.
4. The CTO roles were eliminated in March 2020 by our Board.
In February 2020, our Board approved equity awards under our 2019 Long Term Incentive Plan (the “2019 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.
In January 2021, the Board approved equity awards under the 2019 Plan including nonqualified stock options for the purchase of up to
8,000,000 shares at an exercise price of $0.54 per share to Mr. Parker and nonqualified stock options for the purchase of up to 1,000,000
shares at an exercise price of $0.54 to Ms. French. These options vest over eight equal quarterly increments commencing March 31, 2021
and expiring on January 11, 2026. These awards were awarded as long-term incentive to our executives and took into consideration the
longevity of their tenure with us, the continuation of their base compensation at a 20% reduced pay rate since 2018 and in recognition of the
key role each holds in the organization.
We do not have employment agreements with any of our Executives. We have non-compete arrangements in place with all of our employees,
including our Executives, that impose post-termination
64
restrictions on (i) employment or consultation with competing companies or customers, (ii) recruiting or hiring employees for a competing
company, and (iii) soliciting or accepting business from our customers. We also have a tax-qualified defined contribution 401(k) plan for all
of our employees, including our Executives. We did not make any employer contributions to the 401(k) plan in 2021 or 2020.
Outstanding Equity Awards at Fiscal Year End
The following table summarizes information concerning the outstanding equity awards, including unexercised options, unvested stock and
equity incentive awards, as of December 31, 2021 for each of our Executives:
Name
Jeffrey Parker
Cynthia French
Number of
securities
underlying
unexercised
options
(#)
exercisable
(a)
Option Awards
Number of
securities
underlying
unexercised
options
(#)
unexercisable
(b)
Option
Exercise
Price
($)
(c)
20,000
2,680,000
4,000,000
20,000
877,150
150,000
500,000
1
2, 5
3
1
2
4
3
-
-
4,000,000 3
-
-
-
500,000 3
1.98
0.17
0.54
1.98
0.17
0.33
0.54
Option
Expiration
Date
(d)
8/15/2024
8/7/2026
1/11/2026
8/15/2024
8/7/2026
2/9/2027
1/11/2026
1 Options vested over four equal quarterly periods from August 31, 2017 to May 31, 2018.
2 Options vested over eight equal quarterly periods from September 1, 2019 to June 1, 2021.
3 Options vest over eight equal quarterly periods beginning March 31, 2021
4 Options vested 50% on grant date and the remaining 50% over four equal quarterly periods from May 9, 2020 to May 9, 2021
5 Number of securities underlying exercisable options is net of 3.3 million share options gifted for no consideration by Mr. Parker in January 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.
In January 2021, each of our non-employee directors were awarded 380,000 nonqualified stock options at an exercise price of $0.54 per
share. These options vest over eight equal quarterly increments commencing March 31, 2021 and expiring on January 11, 2026.
We reimburse our non-employee directors for their reasonable expenses incurred in attending meetings where applicable and we encourage
participation in relevant educational programs for which we reimburse all or a portion of the costs incurred for these purposes.
Directors who are also our employees are not compensated for serving on our Board. Information regarding compensation otherwise
received by our directors who are also named executive officers is provided under “Executive Compensation.”
The following table summarizes the compensation of our non-employee directors for the year ended December 31, 2021.
Name
(a)
Frank Newman 2
Paul Rosenbaum 3
Robert Sterne 4
Stock
Awards($)
(b)
$
Option
Awards($) 1
(c)
Total
($)
(d)
$
-
-
-
172,900 $
172,900
172,900
172,900
172,900
172,900
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, 2021, Mr. Newman has an aggregate of 1,355,000 nonqualified stock options outstanding, of which 1,165,000 are exercisable.
3. At December 31, 2021, Mr. Rosenbaum has an aggregate of 1,505,000 nonqualified stock options outstanding, of which 1,315,000 are exercisable.
4. At December 31, 2021, Mr. Sterne has 1,651,735 nonqualified stock options outstanding, of which 1,461,735 are exercisable.
66
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Equity Compensation Plan Information
The following table gives information as of December 31, 2021 about shares of our common stock authorized for issuance under all of our
equity compensation plans (in thousands, except for per share amounts):
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c)
1,204
22,011
23,215
$0.94
0.39
82
1,898
1,980
Plan Category
Equity compensation plans approved by security holders
1,3
Equity compensation plans not approved by security
holders 2,3
Total
1.
2.
Includes the 2008 Plan and the 2011 Plan.
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 15, 2022 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 15, 2022, 77,766,448 shares of our common stock were issued and outstanding.
Name of Beneficial Owner
>5% HOLDERS (EXCLUDING EXECUTIVE OFFICERS AND DIRECTORS)
GEM Partners, LP
Thomas Staz Revocable Trust
EXECUTIVE OFFICERS AND DIRECTORS
Jeffrey Parker 10
Cynthia French 10
Frank Newman 10
Paul Rosenbaum 10
Robert Sterne 10
All directors and executive officers as a group (5 persons)
Amount and
Nature of
Beneficial
Ownership
Percent
of Class1
8,156,616 2
4,017,169 3
9.99%
5.17%
7,990,583
1,690,743
1,395,600
2,039,884
1,557,500
14,674,310
4
5
6
7
8
9
9.35%
2.13%
1.77%
2.57%
1.96%
16.05%
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) 4,272,796 shares held by GEM, and (iv)
3,886,923 shares underlying convertible notes held by GEM. Excludes 5,440,000 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.
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 derived from a Schedule 13D filed by Thomas Staz Revocable Trust on April 7, 2021.
3
4
5
6
7
Includes 7,680,000 shares of common stock issuable upon currently exercisable options, 193,324 shares held by Mr. Parker directly, and 117,259
shares held by Jeffrey Parker and Deborah Parker Joint Tenants in Common, over which Mr. Parker has shared voting and dispositive power. Excludes
3,000,000 shares of common stock issuable upon options that may become exercisable in the future.
Includes 1,665,550 shares of common stock issuable upon currently exercisable options and excludes 375,000 shares of common stock issuable upon
options that may become exercisable in the future.
Includes 1,212,500 shares of common stock issuable upon currently exercisable options and excludes 142,500 shares of common stock issuable upon
options that may become exercisable in the future.
Includes 1,362,500 shares of common stock issuable upon currently exercisable options and 250,000 shares of common stock issuable upon conversion
of convertible notes. Excludes 142,500 shares of common stock issuable upon options that may become exercisable in the future.
68
8
9
Includes 1,509,235 shares of common stock issuable upon currently exercisable options and excludes 142,500 shares of common stock issuable upon
options that may become exercisable in the future.
Includes 13,429,785 shares of common stock issuable upon currently exercisable options and 250,000 shares of common stock issuable upon
conversion of convertible notes held by directors and officers and excludes 3,802,500 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.
Item 13. Certain Relationships and Related Transactions and Director Independence.
Related Party Transactions
We paid approximately $97,000 and $11,000 in 2021 and 2020, respectively for patent-related legal services to SKGF, of which Robert
Sterne is a partner. In addition, we paid approximately $130,000 and $110,000 in 2021 and 2020, respectively, 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 has been amended multiple times 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, 2023. At December 31, 2021, the
outstanding balance of the note, including unpaid interest is approximately $703,000.
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.
Item 14. Principal Accountant Fees and Services.
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, 2021 and 2020, 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 $120,000 and $148,300, respectively. In addition, for the year
ended December 31, 2020, the aggregate fees billed by our Prior Accountants for professional services rendered in connection with services
provided in connection with regulatory filings were approximately $70,000.
Audit Related Fees. For the years ended December 31, 2021 and 2020, 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, 2021 and 2020, 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, 2021 and 2020, 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
Item 15. Exhibits and Financial Statement Schedules.
(a) Documents filed as part of this report:
(1) Financial statements:
PART IV
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2021 and 2020
Consolidated Statements of Shareholders’ Deficit for the years ended December 31, 2021 and 2020
Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020
Notes to Consolidated Financial Statements for the years ended December 31, 2021 and 2020
(2) Financial statement schedules:
Not applicable.
(3) Exhibits.
Exhibit
Number
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
Description
Amended and Restated Articles of Incorporation (incorporated by reference from Exhibit 3.1 of Current Report on Form 8-K
filed March 29, 2016)
Amended and Restated Bylaws (incorporated by reference from Exhibit 3.1 of Current Report on Form 8-K filed August 14,
2007)
Articles of Amendment to Amended and Restated Articles of Incorporation (incorporated by reference from Exhibit 3.1 of
Current Report on Form 8-K filed August 18, 2016)
Articles of Amendment to Amended and Restated Articles of Incorporation (incorporated by reference from Exhibit 3.1 of
Current Report on Form 8-K filed July 13, 2017)
Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference from Exhibit 3.5 of
Form S-1 filed August 9, 2018)
Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference from Exhibit 3.1 of
Current Report on Form 8-K filed October 30, 2018)
Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference from Exhibit 3.1 of
Current Report on Form 8-K filed November 15, 2019)
Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference from Exhibit 3.1 of
Current Report on Form 8-K filed September 4, 2020)
Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference from Exhibit 3.1 of
Current Report on Form 8-K filed September 30, 2021)
Certificate of Designations of the Preferences, Limitations and Relative Rights of Series E Preferred Stock, dated November
21, 2005 (incorporated by reference from Exhibit 4.02 of Current Report on Form 8-K filed November 22, 2005)
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
10.14
Form of common stock certificate (incorporated by reference from Exhibit 4.1 of Annual Report on Form 10-K for the year
ended December 31, 2015)
Shareholder Protection Rights Agreement between the Registrant and American Stock Transfer & Trust Company, as Rights
Agent (incorporated by reference from Exhibit 4.01 of Form 8-K filed November 22, 2005)
First Amendment to Shareholder Protection Rights Agreement dated as of November 20, 2015 between the Registrant and
American Stock Transfer & Trust Company, as Rights Agent (incorporated by reference from Exhibit 4.1 of Form 8-K filed
November 23, 2015)
Second Amendment to Shareholder Protection Rights Agreement dated as of November 20, 2020 between the Registrant and
American Stock Transfer and Trust Company, as Rights Agent (incorporated by reference from Exhibit 4.1 of Form 8-K filed
November 20, 2020)
Form of Rights Certificate pursuant to Second Amendment to Shareholder Protection Rights Agreement dated November 20,
2020 (incorporated by reference from Exhibit 4.2 of Form 8-K filed November 23, 2020)
Description of Registered Securities *
Form of 2002 Indemnification Agreement for Directors and Officers (incorporated by reference from Exhibit 10.1 of Quarterly
Report on Form 10-Q for the period ended September 30, 2002, filed November 14, 2002) **
Standard Form of Employee Option Agreement (incorporated by reference from Exhibit 10.1 of Form 8-K filed January 13,
2021)
2008 Equity Incentive Plan (Non-Named Executives), as amended (incorporated by reference from Exhibit 4.1 of Form S-8
filed October 24, 2008) **
2011 Long-Term Incentive Equity Plan, as amended and restated (incorporated by reference from Exhibit 10.1 of Form 8-K
filed July 13, 2017)**
Claims Proceeds Investment Agreement between Registrant and Brickell Key Investments LP (incorporated by reference from
Exhibit 10.2 of Quarterly Report on Form 10-Q filed May 16, 2016)
Amendment to Claims Proceeds Investment Agreement between Registrant and Brickell Key Investments LP (incorporated by
reference from Exhibit 10.1 of Quarterly Report on Form 10-Q filed August 15, 2016)
Amendment to Claims Proceeds Investment Agreement between Registrant and Brickell Key Investments LP dated
December 28, 2017 (incorporated by reference from Exhibit 10.11 of Annual Report on Form 10-K filed March 29, 2018)
Amendment to Claims Proceeds Investment Agreement between Registrant and Brickell Key Investments LP dated April 26,
2018 (incorporated by reference from Exhibit 10.21 of Registration Statement on Form S-1 filed August 9, 2018)
Notice of Exercise of Rights Under Claims Proceeds Investment Agreement between Registrant and Brickell Key Investments
LP dated December 20, 2018 (incorporated by reference from Exhibit 10.2 of Current Report on Form 8-K/A filed December
28, 2018)
Warrant Agreement between Registrant and Brickell Key Investments LP (incorporated by reference from Exhibit 10.1 of
Current Report on Form 8-K filed December 21, 2018)
Form of Convertible Promissory Note dated September 10, 2018 (incorporated by reference from Exhibit 10.2 of Current
Report on Form 8-K filed September 11, 2018)
List of Holders of Convertible Notes dated September 10, 2018 (incorporated by reference from Exhibit 10.4 of Current Report
on Form 8-K filed September 11, 2018)
Securities Purchase Agreement between Registrant and Holders of Convertible Notes dated September 18, 2018 (incorporated
by reference from Exhibit 10.1 of Current Report on Form 8-K filed September 18, 2018)
Form of Convertible Promissory Note dated September 18, 2018 (incorporated by reference from Exhibit 10.2 of Current
Report on Form 8-K filed September 19, 2018)
72
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
10.35
10.36
Securities Purchase Agreement between Registrant and Holders of Convertible Notes dated February 25, 2019 (incorporated
by reference from Exhibit 10.1 of Current Report on Form 8-K filed March 4, 2019)
Form of Convertible Promissory Note dated February 28, 2019 (incorporated by reference from Exhibit 10.2 of Current Report
on Form 8-K filed March 4, 2019)
List of Holders of Convertible Notes dated February 28, 2019 (incorporated by reference from Exhibit 10.4 of Current Report
on Form 8-K filed March 4, 2019)
Securities Purchase Agreement between Registrant and Holders of Convertible Notes dated March 13, 2019 (incorporated by
reference from Exhibit 10.1 of Current Report on Form 8-K filed March 14, 2019)
Form of Convertible Promissory Note dated March 13, 2019 (incorporated by reference from Exhibit 10.3 of Current Report
on Form 8-K filed March 14, 2019)
List of Holders of Convertible Notes dated March 13, 2019 (incorporated by reference from Exhibit 10.4 of Current Report on
Form 8-K filed March 14, 2019)
Securities Purchase Agreement between Registrant and Mark Fisher dated June 7, 2019 (incorporated by reference from
Exhibit 10.1 of Current Report on Form 8-K filed June 13, 2019)
Secured Convertible Note Agreement dated June 7, 2019 (incorporated by reference from Exhibit 10.2 of Current Report on
Form 8-K filed June 13, 2019)
Security Agreement dated June 7, 2019 (incorporated by reference from Exhibit 10.4 of Current Report on Form 8-K filed June
13, 2019)
Form of Securities Purchase Agreement between Registrant and Holders of Convertible Notes dated June 19, 2019
(incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed June 25, 2019)
Form of Convertible Promissory Note dated June 19, 2019 (incorporated by reference from Exhibit 10.2 of Current Report on
Form 8-K filed June 25, 2019)
List of Holders of Convertible Notes dated June 19, 2019 (incorporated by reference from Exhibit 10.4 of Current Report on
Form 8-K filed June 25, 2019)
Form of Securities Purchase Agreement between Registrant and Holders of Convertible Notes dated July 18, 2019
(incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed July 23, 2019)
Form of Convertible Promissory Note dated July 18, 2019 (incorporated by reference from Exhibit 10.2 of Current Report on
Form 8-K filed July 23, 2019)
List of Holders of Convertible Notes dated July 18, 2019 (incorporated by reference from Exhibit 10.4 of Current Report on
Form 8-K filed July 23, 2019)
2019 Long-term Incentive Plan dated August 9, 2019, as amended (incorporated by reference from Exhibit 10.39 of Annual
Report on Form 10-K filed March 31, 2021) **
Form of Securities Purchase Agreement between Registrant and Holders of Convertible Notes dated January 8, 2020
(incorporated by reference from Exhibit 10.1 of Current Report on Form 8-K filed January 10, 2020)
Form of Convertible Promissory Note dated January 8, 2020 (incorporated by reference from Exhibit 10.2 of Current Report
on Form 8-K filed January 10, 2020)
List of Holders of Convertible Notes dated January 8, 2020 (incorporated by reference from Exhibit 10.4 of Current Report on
Form 8-K filed January 10, 2020)
Warrant Agreement between Registrant and Aspire Capital Fund, LLC dated February 28, 2020 (incorporated by reference
from Exhibit 4.1 of Current Report on Form 8-K filed March 5, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated March 5, 2020 (incorporated by reference
from Exhibit 10.2 of Current Report on Form 8-K filed March 5, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated March 13, 2020 (incorporated by
reference from Exhibit 10.72 of Annual Report on Form 10-K filed April 14, 2020)
73
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
10.54
10.55
List of Accredited Investors to March 5, 2020 and March 13, 2020 Subscription Agreements (incorporated by reference from
Exhibit 10.74 of Annual Report on Form 10-K filed April 14, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated April 29, 2020 (incorporated by reference
from Exhibit 10.1 of Current Report on Form 8-K filed May 5, 2020)
List of Accredited Investors to April 29, 2020 Subscription Agreement (incorporated by reference from Exhibit 10.3 of Current
Report on Form 8-K filed May 5, 2020)
Amendment to Subscription Agreement between Registrant and Accredited Investors dated May 1, 2020 (incorporated by
reference from Exhibit 10.4 of Current Report on Form 8-K filed May 5, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated May 22, 2020 (incorporated by reference
from Exhibit 10.1 of Current Report on Form 8-K filed May 29, 2020)
List of Accredited Investors to May 22, 2020 Subscription Agreement (incorporated by reference from Exhibit 10.3 of Current
Report on Form 8-K filed May 29, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated June 8, 2020 (incorporated by reference
from Exhibit 10.1 of Current Report on Form 8-K filed June 12, 2020)
List of Accredited Investors to June 8, 2020 Subscription Agreement (incorporated by reference from Exhibit 10.3 of Current
Report on Form 8-K filed June 12, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated June 29, 2020 (incorporated by reference
from Exhibit 10.1 of Current Report on Form 8-K filed July 6, 2020)
List of Accredited Investors to June 29, 2020 Subscription Agreement (incorporated by reference from Exhibit 10.3 of Current
Report on Form 8-K filed July 6, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated August 19, 2020 (incorporated by
reference from Exhibit 10.1 of Current Report on Form 8-K filed August 21, 2020)
List of Accredited Investors to August 19, 2020 Subscription Agreement (incorporated by reference from Exhibit 10.3 of
Current Report on Form 8-K filed August 21, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated November 17, 2020 (incorporated by
reference from Exhibit 10.1 of Current Report on Form 8-K filed November 23, 2020)
List of Accredited Investors to November 17, 2020 Subscription Agreement (incorporated by reference from Exhibit 10.3 of
Current Report on Form 8-K filed November 23, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated December 11, 2020 (incorporated by
reference from Exhibit 10.1 of Current Report on Form 8-K filed November 23, 2020)
List of Accredited Investors to December 11, 2020 Subscription Agreement (incorporated by reference from Exhibit 10.3 of
Current Report on Form 8-K filed December 14, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated December 21, 2020 (incorporated by
reference from Exhibit 10.1 of Current Report on Form 8-K filed November 23, 2020)
List of Accredited Investors to December 21, 2020 Subscription Agreement (incorporated by reference from Exhibit 10.3 of
Current Report on Form 8-K filed December 23, 2020)
Form of Subscription Agreement between Registrant and Accredited Investors dated January 5, 2021 (incorporated by
reference from Exhibit 10.1 of Current Report on Form 8-K filed November 23, 2020)
74
10.56
10.57
10.58
10.59
10.60
10.61
10.62
10.63
10.64
21.1
23.1
31.1
31.2
32.1
99.1
Form of Registration Rights Agreement between Registrant and Accredited Investors dated January 5, 2021 (incorporated by
reference from Exhibit 10.2 of Current Report on Form 8-K filed November 23, 2020)
List of Accredited Investors to January 5, 2021 Subscription Agreement (incorporated by reference from Exhibit 10.3 of
Current Report on Form 8-K filed January 5, 2021)
Form of Subscription Agreement between Registrant and Accredited Investors dated March 29, 2021 (incorporated by
reference from Exhibit 10.84 of Annual Report on Form 10-K filed March 31, 2021)
Form of Registration Rights Agreement between Registrant and Accredited Investors dated March 29, 2021 (incorporated by
reference from Exhibit 10.85 of Annual Report on Form 10-K filed March 31, 2021)
Form of Warrant Agreement between Registrant and Accredited Investors dated March 29, 2021 (incorporated by reference
from Exhibit 10.86 of Annual Report on Form 10-K filed March 31, 2021)
List of Accredited Investors to March 29, 2021 Subscription Agreement (incorporated by reference from Exhibit 10.87 of
Annual Report on Form 10-K filed March 31, 2021)*
Form of Securities Purchase Agreement between Registrant and Accredited Investor dated December 14, 2021 (incorporated
by reference from Exhibit 10.1 of Current Report on Form 8-K filed December 16, 2021)
Form of Registration Rights Agreement between Registrant and Accredited Investor dated December 14, 2021 (incorporated
by reference from Exhibit 10.2 of Current Report on Form 8-K filed December 16, 2021)
Form of Warrant Agreement between Registrant and Accredited Investor dated December 14, 2021 (incorporated by reference
from Exhibit 10.3 of Current Report on Form 8-K filed December 16, 2021)
Schedule of Subsidiaries (incorporated by reference from Exhibit 21.1 of Annual Report on Form 10-K filed March 29, 2018)
Consent of MSL, P.A. *
Rule 13a-14 and 15d-14 Certification of Jeffrey L. Parker *
Rule 13a-14 and 15d-14 Certification of Cynthia L. French *
Section 1350 Certification of Jeffrey L. Parker and Cynthia L. French *
Earnings Press Release *
XBRL Instance Document*
101.INS
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.
Item 16. Form 10-K Summary
None.
75
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.
SIGNATURES
Date: March 29, 2022
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
By: /s/ Jeffrey L. Parker
Jeffrey L. Parker
By: /s/ Cynthia L. French
Cynthia L. French
By: /s/ Frank N. Newman
Frank N. Newman
By: /s/ Paul A. Rosenbaum
Paul A. Rosenbaum
By: /s/ Robert G. Sterne
Robert G. Sterne
Chief Executive Officer and
Chairman of the Board (Principal
Executive Officer)
Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer) and Corporate Secretary
Director
Director
Director
76
Date
March 29, 2022
March 29, 2022
March 29, 2022
March 29, 2022
March 29, 2022
DESCRIPTION OF REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
Exhibit 4.7
The following description of the securities of ParkerVision Inc. (the “Company”, “we”, “our” or similar terms) is based
upon the Company’s amended and restated articles of incorporation (“Charter”), the Company’s bylaws (“Bylaws”) and
applicable provisions of law. We have summarized certain portions of the Charter and Bylaws below. The summary is
not complete and is subject to, and is qualified in its entirety by express reference to, the provisions of our Charter and
Bylaws, each of which is filed as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.7 is a part.
Authorized Capital Stock
Pursuant to our Charter, our authorized capital stock consists of 165,000,000 shares, of which 150,000,000 is voting
Common Stock, $0.01 par value per share, and 15,000,000 is Preferred Stock, $1.00 per share.
Common Stock
Authorization. The outstanding shares of the Company’s common stock are duly authorized, validly issued, fully paid
and nonassessable.
Listing. The Company’s common stock is traded on the OTCQB Market under the ticker symbol “PRKR.”
Voting Rights. Common stockholders of record are entitled to one vote for each share held on all matters to be voted on
by stockholders.
Preemptive Rights, Etc. Our stockholders have no preemptive or other subscription rights. There are no sinking fund
provisions applicable to our common stock, except that upon the consummation of our initial business combination,
subject to the limitations described herein, we will provide our stockholders with the opportunity to redeem their shares
of our common stock for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account.
Preferred Stock
Our Charter provides that shares of preferred stock may be issued from time to time in one or more series. Our board of
directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating,
optional or other special rights and any qualifications, limitations and restrictions, applicable to the shares of each
series. Our board of directors will be able, without stockholder approval, to issue preferred stock with voting and other
rights that could adversely affect the voting power and other rights of the holders of the common stock and could have
anti-takeover effects.
Series E Preferred Stock
On November 17, 2005, the board of directors designated 100,000 shares of authorized preferred stock as the Series E
Preferred Stock in conjunction with its adoption of a Shareholder Protection Rights Plan (as described below). Certain
rights of this series of preferred stock are defined in terms of a “Reference Package.” The “Reference Package” is
initially 1,000 shares of common stock, as adjusted for stock dividends, subdivisions and combinations. The holders of
full or fractional shares of this series are entitled to receive dividends, when and as declared by the board of directors,
on each date that dividends or other distributions (other than dividends or distributions payable in our common stock)
are payable on or in respect of common stock comprising part of the Reference Package, in an amount per whole share
of this series equal to the aggregate amount of dividends or other distributions that would be payable on such date to a
holder of the Reference Package. In addition, on the last day of March, June, September and December in each year,
the holders of this series are entitled to receive dividends in an amount per whole share of this series equal to the excess
(if any) of $100 over the aggregate dividends paid per whole share of this series
during the three-month period ending on such last day. Dividends on each full and each fractional share of this series
are cumulative from the date such full or fractional share is originally issued. In the event of any liquidation,
dissolution or winding up of our affairs, whether voluntary or involuntary, the holders of full and fractional shares of
this series shall be entitled, before any distribution or payment is made on any date to the holders of the common stock
or any other stock of ours ranking junior to this series upon liquidation, to be paid in full an amount per whole share of
this series equal to the greater of $100 or the aggregate amount distributed or to be distributed in connection with such
liquidation, dissolution or winding up to a holder of the Reference Package, together with accrued dividends to such
distribution or payment date, whether or not earned or declared.
Our Series E Preferred Stock shall rank junior to all other series or classes of our preferred stock, now existing or
hereafter created, as to payment of dividends and the distribution of assets, unless the terms of any such other series or
class shall provide otherwise.
Each whole share of this series shall, on any matter, vote as a class with any other capital stock comprising part of the
Reference Package and voting on such matter and shall have the number of votes thereon that a holder of the Reference
Package would have.
Shareholder Protection Rights Plan
We have a Shareholder Protection Rights Agreement (“Rights Agreement”), originally adopted on November 21, 2005
and amended on November 20, 2015 and November 20, 2020 pursuant to which we issued, on November 29, 2005, as a
dividend, one right to acquire a fraction of a share of Series E Preferred Stock for each then outstanding share of
Common Stock. Each share of Common Stock issued by us after such date also has included, and any subsequent
shares of Common Stock issued by us prior to the Separation Time (as defined in the Rights Agreement) will include,
an attached right. The following description of the Rights Agreement, and any description of the Rights Agreement
included in a prospectus supplement, may not be complete and is subject to and qualified in its entirety by reference to
the terms and provisions of the Rights Agreement.
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.
The rights initially are not exercisable and trade with our Common Stock. In the future, the rights may become
exercisable with various provisions that may discourage a takeover bid. If a potential acquirer initiates a takeover bid or
becomes the beneficial owner of 15% or more of our Common Stock, the rights will separate from the Common Stock.
Upon separation, the holders of the rights may exercise their rights at an exercise price of $14.50 per right (the
“Exercise Price”), subject to adjustment and payable in cash. 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 “flip-in”
provision provides that, in the event a potential acquirer acquires 15% or more of the outstanding shares of our
Common Stock, upon payment of the exercise price, the holders of the rights 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 “flip-over”
provision allows 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, with 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 thousandth of a share of Series E Preferred Stock for each share of Common Stock.
The rights may be redeemed upon approval of the Board at a redemption price of $0.01 per right. The Rights
Agreement expires on November 20, 2023.
Classified Board; Director Nominations; Special Meetings
Our Board is divided into three classes, with only one class of directors elected at each annual meeting, and our
shareholders may remove our directors only for cause. Nominations for our Board may be made by our Board or by any
holder of Common Stock. A shareholder entitled to vote for the election of directors may nominate a person for
election as director only if the shareholder provides written notice of his nomination to our secretary not later than 120
days in advance of the same day and month that our proxy statement was released to shareholders in connection with
the previous year’s annual meeting of shareholders or, if no annual meeting was held in the previous year, then by the
end of the fiscal year to which the annual meeting in which the nomination will be made relates. A special meeting of
our shareholders may be called only by our Board or our chief executive officer. These provisions and the Board’s right
to issue shares of our preferred stock from time to time, in one or more classes or series without stockholder approval,
are intended to enhance the likelihood of continuity and stability in the composition of the policies formulated by our
Board. These provisions are also intended to discourage some tactics that may be used in proxy fights.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EXHIBIT 23.1
ParkerVision, Inc.
Jacksonville, Florida
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8
(Registration No. 333-157740, Registration No. 333-197741, Registration No. 333-178064,
Registration No. 333-214596, Registration No. 333-226784, Registration No. 333-237761, and
Registration No. 333-261231) of ParkerVision, Inc. of our report dated March 29, 2022, relating
to the consolidated financial statements, which appears in this Form 10-K.
/s/ MSL P.A.
Fort Lauderdale, Florida
March 29, 2022
I, Jeffrey L. Parker, certify that:
SECTION 302 CERTIFICATION
1.
I have reviewed this Annual Report on Form 10-K of ParkerVision, Inc.;
EXHIBIT 31.1
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons fulfilling the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: March 29, 2022
Name:/s/ Jeffrey L. Parker
Title: Chief Executive Officer (Principal Executive Officer)
I, Cynthia L. French certify that:
SECTION 302 CERTIFICATION
1. I have reviewed this Annual Report on Form 10-K of ParkerVision, Inc.;
EXHIBIT 31.2
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons fulfilling the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: March 29, 2022
Name:/s/Cynthia L. French
Title: Chief Financial Officer (Principal Financial Officer and Principal
Accounting Officer)
SECTION 906 CERTIFICATION
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In connection with the Annual Report of ParkerVision, Inc. (the “Company”) on Form 10-K, for the period
ended December 31, 2021 as filed with the Securities and Exchange Commission (the “Report”), each of the
undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operation of the Company.
Dated: March 29, 2022
Dated: March 29, 2022
Name:
Title:
/s/ Jeffrey L. Parker
Chief Executive Officer
(Principal Executive Officer)
Name:
Title:
/s/ Cynthia L. French
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
ParkerVision Reports 2021 Results
JACKSONVILLE, Fla., March 29, 2022 – ParkerVision, Inc. (OTCQB: PRKR) (“ParkerVision”), a
developer and marketer of technologies and products for wireless applications, today announced results for
the year ended December 31, 2021.
Year End 2021 Summary and Recent Developments
·
·
·
Patent license and settlement agreements were reached with Zyxel Communications Corporation
and Buffalo, Inc. in 2021, resulting from the Company’s patent enforcement campaign initiated in
the Western District of Texas in 2020.
The U.S. District Court in the Middle District of Florida (Orlando Division) issued a summary
judgment order on March 22, 2022 ruling that Qualcomm does not infringe the claims of the three
patents in ParkerVision’s patent case against Qualcomm.
o ParkerVision intends to appeal this ruling along with the same court’s March 9, 2022 ruling
excluding the opinions of ParkerVision’s experts regarding infringement and validity
issues.
Two infringement cases against Intel in the Western District of Texas were reconfigured to include
cellular products in the first case and WiFi and Bluetooth products in the second.
o First Intel trial date against cellular products was moved from June 2022 to October 2022 as
a result of this case reconfiguration and subsequently moved to December 5, 2022 due to
discovery delays.
o Second Intel trial date against Intel WiFi and Bluetooth products currently scheduled for
May 2023.
o Favorable Markman decisions received in both Intel cases during 2021.
o One of the two IPRs filed by Intel related to patents in these cases was decided in the
Company’s favor by the PTAB in January 2022. Third IPR filed by Intel pertaining to
patent in second case is awaiting PTAB decision.
· Additional enforcement actions pending in the Western District of Texas also include Hisense, TCL
and LG with trials scheduled in December 2022 and April 2023.
o Favorable Markman recommendations issued in Hisense and TCL cases in October 2021;
Markman hearing scheduled for April 2022 in LG case.
o IPR petitions were filed by Hisense and TCL against two of the ten patents asserted in these
cases; LG has filed a request to join these pending proceedings. Decisions expected in
November 2022.
·
Infringement cases against Qualcomm and Apple in the Middle District of Florida (Jacksonville)
and LG in the District of New Jersey are stayed pending outcomes in other cases.
Jeffrey Parker, Chairman and Chief Executive Officer, commented, “We are pleased to have resolved our
outstanding patent actions with Zyxel and Buffalo as licensees of our technologies. We are hopeful that
additional parties will join Zyxel and Buffalo and become licensees of our patented technologies in the near
future under comparable royalty rates. The Texas court continues to move efficiently, and we believe the
claim construction rulings to date demonstrate the merits of our claim construction positions. Our first of
two infringement actions against Intel is scheduled for trial in approximately eight months and three
additional trials are scheduled in Texas within five months following this first Intel trial. We look forward to
presenting the facts of our cases to Texas juries.”
Mr. Parker continued, “Recent rulings from the district court in Orlando are substantial blows to our pending
action against Qualcomm as the court first excluded the opinions of our experts and subsequently issued a
summary judgment ruling of non-infringement on the three remaining patents in the case. The next step is
an appeal that we intend to vigorously pursue. We are hopeful that the appellate court will give proper
weight to our positions which we feel are strongly supported by legal precedence. At a recent public hearing
in the Orlando case against Qualcomm, I was surprised to hear the court comment, ‘We all know the jury
isn’t going to follow 99% of what you all are talking about in this trial. They’re going to come up with a
rough idea of who deserves to win, but the nuances of a patent case, there’s no way a jury understands this
which is why this shouldn’t be tried to a jury, in my opinion. They will never understand. It should be PTAB
100%.’ The fact is that district courts with Article 3 judges represent the only venue available to patent
holders for enforcing our patented rights.
“This case has been pending in the district court in Orlando since 2014. It has survived multiple IPR
challenges, a motion to move venue to California, and numerous other delays. We are disappointed with
the additional delays these recent rulings will create; however, we remain confident in the merits of our case,
and we are steadfast in our goal to hold Qualcomm accountable for their unauthorized, and we believe
willful, use of our technologies.”
Financial Results
· Net loss for 2021 was $12.3 million, or $0.17 per common share, compared to a net loss of $19.6
million, or $0.42 per common share for 2020.
o The 37% decrease in year-to-date net loss is a primarily the result of
§
§
§
a $2.3 million decrease in litigation fees and expenses largely related to our case
against Qualcomm in Jacksonville, Florida which is currently stayed.
the recognition in 2020 of approximately $2.2 million in noncash charges related to
the modification of equity-related agreements with third parties.
a $4.0 million decrease in the loss related to the change in fair value of our
contingent payment obligations.
§ An offsetting $2.1 million increase in share-based compensation expense.
· We used cash for operations of approximately $7.7 million in 2021 compared to approximately $4.8
million in cash used for operations in 2020. The increase is the result of a significant decrease in
accounts payable and other current liabilities in 2021, resulting in a $3.7 million improvement in
working capital.
o Our use of cash in 2021 was funded by $6.2 million in net proceeds received from the sale of
debt and equity securities and $1.0 million in proceeds received from the exercise of
outstanding options and warrants.
About ParkerVision
licenses cutting-edge, proprietary radio-frequency (RF)
ParkerVision, Inc. invents, develops and
technologies that enable wireless solution providers to make and sell advanced wireless communication
products. ParkerVision is engaged in a number of patent enforcement actions in the U.S. to protect patented
rights
information, please visit
www.parkervision.com. (PRKR-I)
infringed by others. For more
it believes are broadly
that
Safe Harbor Statement
This press release contains forward-looking information. Readers are cautioned not to place undue reliance
on any such forward-looking statements, each of which speaks only as of the date made. Such statements are
subject to certain risks and uncertainties that are disclosed in the Company’s SEC reports, including the
Form 10-K for the year ended December 31, 2021. These risks and uncertainties could cause actual results
to differ materially from those currently anticipated or projected.
Cindy French
Chief Financial Officer
ParkerVision, Inc
cfrench@parkervision.com
(TABLES FOLLOW)
ParkerVision, Inc.
Balance Sheet Highlights
(in thousands)
Cash and cash equivalents
Prepaid expenses and other current assets
Intangible assets, net
Other noncurrent assets, net
Total assets
Current liabilities
Contingent payment obligations
Convertible notes
Other long-term liabilities
Shareholders’ deficit
Total liabilities and shareholders’ deficit
December 31,
2021
2020
$
$
1,030
599
1,785
26
3,440
1,646
43,063
2,895
613
(44,777)
3,440
$
$
1,627
607
2,170
52
4,456
5,989
38,279
3,018
991
(43,821)
4,456
ParkerVision, Inc.
Summary Results of Operations
(in thousands, except per share amounts)
Licensing revenue
Cost of sales
Gross margin
Selling, general and administrative expenses
Total operating expenses
Interest and other income
Interest expense
Change in fair value of contingent payment obligations
Total interest and other
Net loss
Basic and diluted net loss per common share
Weighted average shares outstanding
Year Ended
December 31,
2021
2020
$
$
$
144
(5)
139
8,088
8,088
242
(251)
(4,372)
(4,381)
(12,330)
(0.17)
71,299
-
-
-
10,664
10,664
-
(547)
(8,367)
(8,914)
(19,578)
(0.42)
47,019
$
$
$
ParkerVision, Inc.
Summary of Cash Flows
(in thousands)
Net cash used in operating activities
Net cash used in investing activities
Net cash provided by financing activities
Net (decrease) increase in cash & cash equivalents
Cash & cash equivalents - beginning of year
Cash & cash equivalents - end of year
Year Ended
December 31,
2021
2020
$
(7,702) $
(3)
7,108
(597)
1,627
$
1,030 $
(4,777)
(1)
6,348
1,570
57
1,627