# Parkervision Inc: Form 10-Q for the period ended Mar 31, 2023

- Company: [Parkervision Inc](/companies/prkr.md) (CIK 914139)
- Form: 10-Q
- Filed: 2023-05-15
- Accepted by EDGAR: May 15, 2023, 16:06 ET
- Period: 2023-03-31
- Accession: 0001437749-23-014563
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/914139/000143774923014563/prkr20230331_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/914139/000143774923014563/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-01-01 to 2023-03-31 | $25.0m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2023-01-01 to 2023-03-31 | $43.0k | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2023-01-01 to 2023-03-31 | $25.0m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2023-01-01 to 2023-03-31 | $12.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Interest expense | 3 months, 2023-01-01 to 2023-03-31 | $106.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-01-01 to 2023-03-31 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-01-01 to 2023-03-31 | $13.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-01-01 to 2023-03-31 | $0.11 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-01-01 to 2023-03-31 | $0.16 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-01-01 to 2023-03-31 | 121,696,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-01-01 to 2023-03-31 | $13.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-01-01 to 2023-03-31 | $0 | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-03-31 | $135.0k | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-03-31 | $14.3m | us-gaap:AssetsCurrent |
| Total assets | at 2023-03-31 | $15.6m | us-gaap:Assets |
| Current liabilities | at 2023-03-31 | $2.9m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-03-31 | $52.4m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-03-31 | −$36.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 14,266 characters.

#### 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, 2022 (the “2022 Annual Report”) and in this Item 2 of Part I of this quarterly report. Examples of such risks and uncertainties include general economic and business conditions, competition, unexpected changes in technologies and technological advances, the timely development and commercial acceptance of new products and technologies, reliance on key suppliers, reliance on our intellectual property, the outcome of our intellectual property litigation and the ability to obtain adequate financing in the future. We have no obligation to publicly release the results of any revisions which may be made to any forward-looking statements to reflect anticipated events or circumstances occurring after the date of such statements.

#### Corporate Website

We announce investor information, including news and commentary about our business, financial performance and related matters, SEC filings, notices of investor events, and our press and earnings releases, in the investor relations section of our website (http://ir.parkervision.com). Additionally, if applicable, we webcast our earnings calls and certain events we participate in or host with members of the investment community in the investor relations section of our website. Investors and others can receive notifications of new information posted in the investor relations section in real time by signing up for email alerts and/or RSS feeds. Further corporate governance information, including our governance guidelines, board of directors (“Board”) committee charters, and code of conduct, is also available in the investor relations section of our website under the heading “Corporate Governance.” The content of our website is not incorporated by reference into this Quarterly Report or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.

#### Overview

We have invented and developed proprietary radio frequency (“RF”) technologies and integrated circuits based on those technologies, and we license those technologies to third parties for use in wireless communication products. We have expended significant financial and other resources to research and develop our RF technologies and to obtain patent protection for those technologies in the United States of America (“U.S.”) and certain foreign jurisdictions. We believe certain patents protecting our proprietary technologies have been broadly infringed by others and therefore the primary focus of our business plan is the enforcement of our intellectual property rights through patent licensing and infringement litigation efforts. We currently have patent enforcement actions ongoing in various U.S. district courts against mobile handset, smart television, and other WiFi product providers, as well as semiconductor suppliers, for the infringement of several of our RF patents. We have made significant investments in developing and protecting our technologies, the returns on which are dependent upon the generation of future revenues for realization.

#### Recent Events

#### Legal Proceedings

In February 2023, we entered into a confidential patent license and settlement agreement and in March 2023, we received a payment of $25 million with respect thereto. These proceeds were fully utilized for repayment of contingent legal fees and expenses and outstanding principal on our contingent payment obligation with Brickell repaid in May 2023 (see “Brickell Agreement” below).

In February 2023, we dismissed our two patent enforcement actions against Intel Corporation. Refer to Note 12 to our consolidated financial statements included elsewhere in this prospectus for a complete discussion of our patent enforcement proceedings.

#### Brickell Agreement

We repaid Brickell $13.9 million in May 2023 from our patent licensing and settlement proceeds. On May 4, 2023, we entered into a confidential letter agreement with Brickell whereby Brickell provided $5.0 million in new funding to us on substantially similar repayment terms as those set forth in our existing contingent payment agreement, but at a lower interest rate. The new funding will be used for operations.

#### Other Debt and Equity Financings

In January 2023, we received proceeds of approximately $0.7 million from the sale of five-year convertible notes to accredited investors. The notes are convertible, at the holders' option, into shares of our common stock at a fixed conversion price of $0.16 per shares and bear interest at a stated rate of 9% per annum. Interest is payable quarterly, and we may elect, subject to certain equity conditions, to pay interest in cash, shares of our common stock, or a combination thereof. In addition, in January 2023, we received aggregate proceeds of approximately $0.14 million from the sale of common stock to accredited investors, including 62,500 shares to Sanford Litvack, a member of our Board of Directors, at a price of $0.16 per share. The shares were registered for resale on a registration statement that was declared effective on May 11, 2023 (File No. 333-271351).

#### Liquidity and Capital Resources

We generated cash and restricted cash from operations of approximately $13.2 million for the three months ended March 31, 2023 and used cash for operations of $0.9 million for the three months ended March 31, 2022. The increase in cash generated from operations from 2022 to 2023 is primarily due to proceeds received from the patent license and settlement agreement entered into in February 2023, net of contingent legal fees and expenses paid. At March 31, 2023, we had cash and cash equivalents of approximately $0.1 million and restricted cash of approximately $13.9 million. The restricted cash was used to make a $13.9 million repayment of principal on our secured contingent payment obligation in May 2023.

For the three months ended March 31, 2023, we received aggregate net proceeds from the sale of debt and equity securities, including the exercise of outstanding options and warrants, of approximately $0.8 million compared to approximately $0.1 million in proceeds received for the three months ended March 31, 2022. We repaid approximately $0.04 million and $0.02 in debt obligations during the three months ended March 31, 2023 and 2022, respectively. In May 2023, we repaid $13.9 million on our secured contingent payment obligation and received $5.0 million in new funding under that agreement (see Note 17).

We believe our current capital resources are sufficient to meet our liquidity needs for at least the next twelve months and we will not be required to seek additional capital.

We expect to continue to invest in the support of our patent licensing and enforcement program. A significant amount of future proceeds that we may receive from our patent licensing and enforcement program will be first utilized to repay borrowings and legal fees and expenses under our contingent funding arrangements. The long-term continuation of our business plan is dependent upon the generation of sufficient cash flows from our technologies and/or products to offset expenses and debt obligations. In the event that we do not generate sufficient cash flows, we will be required to obtain additional funding through public or private debt or equity financing or contingent fee arrangements and/or reduce operating costs. Failure to generate sufficient cash flows, raise additional capital through debt or equity financings or contingent fee arrangements, and/or reduce operating costs will have a material adverse effect on our ability to meet our long-term liquidity needs and achieve our intended long-term business objectives.

#### Financial Condition

Our working capital increased approximately $13.3 million from December 31, 2022 to March 31, 2023. This increase in working capital is primarily the result of our restricted cash balance of $13.9 million, which is partially offset by an increase in current liabilities from the reclassification of an additional $0.8 million of convertible notes due in February and March 2024 from long-term to current liabilities.

Our long-term liabilities decreased $0.6 million from December 31, 2022 to March 31, 2023, primarily due to a $0.3 million decrease in the fair value of our contingent payment obligations, the reclassification of an additional $0.8 million of convertible notes due in February and March 2024 from long-term to current liabilities, and the conversion of $0.2 million in convertible notes by the holder, offset by the issuance of $0.7 million of new five-year convertible notes.

#### Results of Operations for the three months ended March 31, 2023 and 2022

### Revenue and Cost of Sales

We reported no licensing revenue for the three months ended March 31, 2022. Licensing revenue was $25.0 million for the three months ended March 31, 2023, resulting from a patent license and settlement agreement entered into in February 2023. The parties' performance obligations were met in February 2023 and we recognized revenue at that time. Cost of sales for the three months ended March 31, 2023 and 2022 consists of amortization expense related to the patents covered under license agreements. Although we anticipate additional revenue to result in 2023 and beyond from our patent enforcement actions, the amount and timing is highly unpredictable and there can be no assurance that we will achieve our anticipated results.

### Selling, General, and Administrative Expenses

Selling, general and administrative expenses consist primarily of litigation fees and expenses, personnel and related costs, including share-based compensation, for executive, Board, finance and accounting and technical support personnel for our patent enforcement program, and costs incurred for insurance and outside professional fees for accounting, legal and business consulting services.

Our selling, general and administrative expenses increased by approximately $10.2 million, or 525.2%, during the three months ended March 31, 2023 when compared to the same period in 2022. This is primarily the result of an $10.7 million increase in litigation fees and expenses and is partially offset by a $0.6 million decrease in share-based compensation.

The increase in litigation fees and expenses is the result of contingent legal fees and expenses recognized in 2023 in conjunction with the confidential patent license and settlement agreement reached in February 2023.

The decrease in our share-based compensation for the three-month period ended March 31, 2023 is the result of share-based compensation expense attributed to restricted stock units and nonqualified stock options awarded to executives, key employees and nonemployee directors in 2020 and 2021 being fully recognized as of December 31, 2022. As of March 31, 2023, we had $0.4 million of total unrecognized compensation cost related to all non-vested share-based compensation awards that is expected to be recognized over a period of approximately 0.9 years.

### Change in Fair Value of Contingent Payment Obligations

We have elected to measure our secured and unsecured contingent payment obligations at fair value which is based on significant unobservable inputs. We estimated the fair value of our secured contingent payment obligations using a probability-weighted income approach based on the estimated present value of projected future cash outflows using a risk-adjusted discount rate. Increases or decreases in the significant unobservable inputs could result in significant increases or decreases in fair value. Generally, changes in fair value are a result of changes in estimated amounts and timing of projected future cash flows due to increases in funded amounts, passage of time, and changes in the probabilities based on the status of the funded actions.

For the three months ended March 31, 2023 and 2022, we recorded an aggregate decrease in the fair value of our secured and unsecured contingent payment obligations of approximately $0.3 million and $2.3 million, respectively. The change in fair value for the three months ended March 31, 2023 was primarily the result of changes in the estimated amounts and timing of projected future cash flows due to changes in probabilities and time frames based on the status of various patent infringement actions.

#### Off-Balance Sheet Transactions, Arrangements and Other Relationships

As of March 31, 2023, we had outstanding warrants to purchase approximately 10.3 million shares of our common stock. The estimated grant date fair value of these warrants of approximately $3.2 million is included in shareholders’ deficit in our condensed consolidated balance sheets. The outstanding warrants have a weighted average exercise price of $0.75 per share and a weighted average remaining life of approximately 1.9 years.

#### Critical Accounting Policies

There have been no changes in accounting policies from those stated in our 2022 Annual Report. We do not expect any newly effective accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective.

## Controls and procedures

As filed, 945 characters.

#### Evaluation of Disclosure Controls and Procedures

As of March 31, 2023, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our “disclosure controls and procedures,” as defined in Rule 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of March 31, 2023.

#### 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.

## Risk factors

As filed, 395 characters.

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.

Filed May 15, 2023.
Source: SEC EDGAR, the filing index for accession 0001437749-23-014563. Last ingested by Listed: Oct 30, 2026, 17:22 ET. No prices; not investment advice.