PARKERVISION INC
10-Ks and 10-Qs
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-Q
(Mark
One)
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☒
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QUARTERLY
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
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For the quarterly period September 30, 2019
or
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☐
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
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For the
transition period from ________to____________
Commission
file number
000-22904
PARKERVISION, INC.
(Exact
name of registrant as specified in its charter)
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Florida
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59-2971472
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(State
or other jurisdiction of incorporation or
organization)
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(I.R.S.
Employer Identification No)
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9446 Philips Highway, Suite 5A
Jacksonville, Florida 32256
(Address
of principal executive offices)
(904) 732-6100
(Registrant’s
telephone number, including area code)
(Former
name, former address and former fiscal year, if changed since last
report)
Securities
registered pursuant to Section 12(b) of the Act:
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Title
of Each Class
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Trading
Symbol
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Name of
Each Exchange on Which Registered
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Common Stock, $.01 par value
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PRKR
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OTCQB
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Common Stock Rights
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OTCQB
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Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ☒ No ☐ .
Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months (or for
such shorter period that the registrant was required to submit such
file). Yes ☒ No ☐ .
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange
Act. (Check one):
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Large
accelerated filer ☐
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Accelerated
filer ☐
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Non-accelerated
filer ☒
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Smaller
reporting company ☒
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Emerging
growth company ☐
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If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised accounting standards provided pursuant to
Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ☐ No
☒
As of
November 8, 2019, 33,610,994 shares of the issuer’s common
stock, $.01 par value, were outstanding.
TABLE OF CONTENTS
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PART I
- FINANCIAL INFORMATION
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PART II
- OTHER INFORMATION
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PART I - FINANCIAL INFORMATION
PA
R
KERVISION, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in
thousands, except par value data)
|
|
September
30,
|
December
31,
|
|
|
2019
|
2018
|
|
CURRENT
ASSETS:
|
|
|
|
Cash
and cash equivalents
|
$
130
|
$
1,527
|
|
Accounts
receivable, net
|
-
|
2
|
|
Finished
goods inventories, net
|
21
|
98
|
|
Prepaid
expenses
|
726
|
538
|
|
Other
current assets
|
1
|
55
|
|
Held
for sale assets
|
50
|
65
|
|
Total
current assets
|
928
|
2,285
|
|
|
|
|
|
Property
and equipment, net
|
84
|
129
|
|
Operating
lease right-of-use assets
|
311
|
-
|
|
Intangible
assets, net
|
3,174
|
3,902
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|
Other
assets, net
|
16
|
15
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|
Total
assets
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$
4,513
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$
6,331
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CURRENT
LIABILITIES:
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Accounts
payable
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$
1,834
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$
655
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Accrued
expenses:
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Salaries
and wages
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104
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122
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Professional
fees
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571
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379
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Statutory
court costs
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363
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114
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Other
accrued expenses
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551
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563
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Related
party note payable, current portion
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139
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37
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Unsecured
notes payable
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225
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-
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Secured
notes payable
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1,600
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2,400
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Operating
lease liabilities, current portion
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262
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86
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Total
current liabilities
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5,649
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4,356
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LONG-TERM
LIABILITIES:
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Secured
contingent payment obligation
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24,802
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25,557
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Convertible
notes, net
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2,711
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837
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Related
party note payable, net of current portion
|
732
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799
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Operating
lease liabilities, net of current portion
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339
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91
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Other
long term liabilities
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-
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1
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Total
long-term liabilities
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28,584
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27,285
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Total
liabilities
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34,233
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31,641
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COMMITMENTS
AND CONTINGENCIES
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SHAREHOLDERS'
DEFICIT:
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Common
stock, $.01 par value, 75,000 shares authorized, 33,509 and 28,677
shares issued and outstanding at September 30, 2019 and December
31, 2018, respectively
|
335
|
287
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Warrants
outstanding
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1,330
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1,810
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Additional
paid-in capital
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366,720
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364,885
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Accumulated
deficit
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(398,105
)
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(392,292
)
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Total
shareholders' deficit
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(29,720
)
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(25,310
)
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Total
liabilities and shareholders' deficit
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$
4,513
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$
6,331
|
The
accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
1
PARKERVISION,
INC.
(UNAUDITED)
(in
thousands, except per share data)
|
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Three Months
Ended
|
Nine Months
Ended
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||
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September
30,
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September
30,
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||
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2019
|
2018
|
2019
|
2018
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Product
revenue
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$
35
|
$
13
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$
70
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$
128
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Cost
of sales
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(35
)
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(12
)
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(70
)
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(96
)
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Inventory
impairment charge
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-
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(975
)
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-
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(1,017
)
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Gross
margin
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-
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(974
)
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-
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(985
)
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Research
and development expenses
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-
|
685
|
334
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2,560
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Selling,
general and administrative expenses
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1,950
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2,522
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5,957
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8,401
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Restructuring
charges
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-
|
607
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-
|
607
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Total
operating expenses
|
1,950
|
3,814
|
6,291
|
11,568
|
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|
|
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Interest
and other income
|
3
|
-
|
3
|
2
|
|
Interest
expense
|
(104
)
|
(24
)
|
(242
)
|
(58
)
|
|
Change
in fair value of secured contingent payment obligation
|
(68
)
|
(26
)
|
755
|
(1,013
)
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Total
interest and other
|
(169
)
|
(50
)
|
516
|
(1,069
)
|
|
|
|
|
|
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Net
loss
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(2,119
)
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(4,838
)
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(5,775
)
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(13,622
)
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|
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Other
comprehensive loss, net of tax
|
-
|
-
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-
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-
|
|
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|
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Comprehensive
loss
|
$
(2,119
)
|
$
(4,838
)
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$
(5,775
)
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$
(13,622
)
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Basic
and diluted net loss per common share
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$
(0.07
)
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$
(0.19
)
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$
(0.19
)
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$
(0.59
)
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Weighted
average common shares outstanding
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32,012
|
25,997
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30,706
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23,282
|
The
accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
2
PARKERVISION,
INC.
CONDENSED
CO
N
SOLIDATED STATEMENTS OF
SHAREHOLDERS’ DEFICIT
(UNAUDITED)
(in
thousands)
|
|
Common Stock,
Par Value
|
Warrants
Outstanding
|
Additional
Paid-in Capital
|
Accumulated
Deficit
|
Total
Shareholders' Deficit
|
|
Balance as of December 31, 2018
|
$
287
|
$
1,810
|
$
364,885
|
$
(392,292
)
|
$
(25,310
)
|
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Cumulative
effect of change in accounting principle
|
-
|
-
|
-
|
(38
)
|
(38
)
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Issuance
of common stock upon exercise of warrants
|
15
|
(357
)
|
357
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-
|
15
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Issuance
of common stock upon conversion and payment of interest-in-kind on
convertible debt
|
4
|
-
|
76
|
-
|
80
|
|
Share-based
compensation, net of shares withheld for taxes
|
-
|
-
|
67
|
-
|
67
|
|
Comprehensive
loss for the period
|
-
|
-
|
-
|
(2,094
)
|
(2,094
)
|
|
Balance as of March 31, 2019
|
306
|
1,453
|
365,385
|
(394,424
)
|
(27,280
)
|
|
Issuance
of common stock for services
|
6
|
-
|
54
|
-
|
60
|
|
Issuance
of common stock upon conversion and payment of interest-in-kind on
convertible debt
|
5
|
-
|
43
|
-
|
48
|
|
Share-based
compensation, net of shares withheld for taxes
|
-
|
-
|
48
|
-
|
48
|
|
Comprehensive
loss for the period
|
-
|
-
|
-
|
(1,562
)
|
(1,562
)
|
|
Balance as of June 30, 2019
|
317
|
1,453
|
365,530
|
(395,986
)
|
(28,686
)
|
|
Issuance
of common stock upon exercise of warrants
|
14
|
(303
)
|
303
|
-
|
14
|
|
Issuance
of warrants for services
|
-
|
180
|
-
|
-
|
180
|
|
Issuance
of convertible debt with beneficial conversion feature
|
|
|
550
|
|
550
|
|
Issuance
of common stock upon conversion and payment of interest-in-kind on
convertible debt
|
4
|
-
|
51
|
-
|
55
|
|
Share-based
compensation, net of shares withheld for taxes
|
-
|
-
|
286
|
-
|
286
|
|
Comprehensive
loss for the period
|
-
|
-
|
-
|
(2,119
)
|
(2,119
)
|
|
Balance as of September 30, 2019
|
$
335
|
$
1,330
|
$
366,720
|
$
(398,105
)
|
$
(29,720
)
|
|
|
Common Stock,
Par Value
|
Warrants
Outstanding
|
Additional
Paid-in Capital
|
Accumulated
Deficit
|
Total
Shareholders' Deficit
|
|
Balance as of December 31, 2017
|
$
212
|
$
826
|
$
359,141
|
$
(371,423
)
|
$
(11,244
)
|
|
Issuance
of common stock and warrants in public and private offerings, net
of issuance costs
|
25
|
-
|
2,227
|
-
|
2,252
|
|
Share-based
compensation, net of shares withheld for taxes
|
1
|
-
|
362
|
-
|
363
|
|
Comprehensive
loss for the period
|
-
|
-
|
-
|
(4,290
)
|
(4,290
)
|
|
Balance as of March 31, 2018
|
238
|
826
|
361,730
|
(375,713
)
|
(12,919
)
|
|
Expiration
of warrants
|
-
|
(491
)
|
491
|
-
|
-
|
|
Issuance
of common stock and warrants in public and private offerings, net
of issuance costs
|
20
|
-
|
1,103
|
-
|
1,123
|
|
Share-based
compensation, net of shares withheld for taxes
|
1
|
-
|
347
|
-
|
348
|
|
Comprehensive
loss for the period
|
-
|
-
|
-
|
(4,494
)
|
(4,494
)
|
|
Balance as of June 30, 2018
|
259
|
335
|
363,671
|
(380,207
)
|
(15,942
)
|
|
Issuance
of common stock and warrants in public and private offerings, net
of issuance costs
|
|
1,950
|
(48
)
|
|
1,902
|
|
Issuance
of convertible debt with beneficial conversion feature
|
|
|
442
|
|
442
|
|
Share-based
compensation, net of shares withheld for taxes
|
3
|
|
183
|
|
186
|
|
Comprehensive
loss for the period
|
|
|
|
(4,838
)
|
(4,838
)
|
|
Balance as of September 30, 2018
|
$
262
|
$
2,285
|
$
364,248
|
$
(385,045
)
|
$
(18,250
)
|
The
accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
3
PARKERVISION,
INC.
CONDENSED
CO
N
SOLIDATED STATEMENTS OF CASH
FLOWS
(UNAUDITED)
(in
thousands)
|
|
Nine
Months Ended
|
|
|
|
September
30,
|
|
|
|
2019
|
2018
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
Net
loss
|
$
(5,775
)
|
$
(13,622
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation
and amortization
|
604
|
947
|
|
Share-based
compensation
|
401
|
911
|
|
Noncash
lease expense
|
252
|
-
|
|
Change
in fair value of secured contingent payment obligation
|
(755
)
|
1,013
|
|
Loss
on disposal of equipment and other assets
|
220
|
356
|
|
Inventory
impairment charges
|
-
|
1,017
|
|
Changes
in operating assets and liabilities:
|
|
|
|
Accounts
receivable
|
2
|
24
|
|
Finished
goods inventories
|
77
|
(217
)
|
|
Prepaid
expenses and other assets
|
105
|
(17
)
|
|
Accounts
payable and accrued expenses
|
1,759
|
413
|
|
Operating
lease liabilities and deferred rent
|
(184
)
|
109
|
|
Total
adjustments
|
2,481
|
4,556
|
|
Net
cash used in operating activities
|
(3,294
)
|
(9,066
)
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
Proceeds
from redemption of available-for-sale securities
|
-
|
26
|
|
Proceeds
from sale of property and equipment
|
27
|
4
|
|
Purchases
of property and equipment
|
(5
)
|
(5
)
|
|
Payments
for patent costs and other intangible assets
|
(18
)
|
(6
)
|
|
Net
cash provided by investing activities
|
4
|
19
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
Net
proceeds from issuance of common stock and warrants in public and
private offerings
|
-
|
5,277
|
|
Net
proceeds from exercise of options and warrants
|
29
|
-
|
|
Net
proceeds from debt financings
|
2,665
|
2,819
|
|
Principal
payments on long-term debt
|
(800
)
|
(121
)
|
|
Principal
payments on finance lease obligation
|
(1
)
|
(1
)
|
|
Shares
withheld for payment of taxes
|
-
|
(14
)
|
|
Net
cash provided by financing activities
|
1,893
|
7,960
|
|
|
|
|
|
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
(1,397
)
|
(1,087
)
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS, beginning of period
|
1,527
|
1,354
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS, end of period
|
$
130
|
$
267
|
The
accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
4
PARKERVISION,
INC.
NOTES
T
O
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
1. Description of Business
ParkerVision,
Inc. and its wholly-owned German subsidiary, ParkerVision GmbH
(collectively “ParkerVision”, “we” or the
“Company”) is in the business of innovating fundamental
wireless technologies and products. We have designed and developed
proprietary radio frequency (“
RF
”) technologies and integrated
circuits for use in wireless communication products. We have
expended significant financial and other resources to research and
develop our RF technologies and to obtain patent protection for
those technologies in the United States and certain foreign
jurisdictions. We believe certain patents protecting our
proprietary technologies have been broadly infringed by others, and
therefore our primary business plan includes enforcement of our
intellectual property rights through patent infringement litigation
and licensing efforts. We have made significant investments in
developing and protecting our technologies and products, the
returns on which are dependent upon the generation of future
revenues for realization.
We have
also designed and developed a distributed WiFi product line for
consumers and small businesses marketed under the brand name
Milo®. We restructured our operations during the third quarter
of 2018 in order to reduce operating expenses in light of our
limited capital resources. Accordingly, we significantly reduced
our ongoing investment in the Milo product. In early 2019, we
ceased our ongoing research and development efforts and, where
applicable, repurposed resources to support our patent enforcement
and product sales and support efforts. We expect to close the Milo
product operations in the fourth quarter of 2019 and further reduce
our operating costs.
2. Liquidity and Going Concern
Our
accompanying condensed consolidated financial statements were
prepared assuming we would continue as a going concern, which
contemplates that we will continue in operation for the foreseeable
future and will be able to realize assets and settle liabilities
and commitments in the normal course of business. These condensed
consolidated financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of
liabilities that could result should we be unable to continue as a
going concern.
We have
incurred significant losses from operations and negative cash flows
in every year since inception and have utilized the proceeds from
debt and equity financings to fund our operations, including the
cost of litigation. For the nine months ended September 30, 2019,
we incurred a net loss of approximately $5.8 million and negative
cash flows from operations of approximately $3.3 million. At
September 30, 2019, we had a working capital deficit of
approximately $4.7 million and we had an accumulated deficit of
approximately $398.1 million. These circumstances raise substantial
doubt about our ability to continue to operate as a going concern
within one year following the issue date of these condensed
consolidated financial statements.
For the
nine months ended September 30, 2019, we received aggregate net
proceeds of approximately $2.44 million from the sale of
convertible promissory notes and $0.23 million for the issuance of
short-term notes. At September 30, 2019, we had cash and cash
equivalents of approximately $0.1 million. Our Milo product line
has not generated expected revenues to date and we expect to
discontinue sales of the Milo product in the fourth quarter of
2019. The amount and timing of proceeds from our patent enforcement
actions, if any, is difficult to predict. Although we have made
significant reductions in our operating costs, we will need
additional working capital to fund our operations.
In
October 2019, we engaged an additional law firm to support ongoing
litigation as well as explore additional patent enforcement
actions. This firm will support the litigation on a full contingent
basis, including advancement of out-of-pocket costs incurred by us
to support litigation efforts. In addition, we are exploring
financing opportunities for both our short and long-term capital
needs. These financing opportunities may include debt, convertible
debt, common or preferred equity offerings, additional litigation
financing, or a combination thereof. There can be no assurance that
we will be able to consummate a financing transaction or that the
terms of such financing will be on terms and conditions that are
acceptable.
Our
ability to meet our liquidity needs for the next twelve months is
dependent upon one or more of (i) our ability to successfully
negotiate licensing agreements and/or settlements relating to the
use of our technologies by others in excess of our contingent
payment obligations; and/or (ii) our ability to obtain additional
debt or equity financing. We expect that revenue generated from
patent enforcement actions and technology licenses over the next
twelve months may not be sufficient to cover our working capital
requirements. In the event we do not generate sufficient revenues
to cover our operational costs and contingent repayment
obligations, we will be required to use available working capital
and/or raise additional working capital through the sale of equity
securities or other financing arrangements.
5
We
expect to continue to invest in the support of our patent
enforcement and licensing programs. The long-term continuation of
our business plan is dependent upon 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 debt repayment obligations. Failure to generate sufficient
revenues, raise additional capital through debt or equity
financings or contingent fee arrangements, and/or reduce operating
costs will have a material adverse effect on our ability to meet
our long-term liquidity needs and achieve our intended long-term
business objectives.
3. Basis of Presentation
The
accompanying unaudited condensed consolidated financial statements
for the period ended September 30, 2019 were prepared in accordance
with generally accepted accounting principles (“GAAP”)
for interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Operating results for the
three and nine months ended September 30, 2019 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 2019 or future years. Certain reclassifications have
been made to prior period amounts to conform to the current period
presentation. All normal and recurring adjustments which, in the
opinion of management, are necessary for a fair statement of the
consolidated financial condition and results of operations have
been included.
The
year-end condensed consolidated balance sheet data was derived from
the audited consolidated financial statements for the year ended
December 31, 2018, but does not include all disclosures required by
GAAP. These interim condensed consolidated financial statements
should be read in conjunction with our latest Annual Report on Form
10-K for the year ended December 31, 2018 (“2018 Annual
Report”).
The
condensed consolidated financial statements include the accounts of
ParkerVision, Inc. and its wholly-owned German subsidiary,
ParkerVision GmbH, after elimination of all intercompany
transactions and accounts.
4.
Accounting Policies
There
have been no changes in accounting policies from those stated in
our 2018 Annual Report, except as follows:
Adoption of New Accounting Standards
As of
January 1, 2019, we adopted Accounting Standards Codification
(“ASC”) 842, “Leases.” ASC 842 requires
lessees to recognize right-of-use (“ROU”) assets and
lease liabilities on the balance sheet for all finance and
operating leases with lease terms of more than 12 months and
disclose key information about leasing arrangements (see Note 8).
ASC 842 allows for the application of the new standard on the
adoption date without restatement of prior comparative periods or a
modified retrospective transition method which requires application
of the new standard at the beginning of the earliest period
presented. We have elected to use the adoption date as the initial
application date without restatement of prior comparative periods.
We also elected the package of practical expedients permitted under
the transition guidance which, among other things, does not require
us to reassess lease classification. Upon adoption of ASC 842, we
recognized an adjustment to beginning retained earnings of
approximately $0.04 million for the cumulative effect of the change
in accounting principle. We also recorded a ROU asset of
approximately $0.56 million and an increase in our operating lease
liabilities of approximately $0.60 million, primarily related to
operating leases for our office and warehouse facilities. Our
accounting for finance leases remains substantially unchanged.
Adoption of the standard did not materially impact operating
results or cash flows.
As of
January 1, 2019, we adopted Accounting Standards Update
(“ASU”) 2018-02, “Income Statement - Reporting
Comprehensive Income (Topic 220): Reclassification of Certain Tax
Effects from Accumulated Other Comprehensive Income.” The
amendments in this update allow a reclassification from accumulated
other comprehensive income to retained earnings for stranded tax
effects resulting from the Tax Cuts and Jobs Act. We have no
stranded tax effects included in our other comprehensive loss and
therefore the adoption of ASU 2018-02 did not impact our condensed
consolidated financial statements.
As of
January 1, 2019, we adopted ASU 2018-07, "Compensation - Stock
Compensation (Topic 718): Improvements to Nonemployee Share-Based
Payment Accounting." The amendments in this update simplify the
accounting for share-based payments to nonemployees by aligning it
with the accounting for share-based payments to employees, with
certain exceptions. We did not previously have awards to
nonemployees
that would require
reassessment
and therefore the adoption of ASU 2018-07 did
not impact our condensed consolidated financial
statements.
6
5. Loss per Common Share
Basic
loss per common share is determined based on the weighted-average
number of common shares outstanding during each period. Diluted
loss per common share is the same as basic loss per common share as
all common share equivalents are excluded from the calculation, as
their effect is anti-dilutive.
We have shares underlying outstanding options, warrants, unvested
restricted stock units (“RSUs”) and convertible notes
that were excluded from the computation of diluted loss per share
as their effect would have been anti-dilutive. These common share
equivalents at September 30, 2019 and 2018 were as follows (in
thousands):
|
|
September
30,
|
|
|
|
2019
|
2018
|
|
Options
outstanding
|
11,349
|
1,455
|
|
Warrants
outstanding
|
12,150
|
10,350
|
|
Unvested
RSUs
|
-
|
36
|
|
Shares
underlying convertible notes
|
20,846
|
2,996
|
|
|
44,345
|
14,837
|
6. Prepaid Expenses
Prepaid
expenses consist of the following (in thousands):
|
|
September
30,
|
December
31,
|
|
|
2019
|
2018
|
|
Prepaid
services
|
$
503
|
$
252
|
|
Prepaid
bonds for German statutory costs
|
183
|
199
|
|
Prepaid
licenses, software tools and support
|
13
|
51
|
|
Prepaid
insurance
|
11
|
19
|
|
Other
prepaid expenses
|
16
|
17
|
|
|
$
726
|
$
538
|
7. Intangible Assets
Intangible
assets consist of the following (in thousands):
|
|
September
30,
|
December
31,
|
|
|
2019
|
2018
|
|
Patents and
copyrights
|
$
17,474
|
$
18,350
|
|
Accumulated
amortization
|
(14,300
)
|
(14,448
)
|
|
|
$
3,174
|
$
3,902
|
During
the nine months ended September 30, 2019, we recorded losses due to
the abandonment of patents and patent applications of approximately
$0.2 million.
8. Leases
We
lease our office and other facilities and certain office equipment
under long-term, non-cancelable operating and finance leases. Some
leases include options to purchase, terminate, or extend for one or
more years. These options are included in the lease term 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.
At
inception, we determine if an arrangement contains a lease and
whether that lease meets the classification criteria of a finance
or operating lease. Some of our lease arrangements contain lease
components (e.g. minimum rent payments) and non-lease components
(e.g. services). For certain equipment leases, we account for lease
and non-lease components separately based on a relative fair market
value basis. For all other leases, we account for the lease and
non-lease components (e.g. common area maintenance) on a combined
basis.
7
Following
the adoption of ASC 842 as of January 1, 2019 (see Note 4),
operating leases are included in operating lease right-of-use
assets and operating lease liabilities on the condensed
consolidated balance sheets. Operating lease ROU assets and
liabilities are recognized at commencement date based on the
present value of lease payments over the lease term using the
implicit rate, when readily available, or our incremental borrowing
rate for collateralized debt based on information available at the
lease commencement date. 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 condensed consolidated
statement of comprehensive loss. For the three and nine months
ended September 30, 2019, we recognized operating lease costs of
approximately $0.1 million and $0.3 million,
respectively.
Finance
leases are included in property and equipment and other accrued
expenses on the condensed 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
condensed consolidated statements of comprehensive loss. Our
finance leases are not material to our condensed consolidated
financial statements as of or for the three and nine months ended
September 30, 2019.
No new
finance or operating leases commenced during the three or nine
months ended September 30, 2019. The following table summarizes the
supplemental cash flow information related to leases, including the
right-of-use assets recognized upon adoption of the new lease
standard (in thousands):
|
|
Three Months
Ended
|
Nine Months
Ended
|
|
|
September
30,
|
September
30,
|
|
|
2019
|
2019
|
|
Cash
paid for amounts included in the measurement of lease
liabilities:
|
|
|
|
Operating
cash flows from operating leases
|
$
60
|
$
252
|
|
|
|
|
|
|
|
|
|
Right-of-use
assets obtained in exchange for operating lease
liabilities
|
-
|
563
|
The
following table summarizes other supplemental information related
to leases:
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
|
2019
|
|
Weighted-average
remaining lease term (in years):
|
|
|
Operating
leases
|
2.9
|
|
Finance
leases
|
0.5
|
|
Weighted
average discount rate:
|
|
|
Operating
leases
|
12.0
%
|
|
Finance
leases
|
8.7
%
|
The
future maturities of lease liabilities consist of the following as
of September 30, 2019 (in thousands):
|
|
Operating
Leases
|
Finance
Leases
|
|
2019
(remaining)
|
$
170
|
$
1
|
|
2020
|
185
|
-
|
|
2021
|
176
|
-
|
|
2022
|
166
|
-
|
|
2023
|
4
|
-
|
|
Thereafter
|
-
|
-
|
|
Total
undiscounted lease payments
|
$
701
|
$
1
|
|
Less:
imputed interest
|
100
|
-
|
|
Present value of lease liabilities
|
$
601
|
$
1
|
As of
December 31, 2018, we had a lease liability of approximately $0.1
million which represented the estimated fair value of remaining
lease rental payments for our cease-use facility in Lake Mary,
Florida, less estimated sublease rentals, as accounted for under
ASC 840, “Leases” which was superseded by ASC 842 as of
January 1, 2019.
8
9. Long-term debt
Notes Payable
Note Payable to a Related Party
Our
note payable to a related party at September 30, 2019 and December
31, 2018, consisted of the following (in thousands):
|
|
September
30,
|
December
31,
|
|
Description
|
2019
|
2018
|
|
Note
payable to a related party
|
$
871
|
$
836
|
|
Less
current maturities
|
139
|
37
|
|
Long-term
note payable
|
$
732
|
$
799
|
We have
an unsecured promissory note payable to Sterne, Kessler, Goldstein,
& Fox, PLLC (“SKGF”), a related party, for
outstanding unpaid fees for legal services (the “SGKF
Note”). The SKGF Note, as amended in 2018, accrued interest
at a rate of 8% per annum and provided for payments of principal
and interest of approximately $48,500 per month commencing October
31, 2018 through March 31, 2020. At December 31, 2018, we were in
default on the payment terms of the SKGF Note. In March 2019, we
amended the SKGF Note to provide for a waiver of past payment
defaults, a decrease in the interest rate from 8% per annum to 4%
per annum, an extension of the maturity date from March 2020 to
April 2022, and a modification of payment terms. This amendment
constituted a troubled debt restructuring and has been accounted
for on a prospective basis from the date of the amendment. As of
June 29, 2019, we amended the note to provide for a postponement of
past payment defaults and future payments until October 2019. In
October 2019, we further amended the note to provide a continued
waiver of any payment defaults and to modify the payment schedule
such that repayments of principal and interest commence January 31,
2020 at a rate of $10,000 per month with a final balloon payment
due in April 2022. We are currently in compliance with all the
terms of the agreement, as amended.
Unsecured Short Term Notes Payable
In May
and June 2019, we entered into short-term promissory notes with
accredited investors for aggregate proceeds of approximately $0.23
million. The notes are unsecured, accrued interest at a rate of 18%
per annum and had an original maturity date at the earlier of
ninety (90) days following the issuance date or upon our receipt of
additional litigation financing. The maturity date for the notes
was extended to December 2019 and the interest rate was increased
to 20% per annum. In the event of default, the outstanding balance
of the notes and any other obligation from the Company to the
lenders shall become due immediately without demand or notice and
we are obligated to pay all costs of collection, including
reasonable attorney fees.
Secured Note Payable
We have
a note payable of $1.6 million to Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C. (“Mintz”) for outstanding,
unpaid attorney’s fees and costs associated with our patent
enforcement program (the “Mintz Note”). The Mintz Note
is non-interest bearing, except in the event of a default, and is
secured by certain of our U.S. and foreign patents. The Mintz Note
accelerates and becomes immediately due and payable in the case of
standard events of default and/or in the event of a sale or other
transfer of substantially all of our assets or a transfer of more
than 50% of our capital stock in one or a series of transactions or
through a merger or other similar transaction. In an event of
default, the Mintz Note will accrue interest at a rate of 12% per
annum on any outstanding balance until such time that the note is
paid in full. As of December 31, 2018, we were in default on the
payment terms of the Mintz Note. The payment default was cured in
January 2019. On April 1, 2019, June 29, 2019, and November 14,
2019, Mintz waived past and future payment defaults under the note
through November 16, 2019, provided that no other event of default
occurs. Mintz also waived acceleration of unpaid principal and
interest as well as an increase in the interest rate to the default
rate of 12%.
9
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. To date, all interest payments on
the convertible notes have been made in shares of our common
stock.
We have
the option to prepay 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
convertible notes.
Convertible
notes payable at September 30, 2019 and December 31, 2018 consist
of the following (in thousands):
|
Description
|
Fixed
Conversion Rate
|
Stated
Interest Rate
|
Effective
Interest Rate
|
Maturity Date
|
September
30,
2019
|
December
31, 2018
|
|
Convertible
notes dated September 10, 2018
|
$
0.40
|
8.0
%
|
23.6
%
|
September
7, 2023
|
$
700
|
$
800
|
|
Convertible
note dated September 19, 2018
|
$
0.57
|
8.0
%
|
10.2
%
|
September
19, 2023
|
425
|
425
|
|
Convertible
notes dated February/March 2019
|
$
0.25
|
8.0
%
|
8.0
%
|
February
28, 2024 to March 13, 2024
|
1,300
|
-
|
|
Convertible
notes dated June 2019
|
$
0.10
|
8.0
%
|
8.0
%
|
June
7, 2024 to June 19, 2024
|
340
|
-
|
|
Convertible
notes dated July 15, 2019
|
$
0.10
|
8.0
%
|
8.0
%
|
July
15, 2024
|
50
|
-
|
|
Convertible
notes dated July 18, 2019
|
$
0.08
|
7.5
%
|
46.1
%
|
July
18, 2024
|
700
|
-
|
|
Convertible
notes dated September 13, 2019
|
$
0.10
|
8.0
%
|
25.9
%
|
September
13, 2024
|
50
|
-
|
|
Total
principal balance
|
|
|
|
|
3,565
|
1,225
|
|
Less
Unamortized discount
|
|
|
|
|
854
|
388
|
|
|
|
|
|
|
$
2,711
|
$
837
|
10
Secured Contingent Payment Obligation
The
following table provides a reconciliation of our secured contingent
payment obligation, measured at estimated fair market value, for
the nine months ended September 30, 2019 and the year ended
December 31, 2018 (in thousands):
|
|
Nine Months
Ended
September 30,
2019
|
Year
Ended
December 31,
2018
|
|
Secured contingent
payment obligation, beginning of period
|
$
25,557
|
$
15,896
|
|
Proceeds from
contingent payment obligation
|
-
|
4,000
|
|
Change in fair
value
|
(755
)
|
5,661
|
|
Secured contingent
payment obligation, end of period
|
$
24,802
|
$
25,557
|
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 in
May 2016, December 2017, April 2018, September 2018 and December
2018. Under the agreement, as of September 30, 2019, we have
received aggregate proceeds of $18.0 million in exchange for
Brickell’s right to reimbursement and compensation from gross
proceeds resulting from patent enforcement and other patent
monetization actions. To date, we have repaid an aggregate of $3.3
million to Brickell from patent enforcement proceeds.
Brickell
is entitled to priority payment of 100% of proceeds received from
patent-related actions until such time that Brickell has been
repaid in full. After repayment of the funded amount, Brickell is
entitled to a portion of remaining proceeds up to a specified
minimum return which is determined as a percentage of the funded
amount and varies based on the timing of repayment. 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 specified minimum return.
Brickell
holds a senior security interest in the majority of our assets
until such time as the specified minimum return is paid, in which
case, the security interest will be released except with respect to
the patents and proceeds related to specific legal actions. The
security interest is enforceable by Brickell in the event that we
are in default under the agreement which would occur if (i) we
fail, after notice, to pay proceeds to Brickell, (ii) we become
insolvent or insolvency proceedings are commenced (and not
subsequently discharged) with respect to us, (iii) our creditors
commence actions against us (which are not subsequently discharged)
that affect our material assets, (iv) we, without Brickell’s
consent, incur indebtedness other than immaterial ordinary course
indebtedness, or (v) there is an uncured non-compliance of our
obligations or misrepresentations under the agreement. As of
September 30, 2019, we are in compliance with our obligations under
this agreement.
We have
elected to measure our secured contingent payment obligation at
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 secured
contingent payment obligation is remeasured to fair value at each
reporting period with changes recorded in the condensed
consolidated statements of comprehensive loss until the contingency
is resolved. As of September 30, 2019, the fair value of the
obligation is estimated to be approximately $24.8 million (see Note
10).
11
10. Fair Value Measurements
The
following tables summarize the fair value of our assets and
liabilities measured at fair value on a recurring basis as of
September 30, 2019 and December 31, 2018 (in
thousands):
|
|
|
Fair Value
Measurements
|
||
|
|
Total Fair
Value
|
Quoted Prices in
Active Markets (Level 1)
|
Significant
Other Observable Inputs (Level 2)
|
Significant
Unobservable Inputs (Level 3)
|
|
September
30, 2019:
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Secured contingent
payment obligation
|
$
24,802
|
$
-
|
$
-
|
$
24,802
|
|
|
|
Fair Value
Measurements
|
||
|
|
Total Fair
Value
|
Quoted Prices in
Active Markets (Level 1)
|
Significant
Other Observable Inputs (Level 2)
|
Significant
Unobservable Inputs (Level 3)
|
|
December
31, 2018:
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Secured contingent
payment obligation
|
$
25,557
|
$
-
|
$
-
|
$
25,557
|
The
fair value of our secured contingent payment obligation was
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 15.63% at September 30, 2019, based on a risk-free rate of
1.63% as adjusted by 8% for credit risk and 6% for litigation
inherent risk
.
At December 31,
2018, we used a risk-adjusted discount rate of approximately 16.5%,
based on a two year risk-free rate of approximately 2.5% as
adjusted by 8% for credit risk and 6% for litigation inherent risk.
The contingent payment obligation does not have a fixed duration;
however, our cash flow projections assume a remaining duration
ranging from approximately one to three years with an average
duration of 2.5 years. The cash outflows could potentially range
from $0 to $50.1 million through 2021 with a weighted average
outflow of approximately $36.2 million. We evaluate the estimates
and assumptions used in determining the fair value of our secured
contingent payment obligation each reporting period and make any
adjustments prospectively based on those evaluations. Changes in
any of these Level 3 inputs could result in a higher or lower fair
value measurement.
11. Legal Proceedings
From
time to time, we are subject to legal proceedings and claims which
arise in the ordinary course of our business. These proceedings
include patent enforcement actions initiated by us against others
for the infringement of our technologies, as well as proceedings
brought by others against us at the Patent Trial and Appeal Board
of the U.S. Patent and Trademark Office (“PTAB”) and in
the Federal Patent Court in Germany in an attempt to invalidate
certain of our patent claims. We have several patent enforcement
actions in Germany, which has a “loser pay” system
whereby the non-prevailing party is responsible for statutory
attorney fees and costs. To the extent a loss is probable and
reasonably estimable as of the balance sheet date, the estimated
loss is recorded in the accompanying condensed statements of
comprehensive loss and included in current liabilities under the
heading “statutory court costs” in the condensed
consolidated balance sheets. As of September 30, 2019 and December
31, 2018, we have accrued an aggregate of $0.36 million and $0.11
million in estimated statutory court fees for our cases in Germany.
The accompanying condensed statements of comprehensive loss for the
three and nine months ended September 30, 2019 exclude any charges
related to probable losses that arose after the date of these
financial statements. There is at least a reasonable possibility of
an unfavorable outcome in any one or more of our legal proceedings
that could result in expenses in the aggregate that could have a
material unfavorable impact on our results of operations as more
fully discussed below.
12
ParkerVision v. Qualcomm and HTC (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”), and HTC (HTC Corporation and HTC America,
Inc.) (the “Qualcomm Action”) seeking unspecified
damages and injunctive relief for infringement of certain of our
patents. Certain of the defendants have filed counterclaims against
us for non-infringement and invalidity for all patents in the case.
A claim construction hearing was held in August 2015 but no ruling
on claim construction has been issued by the court. In February
2016, the court granted the parties’ joint motion to stay
these proceedings until resolution of proceedings at the
International Trade Commission (“ITC”). In May 2017,
the stay of these proceedings was continued pending an appeal of
certain PTAB decisions with regard to our U.S. Patent 6,091,940
(“the ‘940 Patent”). In September 2018, the
Federal Circuit issued its decision in the appeal of the ‘940
Patent. Accordingly, in January 2019, the court lifted the stay. 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. A second claim construction
hearing was held on November 12, 2019. In addition, the court has
approved a case management schedule that includes a jury trial
beginning December 1, 2020.
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 the
corresponding case filed at the 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 (see
ParkerVision v. LG
below). Also in July
2017, Qualcomm filed a motion to change venue to the southern
district of California and Apple filed a motion to dismiss for
improper venue. In March 2018, the district court ruled against the
Qualcomm and Apple motions. The parties also filed a joint motion
in March 2018 to eliminate three of the four patents in the case in
order to expedite proceedings leaving our U.S. patent 9,118,528 as
the only remaining patent in this case. A claim construction
hearing was held on August 31, 2018. In July 2019, the court issued
its claim construction order in which the court adopted our
proposed claim construction for two of the six terms and the
“plain and ordinary meaning” on the remaining terms. In
addition, the court denied a motion filed by Apple for summary
judgment. The court has approved a case management schedule that
includes a jury trial beginning November 2, 2020.
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 recent 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. LG Electronics (Munich, Germany)
In June
2016, we filed a complaint in Munich District Court against LG
Electronics Deutschland GmbH, a German subsidiary of LG
Electronics, Inc. (“LGE”) seeking damages and
injunctive relief for the alleged infringement of the German part
of our European patent 1 206 831 (“the ‘831
Patent”). A hearing in this case was held in November 2016 at
which time the court concluded that certain LGE products using
Qualcomm RF circuitry infringe our patent. However, the final
decision in this case was stayed pending resolution of the
corresponding nullity, or validity, action filed by Qualcomm in the
German Federal Patent Court in Munich (see
Qualcomm v. ParkerVision
below). In
October 2018, we received an unfavorable decision in the Qualcomm
nullity case for which we filed an appeal. In July 2019, we
withdrew our appeal. As a result, our complaint in this case was
dismissed, and we are subject to a claim for reimbursement of
statutory attorney’s fees and costs in this case which we
have accrued in the accompanying condensed consolidated financial
statements as of September 30, 2019. We have posted a bond to cover
this cost which is included in “Prepaid expenses” in
the accompanying condensed consolidated balance
sheets.
13
ParkerVision v. Apple (Munich, Germany) - the Apple I
case
In
October 2016, we filed a complaint in Munich District Court against
Apple, Inc., Apple Distribution International, and Apple Retail
Germany B.V. & Co. KG (collectively “Apple”)
seeking damages and injunctive relief for the alleged infringement
of the ‘831 Patent (the “Apple I Case”). In
February 2017, we amended our complaint adding the infringement of
a second German patent and alleging infringement by Apple devices
that incorporate an Intel transceiver chip. The Munich Regional
Court bifurcated the new claims into a second case (see
ParkerVision v. Apple - the Apple
II
case below). A hearing was held in May 2017 in the Apple
I Case. In June 2017, the court deferred its ruling pending the
decision from the German Federal Patent Court in the validity
action filed by Qualcomm (see
Qualcomm v. ParkerVision below
). In
October 2018, we received an unfavorable decision in the Qualcomm
nullity case for which we filed an appeal which we subsequently
withdrew. We opted not to post a bond to cover the potential
statutory costs in this case. As a result, in March 2019, the
district court declared the complaint withdrawn, a decision we
opted not to appeal. Accordingly, we are subject to a claim for
reimbursement of statutory attorney’s fees and costs which is
accrued in the accompanying condensed consolidated financial
statements as of September 30, 2019.
Qualcomm v. ParkerVision - Federal Patent Court in Germany (as
appealed to the German Supreme Court)
In
August 2016, Qualcomm filed a validity action in Federal Patent
Court in Germany against the ’831 Patent. The outcome of this
validity action impacts our German patent infringement cases
against LGE and Apple as discussed above. On October 17, 2018,
following an oral hearing, the court ruled that the ‘831
Patent was invalid. Based on the October 2018 decision from the
federal court, we recorded a contingent loss for the estimated
statutory fees and costs in this case as of December 31, 2018. In
January 2019, we appealed this decision to the German Supreme
Court, but withdrew our appeal in July 2019. As a result, we are
subject to statutory fees and costs in this case, which are accrued
in the accompanying condensed consolidated financial
statements.
ParkerVision v. Apple (Munich, Germany) - the Apple II
case
The
Apple II case seeks damages and injunctive relief for the alleged
infringement of the German part of our European patent 1 135 853
(“the ‘853 Patent”). A preliminary hearing was
held in November 2017. Subsequent to the hearing, the court
requested that we supplement certain elements of the infringement
claims against Apple devices. In May 2018, we filed our
supplemental briefs as requested by the court. In October 2018, we
also filed a supplemental expert report. The court appointed an
expert in this case and a hearing was held in March 2019 for
purposes of providing expert testimony. The court ruled in April
2019 that Apple does not infringe our ‘853 Patent. We did not
appeal this decision. As a result, we are subject to a claim for
reimbursement of statutory attorney’s fees and costs in this
case which we have accrued in the accompanying condensed
consolidated financial statements as of September 30, 2019. We have
posted a bond to cover this cost which is included in
“Prepaid expenses” in the accompanying condensed
consolidated balance sheets.
Intel v. ParkerVision
(Federal Patent Court in
Germany)
In
August 2017, Intel filed a nullity action in German Federal Patent
Court claiming invalidity of the ‘853 Patent that is the
subject of the Apple II case. If the ‘853 Patent is declared
invalid, we may be subject to a claim for reimbursement of
statutory attorney fees and costs in this case which we currently
estimate will not exceed $0.1 million. No dates have yet been set
in this nullity action, and the accompanying condensed consolidated
financial statements do not include any accrual for a loss
contingency in this case as a loss is not considered
probable.
14
12. Share-Based Compensation
There
has been no material change in the assumptions used to compute the
fair value of our equity awards, nor in the method used to account
for share-based compensation from those stated in our 2018 Annual
Report.
The
following table presents share-based compensation expense included
in our condensed consolidated statements of comprehensive loss for
the three and nine months ended September 30, 2019 and 2018,
respectively (in thousands):
|
|
Three Months
Ended
|
Nine Months
Ended
|
||
|
|
September
30,
|
September
30,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
Research
and development expenses
|
$
-
|
$
17
|
$
5
|
$
132
|
|
Selling,
general and administrative expenses
|
286
|
133
|
396
|
729
|
|
Restructuring
expenses
|
-
|
50
|
-
|
50
|
|
Total
share-based compensation expense
|
$
286
|
$
200
|
$
401
|
$
911
|
As of September 30, 2019, there was $1.2 million of total
unrecognized compensation cost related to all non-vested
share-based compensation awards. The cost is expected to be
recognized over a weighted-average period of approximately 2
years.
On August 7, 2019, our Board of Directors (“Board”)
adopted the 2019 Long-Term Incentive Plan (the “Plan”)
to provide for share-based compensation awards to our employees,
officers, directors and consultants. Subject to authorization of an
increase in the number of authorized shares by our shareholders,
12,000,000 shares of our common stock will be reserved for issuance
under the Plan. On August 7, 2019, our Board also approved the
grant of nonqualified stock options for the purchase of an
aggregate of 10,550,000 shares of our common stock with an exercise
price of $0.17 per share, vesting in 8 equal quarterly increments
commencing September 1, 2019, provided that such options will not
be exercisable unless and until we have sufficient authorized
unissued shares or treasury shares available for such exercise. The
option grants were made to executive officers, key employees and
non-employee directors and have an aggregate grant date fair value
of approximately $1.5 million.
On July 22, 2019, we entered into a consulting agreement with Park
Consultants LLC to act as special advisor to the Chief Executive
Officer with regard to our future business strategies. As
consideration for services to be provided under the eighteen-month
term of the consulting agreement, we issued a warrant to purchase
up to 1,800,000 shares of our common stock with an exercise price
of $0.10 per share in exchange for a nonrefundable retainer for
services valued at approximately $180,000. The warrant is
exercisable immediately after issuance and expires five years
following the issuance date. The value of the warrant was
determined using the Black-Scholes method. The warrant is being
recognized as consulting expense over the term of the consulting
agreement.
On June 7, 2019, we entered into a consulting agreement with Mark
Fisher to act as special advisor to the Chief Executive Officer
with regard to our future business strategies. As consideration for
services to be provided under the six-month term of the consulting
agreement, we issued 625,000 shares of common stock in exchange for
a nonrefundable retainer for services over the six-month term of
the agreement valued at $60,000. The value of the stock issued is
being recognized as consulting expense over the term of the
agreement.
15
ITEM 2. Management’s
D
iscussion
and Analysis of Financial Condition and Results of
Operations
Forward-Looking Statements
We
believe that it is important to communicate our future expectations
to our shareholders and to the public. This quarterly report
contains forward-looking statements, within the meaning of the
Private Securities Litigation Reform Act of 1995, including, in
particular, statements about our future plans, objectives, and
expectations contained in this Item. When used in this quarterly
report and in future filings by us with the Securities and Exchange
Commission (“SEC”), the words or phrases
“expects”, “will likely result”,
“will continue”, “is anticipated”,
“estimated” or similar expressions are intended to
identify “forward-looking statements.” Readers are
cautioned not to place undue reliance on such forward-looking
statements, each of which speaks only as of the date made. Such
statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from historical
results and those presently anticipated or projected, including the
risks and uncertainties identified in our annual report on Form
10-K for the fiscal year ended December 31, 2018 (the “2018
Annual Report”) and in this Item 2 of Part I of this
quarterly report. Examples of such risks and uncertainties include
general economic and business conditions, competition, unexpected
changes in technologies and technological advances, the timely
development and commercial acceptance of new products and
technologies, reliance on key suppliers, reliance on our
intellectual property, the outcome of our intellectual property
litigation and the ability to obtain adequate financing in the
future. We have no obligation to publicly release the results of
any revisions which may be made to any forward-looking statements
to reflect anticipated events or circumstances occurring after the
date of such statements.
Corporate Website
We
announce investor information, including news and commentary about
our business, financial performance and related matters, SEC
filings, notices of investor events, and our press and earnings
releases, in the investor relations section of our website
(
http://www.parkervision.com
/investor-relations
).
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 quarterly report or in any other report or
document we file with the SEC, and any references to our website
are intended to be inactive textual references only.
Overview
We are
in the business of innovating fundamental wireless technologies and
products. We have designed and developed proprietary RF
technologies and integrated circuits for use in wireless
communication products. We have expended significant financial and
other resources to research and develop our RF technologies and to
obtain patent protection for those technologies in the U.S. and
certain foreign jurisdictions. We believe certain patents
protecting our proprietary technologies have been broadly infringed
by others and therefore our primary business plan includes
enforcement of our intellectual property rights through patent
infringement litigation and licensing efforts. We have made
significant investments in developing and protecting our
technologies and products, the returns on which are dependent upon
the generation of future revenues for realization.
We have
also designed and developed a consumer distributed WiFi product
line that is marketed under the brand name Milo. We restructured
our operations during the third quarter of 2018 in order to reduce
operating expenses in light of our limited capital resources.
Accordingly, we significantly reduced our ongoing investment in the
Milo product. In early 2019, we ceased our ongoing research and
development efforts and, where applicable, repurposed resources to
support our patent enforcement and product sales and support
efforts. We expect to close the Milo product operations in the
fourth quarter of 2019 and further reduce our operating
costs.
16
Recent Developments
Legal Proceedings
In
April 2019, the district court in Munich, Germany issued a ruling
in
ParkerVision v. Apple II
that the Apple products do not infringe our ‘853 Patent. We
have opted not to appeal this decision. In addition, in July 2019,
we withdrew our January 2019 appeal to the German Supreme Court in
the
Qualcomm v.
ParkerVision
nullity action which resulted in dismissal of
our infringement cases against Apple (
ParkerVision v. Apple I
) and LG
(
ParkerVision v. LG
Electronics
). We have accrued an aggregate of approximately
$0.36 million for estimated statutory court costs that may be
assessed against us in these cases. Approximately 50% of these
estimated losses will be covered by bonds that we have posted in
these cases. We anticipate the statutory court fees will be payable
over the next two quarters.
In July
2019, the district court for the Middle District of Florida
(Orlando division) issued a ruling denying Qualcomm’s request
to limit the claims and patents in
ParkerVision v. Qualcomm and HTC
. 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. A second claim construction hearing in this case was held
November 12, 2019 and the jury trial is scheduled to begin on
December 1, 2020.
Also in
July 2019, the district court in the Middle District of Florida
(Jacksonville division) issued its claim construction order in
ParkerVision v. Apple and
Qualcomm
. The court’s claim construction order adopted
our proposed construction for two of the six disputed terms and the
“plain and ordinary meaning” on the remaining terms. In
addition, the court denied Apple’s motion for summary
judgement. A jury trial is scheduled to begin on November 2,
2020.
Refer
to Note 11 in the condensed consolidated financial statements for a
discussion of the background of these and other pending patent
litigation.
Debt Financings
During the nine months ended September 30, 2019, we sold an
aggregate of $2.4 million in convertible promissory notes to
accredited investors. The notes are convertible, at the option of
the holder, into shares of our common stock at fixed conversion
prices ranging from $0.08 to $0.25 per share and bear interest at
rates of 7.5% to 8.0% per annum. We may elect to pay interest in
cash or shares, subject to certain equity conditions.
In addition, in May and June 2019, we entered into short-term
promissory notes with accredited investors for aggregate proceeds
of approximately $0.23 million. The notes accrued interest at a
rate of 18% per annum for the first 90 days and 20% thereafter. The
notes, as modified, mature in December 2019 or upon our receipt of
additional litigation financing, if earlier.
Refer to Note 9 to the condensed consolidated financial statements
for a complete discussion of the terms of these
financings.
Consulting Agreements
In June
2019, we entered into a consulting agreement with Mark Fisher to
act as special advisor to our chief executive officer with regard
to our future business strategies. As consideration for services
provided under the six-month term of the agreement, we issued
625,000 shares of common stock, valued at approximately $0.06
million, as a nonrefundable retainer. In July 2019, we engaged an
additional consultant, Park Consultants LLC ("Park"), to act in an
advisory capacity over an 18-month term. As consideration for
services, we granted Park a warrant for the purchase of 1.8 million
shares of our common stock at an exercise price of $0.10 per share,
valued at approximately $0.2 million, as a nonrefundable retainer.
The warrant is immediately exercisable and expires in July
2024.
Share-based Compensation
In
August 2019, our board of directors ("Board") adopted the 2019
Long-term Incentive Plan (the "2019 Plan") to enable us to offer
equity-based compensation to our employees, officers, directors and
consultants who have been, are, or will be important to our
success. Subject to authorization of sufficient shares for issuance
by our stockholders, 12 million shares will be reserved for
issuance under the 2019 Plan. In addition, the Board authorized the
grant of two-year nonqualified stock options, with an exercise
price of $0.17 per share, vesting in 8 equal quarterly installments
commencing September 1, 2019, provided that such options shall not
be exercisable unless or until we have sufficient authorized
unissued shares or treasury shares available for such exercise.
Each of our three non-employee directors were granted an option to
purchase 800,000 shares, Jeffrey Parker, our chief executive
officer, was granted an option to purchase 6,000,000 shares,
Cynthia Poehlman, our chief financial officer, was granted an
option to purchase 1,000,000 shares, Gregory Rawlins, our chief
technical officer, was granted an option to purchase 750,000 shares
and one additional key employee was granted an option to purchase
400,000 shares. The aggregate grant-date fair value of the awards,
totaling approximately $1.5 million, will be recognized as
share-based compensation expense over the two-year life of the
awards.
17
Liquidity and Capital Resources
We have
incurred significant losses from operations and negative cash flows
in every year since inception and have utilized the proceeds from
debt and equity financings to fund our operations, including the
cost of litigation. We used cash for operations of approximately
$3.3 million and $9.1 million for the nine months ended September
30, 2019 and 2018, respectively. At September 30, 2019, we had a
working capital deficit of approximately $4.7 million and we had an
accumulated deficit of approximately $398.1 million. These
circumstances raise substantial doubt about our ability to continue
to operate as a going concern within one year following the issue
date of our condensed consolidated financial statements. The $5.8
million decrease in cash used for operations year over year is
primarily the result of the restructuring of our operations in the
third quarter of 2018 and ongoing cost reduction
measures.
For the
nine months ended September 30, 2019, we received aggregate net
proceeds of approximately $2.44 million in proceeds from the sale
of convertible promissory notes and $0.23 million for the issuance
of short-term notes. Of these proceeds, $0.15 million was used for
retention payments to legal counsel engaged to assist in a wide
range of activities that include our past, current and potential
future litigation actions. The remaining proceeds were used to fund
our operations.
At
September 30, 2019, we had cash and cash equivalents of
approximately $0.1 million. Our Milo product line has not generated
expected revenues to date, and we expect to discontinue sales of
the Milo product in the fourth quarter of 2019. The amount and
timing of proceeds from our patent enforcement actions, if any, is
difficult to predict. Although we have made significant reductions
in our operating costs, we will need additional working capital to
fund our operations and meet our debt repayment
obligations.
In
October 2019, we engaged an additional law firm to support ongoing
litigation as well as explore additional patent enforcement
actions. This firm will support the litigation on a full contingent
basis, including advancement of out-of-pocket costs incurred by us
to support litigation efforts. In addition, we are exploring
additional financing opportunities for both our short and long-term
capital needs. These financing opportunities may include debt,
convertible debt, common or preferred equity offerings, additional
litigation financing, or a combination thereof. There can be no
assurance that we will be able to consummate a financing
transaction or that the terms of such financing will be on terms
and conditions that are acceptable.
Our
ability to meet our short-term liquidity needs, including our debt
repayment obligations, is dependent upon one or more of (i) our
ability to successfully negotiate licensing agreements and/or
settlements relating to the use of our technologies by others in
excess of our contingent payment obligations to Brickell and legal
counsel; and/or (ii) our ability to raise additional capital from
the sale of equity securities or other financing
arrangements.
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 through 2020, if any, after deduction of
payment obligations to Brickell and legal counsel, may not be
sufficient to cover our operating expenses. In the event we do not
generate revenues, or other patent-related proceeds, sufficient to
cover our operational costs and contingent repayment obligation, we
will be required to raise additional working capital through the
sale of equity securities or other financing
arrangements.
The
long-term continuation of our business plan is dependent upon our
ability to secure sufficient financing to support our business, and
our ability to generate revenues and/or patent-related proceeds
sufficient to offset expenses and meet our contingent payment
obligation and other long-term debt repayment obligations. Failure
to generate sufficient revenues, raise additional capital through
debt or equity financings, and/or reduce operating costs could have
a material adverse effect on our ability to meet our short and
long-term liquidity needs and achieve our intended long-term
business objectives.
18
Results of Operations for Each of the Three and Nine Months Ended
September 30, 2019 and 2018
Revenue and Gross Margin
We
reported no licensing revenue for the three and nine-month periods
ended September 30, 2019 or 2018. Although we do anticipate
licensing revenue and/or settlement gains to result from our
licensing and patent enforcement actions, the amount and timing is
highly unpredictable and there can be no assurance that we will
achieve our anticipated results.
We
reported product revenue of approximately $0.04 million and $.01
million for the three-month periods ended September 30, 2019 and
2018, respectively, and $0.07 million and $0.13 million for the
nine-month periods ended September 30, 2019 and 2018, respectively.
Our product revenue is from sales of our Milo-branded WiFi
products. The increase in product revenue for the three-month
period ended September 30, 2019 is the result of increased
advertising spend. On a year over year basis, our product revenue
has declined due to overall reductions in sales and marketing for
these products following our 2018 restructuring.
The
gross margins for the Milo product sales, before inventory
impairment charges, were 0% and 8%, respectively, for the three
months ended September 30, 2019 and 2018 and 0% and 25%,
respectively, for the nine months ended September 30, 2019 and
2018. The decrease in product margins, before inventory impairment
charges, is the result of reduced selling prices. We incurred
inventory impairment charges of approximately $1.0 million for the
three and nine-month periods ended September 30, 2018 in order to
reduce our inventories to their estimated net realizable value. Our
revenues from Milo products to date have fallen short of our
projections, and we have limited resources to deploy toward
increasing consumer awareness of our products. As a result,
management expects to close the Milo product operations in the
fourth quarter of 2019.
Research and Development Expenses
Research
and development expenses consist primarily of engineering and
related management and support personnel costs; fees for outside
engineering design services which we use from time to time to
supplement our internal resources; depreciation expense related to
our assets used in product development; prototype production and
materials costs; software licensing and support costs, which
represent the annual licensing and support maintenance for
engineering design and other software tools; and rent and other
overhead costs. Personnel costs include share-based compensation
amounts which have been determined based on the grant date fair
value of equity-based awards to our employees and then recorded to
expense over the vesting period of the award. Subsequent to March
31, 2019, we halted all research and development efforts and, where
applicable, repurposed prior engineering resources to support our
patent enforcement programs or our Milo sales and
support.
Our
research and development expenses decreased approximately $0.7
million, or 100.0%, during the three months ended September 30,
2019 when compared to the same three-month period in 2018. The
decrease is primarily the result of a $0.3 million reduction in
personnel costs and a $0.1 million decrease in outside consulting
fees. Additionally, research and development expenses decreased
approximately $0.2 million due to personnel and related costs being
repurposed for selling, general and administrative purposes,
including litigation support and Milo sales and
support.
Our
research and development expenses decreased approximately $2.2
million, or 87.0%, during the nine months ended September 30, 2019
when compared to the same period in 2018. This decrease is
primarily the result of a $1.2 million reduction in personnel
costs, including a $0.1 million decrease in share-based
compensation expense, a $0.3 million decrease in consulting fees,
and a $0.1 million decrease in engineering software tools and
support. Additionally, research and development expenses decreased
approximately $0.4 million due to personnel and related costs being
repurposed for selling, general and administrative purposes
including litigation support and Milo sales and
support.
The
reductions in personnel costs for the three and nine month periods
is a result of the closure of our Lake Mary design facility in the
third quarter of 2018 along with reductions in engineering
executive and key employee compensation during that same period.
The reduction in consulting fees for the three and nine month
periods and reduction in software tools and support for the nine
month period is the result of cost reduction efforts pertaining to
our Milo product operations and integrated circuit development
following our 2018 restructuring.
19
Selling, General, and Administrative Expenses
Selling,
general and administrative expenses consist primarily of executive,
director, sales and marketing, internal litigation support, and
finance and administrative personnel costs, including share-based
compensation, and costs incurred for advertising, insurance,
shareholder relations and legal and professional services,
including litigation expenses.
Our
selling, general and administrative expenses decreased by
approximately $0.6 million, or 22.7%, during the three months ended
September 30, 2019 when compared to the same period in 2018. This
is primarily the result of a $0.2 million decrease in Milo product
advertising costs, a $0.1 million decrease in noncash amortization
expense, and a $0.2 million decrease in outside legal fees,
including litigation-related fees and expenses.
Our
selling, general and administrative expenses decreased by
approximately $2.4 million, or 29.1%, during the nine months ended
September 30, 2019 when compared to the same period in 2018. This
is primarily due to a $1.2 million decrease in personnel and
related expense, including a decrease in share-based compensation
expense of approximately $0.3 million, a decrease in Milo product
advertising costs of approximately $0.6 million, a decrease in
marketing and other consulting fees of approximately $0.5 million,
a decrease in noncash amortization expense of approximately $0.3
million, and a decrease in board compensation of approximately $0.2
million. These decreases are somewhat offset by a loss on disposal
of certain patents of approximately $0.2 million and an increase in
legal fees, including litigation-related fees and expenses of
approximately $0.5 million.
The
decreases in product advertising for both the three and nine month
periods ended September 30, 2019 and the decrease in marketing and
consulting fees for the nine month period are a result of our cost
reduction measures that commenced in the third quarter of
2018.
The
decrease in board compensation for the nine month period ended
September 30, 2019 is a result of our board restructuring in the
third quarter of 2018 and the waiver of any cash fees for board or
committee service by our nonemployee directors.
The
decrease in personnel costs for the nine-month period ended
September 30, 2019 is primarily the result of the reduction in
personnel and executive compensation as part of our 2018
restructuring, somewhat offset by the repurposing of engineering
personnel for litigation support commencing in the second quarter
of 2019. Share-based compensation expense decreased for nine month
period during 2019 when compared to the same period in 2018 as a
result of fewer grants and lower stock prices for new awards when
compared to prior year awards.
The
decrease in noncash amortization expense for the three and nine
month periods ended September 30, 2019 is the result of the
expiration and/or abandonment of a number of our patents and patent
applications since the third quarter of 2018.
The
decrease in legal expenses for the three months ended September 30,
2019 is primarily the result of reduced fees related to German
cases as final decisions have been made, as well as an overall
decrease in the use of outside firms for corporate legal matters.
The increase in legal fees and expenses for the nine months ended
September 30, 2019 is primarily the result of fees and expenses
incurred in the first quarter of 2019 to support our German
litigation, including accruals for statutory court costs as a
result of unfavorable court decisions in Germany as well as
increased legal fees related to the patent enforcement cases in
Florida following the lifting of the stays in those cases in July
2019.
Restructuring Charges
We incurred approximately $0.6 million in
restructuring charges during the three months ended September 30,
2018 as a result of one-time termination benefits and costs related
to closure of our Lake Mary engineering design facility in August
2018 and cutbacks in our Milo product operations. These cost
reduction measures have resulted in significant cost savings in
2019 as discussed above.
20
Change in Fair Value of Contingent Payment Obligation
We have
elected to measure our secured contingent payment obligation at
fair value which is based on significant unobservable inputs. We
estimated the fair value of our secured contingent payment
obligation using an income approach based on the estimated present
value of projected future cash outflows using a risk-adjusted
discount rate. Increases or decreases in the significant
unobservable inputs could result in significant increases or
decreases in fair value.
For the
three months ended September 30, 2019, we recorded an increase in
the fair value of our secured contingent payment obligation of
approximately $0.07 million and a decrease of $0.76 million for the
nine months ended September 30, 2019, compared to increases in fair
value of approximately $0.03 million and $1.01 million for the same
periods in 2018. The changes in fair value are a result of changes
in estimated amounts and timing of projected future cash flows due
to increases in funded amounts, passage of time, and changes in the
probabilities based on the status of the funded
actions.
Off-Balance Sheet Transactions, Arrangements and Other
Relationships
As of
September 30, 2019, we had outstanding warrants to purchase
approximately 12.2 million shares of our common stock. The
estimated grant date fair value of these warrants of approximately
$1.3 million is included in shareholders’ deficit in our
condensed consolidated balance sheets. The outstanding warrants
have a weighted average exercise price of $0.44 per share and a
weighted average remaining life of approximately 4.1
years.
Contractual Obligations
Changes
to our contractual obligations from those included in our 2018
Annual Report are discussed in Note 9 to our unaudited condensed
consolidated financial statements included in this quarterly
report, which discussion is incorporated herein by
reference.
Critical Accounting Policies
Changes
to our critical accounting policies from those stated in our 2018
Annual Report are discussed in the section entitled “Adoption
of New Accounting Standards” in Note 4 to our unaudited
condensed consolidated financial statements included in this
quarterly report, which discussion is incorporated herein by
reference.
ITEM 3. Quan
t
itative and Qualitative
Disclosures About Market Risk.
Not
applicable.
ITEM 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of
September 30, 2019, our management, with the participation of our
Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of our “disclosure controls and
procedures,” as defined in Rule 13a-15(e) and 15d-15(e) under
the Securities and Exchange Act of 1934, as amended (the
“Exchange Act”). Based upon this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that these
disclosure controls and procedures were effective as of September
30, 2019.
Changes in Internal Control Over Financial Reporting
There
have been no changes in our internal control over financial
reporting identified in connection with the evaluation required by
Rule 13a-15(d) under the Exchange Act that occurred during the last
fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
21
PART II - OTH
E
R INFORMATION
ITEM 1. Legal Proceedings.
Reference
is made to the section entitled “Legal Proceedings” in
Note 11 to our unaudited condensed consolidated financial
statements included in this quarterly report for a discussion of
current legal proceedings, which discussion is incorporated herein
by reference.
ITEM 1A. Risk Factors.
There
have been no material changes from the risk factors disclosed in
Item 1A of Part I of our Annual Report. In addition to the
information in this quarterly report, the risk factors disclosed in
our Annual Report should be carefully considered in evaluating our
business because such factors may have a significant impact on our
business, operating results, liquidity and financial
condition.
ITEM 2. Unregistered Sales of Equity Securities and Use of
Proceeds.
On June
7, 2019, we entered into a consulting agreement with Mark Fisher to
act as a special advisor to our chief executive officer with regard
to future business strategies. As consideration for services to be
provided under the six-month term of the consulting agreement, we
issued
625,000 shares of common stock
in exchange for a nonrefundable retainer valued at $60,000
.
The shares were registered on a Form S-1 registration statement
that was declared effective on August 28, 2019 (File No.
333-233390).
On July
15, 2019, we entered into a purchase agreement with an accredited
investor which provided for the sale of convertible notes with an
aggregate face value of $0.05 million. The outstanding principal
and interest accrued on the notes are convertible at any time and
from time to time by the holders into shares of our common stock at
a fixed conversion price of $0.10 per share. Any unconverted,
outstanding principal amount is payable in cash on the five-year
anniversary of the issuance date of the notes. The shares
underlying the convertible notes were registered on a Form S-1
registration statement that was declared effective on August 28,
2019 (File No. 333-233390).
On July
18, 2019, we entered into purchase agreements with accredited
investors which provide for the sale of convertible notes with an
aggregate face value of $0.7 million. The outstanding principal and
interest accrued on the notes are convertible at any time and from
time to time by the holders into shares of our common stock at a
fixed conversion price of $0.08 per share. Any unconverted,
outstanding principal amount is payable in cash on the five-year
anniversary of the issuance date of the notes. The shares
underlying the convertible notes were registered on a Form S-1
registration statement that was declared effective on August 28,
2019 (File No. 333-233390).
On July
22, 2019, we entered into a consulting agreement with Park
Consultants LLC to act as a special advisor to our chief executive
officer with regard to future business strategies. As consideration
for services to be provided under the eighteen-month term of the
consulting agreement, we issued a warrant to purchase up to
1,800,000 shares of our common stock with an exercise price of
$0.10 per share in exchange for a nonrefundable retainer for
services. The warrants are exercisable immediately after issuance
and expire five years following the issuance date. The shares
underlying the warrants were registered on a Form S-1 registration
statement that was declared effective on August 28, 2019 (File No.
333-233390).
On
September 13, 2019, we entered into a purchase agreement with an
accredited investor which provides for the sale of a convertible
note with an aggregate face value of $0.05 million. The outstanding
principal and interest accrued on the note is convertible at any
time and from time to time by the holder into shares of our common
stock at a fixed conversion price of $0.10 per share. Any
unconverted, outstanding principal amount is payable in cash on the
five-year anniversary of the issuance date of the notes. We are not
obligated to register the shares underlying the note.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Mine Safety Disclosures.
Not
applicable.
ITEM 5. Other Information.
None.
22
ITEM 6.
E
xhibits.
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3.1
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3.2
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3.3
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3.4
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3.5
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3.6
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3.7
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10.1
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10.2
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10.3
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10.4
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10.5
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10.6
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10.7
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23
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31.1
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31.2
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32.1
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101.INS
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XBRL
Instance Document*
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101.SCH
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XBRL
Taxonomy Extension Schema*
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101.CAL
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XBRL
Taxonomy Extension Calculation Linkbase*
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101.DEF
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XBRL
Taxonomy Extension Definition Linkbase*
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101.LAB
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XBRL
Taxonomy Extension Label Linkbase*
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101.PRE
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XBRL
Taxonomy Extension Presentation Linkbase*
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*Filed
herewith
24
SIGNATURES
Pursuant
to the requirements of the Securities E
x
change Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
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ParkerVision,
Inc.
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Registrant
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November
14, 2019
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By:
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/s/Jeffrey
L. Parker
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Jeffrey
L. Parker
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Chairman
and Chief Executive Officer
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(Principal
Executive Officer)
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November
14, 2019
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By:
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/s/Cynthia
L. Poehlman
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Cynthia
L. Poehlman
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Chief
Financial Officer
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(Principal
Financial Officer and Principal
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Accounting
Officer)
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25
TABLE OF CONTENTS
Part I - Financial InformationItem 1. Financial Statements (unaudited)Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II - Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits