PARKERVISION INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

1. SIGNIFICANT ACCOUNTING POLICIES

ParkerVision, Inc. and its wholly-owned German subsidiary, ParkerVision GmbH (collectively “ParkerVision”, “we” or the “Company”) is in the business of innovating fundamental wireless hardware technologies and products. We have determined that our business currently operates under a single operating and reportable segment.

We have designed and developed proprietary radio frequency (“RF”) technologies and integrated circuits based on those technologies, and we license our technologies to others for use in wireless communication products. We have expended significant financial and other resources to research and develop our RF technologies and to obtain patent protection for those technologies in the United States of America (“U.S.”) and certain foreign jurisdictions. We believe certain patents protecting our proprietary technologies have been broadly infringed by others, and therefore the primary focus of our business plan is the enforcement of our intellectual property rights through patent 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 a number of our RF patents. We have made significant investments in developing and protecting our technologies, the returns on which are dependent upon the generation of future revenues for realization.

Basis of Presentation

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Certain reclassifications have been made to prior period amounts to conform to the current period presentation. The consolidated financial statements include the accounts of ParkerVision, Inc. and our wholly-owned German subsidiary, ParkerVision GmbH, after elimination of all intercompany transactions and accounts. As of* December 31, 2023,we are in the process of liquidating ParkerVision GmbH which will haveno* impact on the consolidated financial statements.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The more significant estimates made by us include projected future cash flows and risk-adjusted discount rates for estimating the fair value of our contingent payment obligations, the volatility and estimated lives of share-based awards used in the estimate of the fair market value of share-based compensation, the assessment of recoverability of long-lived assets, the amortization periods for intangible and long-lived assets, and the valuation allowance for deferred taxes. Actual results could differ from the estimates made. We periodically evaluate estimates used in the preparation of the financial statements for continued reasonableness. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation.

Cash and Cash Equivalents

We consider cash and cash equivalents to include cash on hand, interest-bearing deposits, overnight repurchase agreements and investments with original maturities ofthree months or less when purchased.

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Intangible Assets

We capitalize outside legal costs and agency filing fees incurred in connection with securing the rights to our intellectual property. Patents, copyrights, and other intangible assets are amortized using the straight-line method over their estimated period of benefit. We estimate the economic lives of our patents and copyrights to befifteen totwenty years. Management evaluates the recoverability of intangible assets periodically and considers events or circumstances that* maywarrant revised estimates of useful lives or that may*indicate impairment exists. As part of our ongoing patent maintenance program, we will, from time to time, abandon a particular patent if we determine fees to maintain the patent exceed its expected recoverability. The cost and accumulated amortization of abandoned intangible assets are removed from their respective accounts, and any resulting net loss is recognized in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income (loss).

Contingent Payment Obligations

We have accounted for our secured and unsecured contingent payment obligations as long-term debt in accordance with Accounting Standards Codification (“ASC”)470-10-25, “Sales of Future Revenues or Various other Measures of Income.” Our payment obligations are contingent upon the receipt of proceeds from patent enforcement and/or patent monetization actions. We have elected to measure our contingent payment obligations at their estimated fair values in accordance with ASC825, “Financial Instruments” based on the variable and contingent nature of the repayment provisions. We have determined that the fair value of our secured and unsecured contingent payment obligations falls within Level3 in the fair value hierarchy, which involves significant estimates, and assumptions including projected future patent-related proceeds and the risk-adjusted rate for discounting future cash flows (see Note11). Actual results could differ from the estimates made. Changes in fair value, including the component related to imputed interest, are included in the accompanying consolidated statements of comprehensive income (loss) under the heading “Change in fair value of contingent payment obligations.”

Leases

We account for finance and operating leases in accordance with ASC842, “Leases” which requires the recognition of lease right-of-use assets and lease liabilities on our consolidated balance sheets for finance and operating leases with initial lease terms of more than12 months.No new finance or operating leases commenced during the years ended* December 31, 2023* or2022. The impacts of leasing arrangements during the years ended* December 31, 2023and2022* werenot considered material.

Revenue Recognition

We account for revenue under ASC606, “Revenue from Contracts with Customers” which implements a common revenue standard that clarifies the principles for recognizing revenue. This revenue recognition model provides afive-step analysis in determining when and how revenue is recognized. These steps include (1) identifying the contract with the customer, (2) identifying the performance obligations, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing revenue as the entity satisfies the performance obligation(s).

Our revenue is derived from patent licensing and settlement agreements. We have an active monitoring and enforcement program with respect to our intellectual property rights that includes seeking appropriate compensation fromthird parties that utilize or have utilized our intellectual property without a license. As a result, we* mayreceive payments as part of a settlement or in the form of court-awarded damages for a patent infringement dispute. The timing and amount of revenue recognized from each licensee depend upon a variety of factors, including the specific terms of each agreement and the nature of the deliverables and obligations. Such agreements are often complex and may*include multiple performance obligations. These agreements can include performance obligations related to the settlement of past patent infringement liabilities, royalties on future covered products sold by licensees, access to a portfolio of technology as it exists at a point in time, and/or promises to provide technology updates to the portfolio during the term of the license.

Refer to Note3 for additional disclosures related to our revenue.

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Cost of Sales

Cost of sales includes amortization of intangible assets directly linked with revenue generating licensing activities. Amortization expense for intangible assets that arenot directly related to revenue generating licensing activities are included in selling, general, and administrative expenses in our consolidated statements of comprehensive income (loss). As a result of the confidential patent license and settlement agreement reached in* February 2023,*all of our patents are now directly linked with revenue generating licensing activities and, therefore, amortization expense for all intangible assets is now recorded to cost of sales.

Accounting for Share-Based Compensation

We have various share-based compensation programs which provide for equity awards including stock options, restricted stock units (“RSUs”) and restricted stock awards (“RSAs”). We calculate the fair value of share-based equity awards on the date of grant and recognize the calculated fair value as compensation expense over the requisite service periods of the related awards. We estimate the fair value of stock option awards using the Black-Scholes option valuation model. This valuation model requires the use of highly subjective assumptions and estimates including how long employees will retain their stock options before exercising them and the volatility of our common stock price over the expected life of the equity award. Such estimates, and the basis for our conclusions regarding such estimates, are outlined in detail in Note15. Estimates of fair value arenot intended to predict actual future events or the value ultimately realized by persons who receive equity awards. We account for forfeitures of share-based awards as they occur.

Income Taxes

The provision for income taxes is based on income (loss) before taxes as reported in the accompanying consolidated statements of comprehensive income (loss). Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established to reduce deferred tax assets when, based on available objective evidence, it is more likely thannot that the benefit of such assets willnot be realized. Our deferred tax assets exclude unrecognized tax benefits which donot meet a more-likely-than-not threshold for financial statement recognition for tax positions taken or expected to be taken in a tax return.

2. LIQUIDITY AND GOING CONCERN

The accompanying consolidated financial statements as of and for the year ended* December 31, 2023* were prepared assuming we will continue as a going concern, which contemplates that we will continue in operation and will be able to realize our assets and settle our liabilities and commitments in the normal course of business for a period of at leastone year from the issuance date of these consolidated financial statements. These consolidated financial statements donot 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.

With the exception of the year ended* December 31, 2023*,we have incurred significant losses from operations and negative cash flows in every year since inception, largely as a result of our significant investments in developing advanced technologies and protecting our intellectual property. We have utilized the proceeds from sales of debt and equity securities and contingent funding arrangements withthird parties to fund our operations, including the cost of litigation to enforce our intellectual property rights. At* December 31, 2023*, we had cash and cash equivalents of approximately $2.6 million, working capital of $0.4 million, and an accumulated deficit of approximately $433.7 million.

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For the year ended* December 31, 2023*, we recognized net income of approximately $9.5 million and cash flows from operations of approximately $10.8 million. The net income and related cash flows is a result of revenue from a patent license and settlement agreement, net of contingent legal fees. For the year ended* December 31, 2023*, we made payments of $13.9 million on our secured contingent payment obligation, $0.1 million on a related party note, and $0.2 million upon the maturity of convertible notes. We received aggregate proceeds from new borrowings under our secured contingent payment obligation of $5.0 million and aggregate net proceeds from convertible debt and equity financings of approximately $0.9 million. These proceeds will be used to support our operations.

Despite the net income and cash flows generated during the year ended* December 31, 2023*, a significant amount of future proceeds that we* mayreceive from our patent enforcement and licensing programs willfirst* be utilized to repay borrowings, legal fees, and litigation expenses under our contingent funding arrangements. In addition, we have approximately $1.5 million in convertible debt that, ifnot converted, will mature between* June 2024and January 2025.These circumstances raise substantial doubt about our ability to continue to operate as a going concern for a period ofone* year following the issue date of these consolidated financial statements.

Our business plan is currently focused solely on our patent enforcement and technology licensing objectives. The timing and amount of proceeds from our patent enforcement actions are difficult to predict and there can beno assurance we will receive any proceeds from these enforcement actions. Refer to Note13 for a complete discussion of our patent enforcement proceedings.

Significant portions of our litigation costs to date have been funded by contingent payment arrangements with legal counsel. Fee discounts offered by legal counsel in exchange for contingent payments upon successful outcome in our litigation arenot recognized in expense until such time that the related proceeds on which the contingent fees are payable are considered probable. Contingent fees vary based on each firm’s specific fee agreement. We currently have contingent fee arrangements in place for all of our active cases. In addition to our contingent fee agreements with legal counsel, we have secured and unsecured contingent payment obligations that have priority payments due from patent-related proceeds.

Our current capital resources arenot sufficient to meet our liquidity needs for the nexttwelve months and we* maybe required to seek additional capital. Our ability to meet our liquidity needs for the nexttwelve* months is dependent upon (i) our ability to successfully negotiate licensing agreements and/or settlements relating to the use of our technologies by others in excess of our contingent payment obligations, (ii) our ability to control operating costs, (iii) our ability to successfully negotiate extensions to the maturity date for certain convertible notes, and/or (iv) our ability to obtain additional debt or equity financing. We expect that proceeds received by us from patent enforcement actions and technology licenses over the nexttwelve months* may**not* alone be sufficient to cover our working capital requirements.

We expect to continue to invest in the support of our patent licensing and enforcement program. 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 donot 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 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.

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3. REVENUE

During the years ended* December 31, 2023* and2022, we recognized $25.00 million and $0.93 million of revenue, respectively, derived from contracts with licensees. The contracts provide access to specified patented technologies as they exist at a point in time, and we haveno obligation to provide any future updates. The consideration received by us was negotiated as part of a settlement of patent litigation whereno prior license agreement existed. The performance obligations were satisfied upon our dismissal of patent enforcement actions with each licensee which was contingent upon our receipt of the negotiated and agreed-upon lump-sum payments from the licensees. The contracts includedno variable consideration. All consideration received was recorded to licensing revenue as there wereno other material components of the contracts. No contract assets or liabilities exist as of* December 31, 2023*.

4. EARNINGS PER SHARE

Basic earnings 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 for the year ended* December 31, 2022,as all common share equivalents are excluded from the calculation, as their effect is anti-dilutive. The dilutive effect of outstanding options and warrants is calculated using the treasury stock method. The dilutive effect of shares underlying convertible notes was calculated using the if-converted method. The following table shows the computation of basic and diluted earnings (loss) per share for the years ended December 31, 2023and2022* (net income (loss) and shares in thousands):

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Diluted earnings per common share for the years ended* December 31, 2023and2022* excludes options, warrants, and shares underlying convertible notes that are anti-dilutive. The anti-dilutive common share equivalents at* December 31, 2023and2022* were as follows (in thousands):

5. PREPAID EXPENSES

Prepaid expenses consisted of the following at* December 31, 2023and2022* (in thousands):

Prepaid services at* December 31, 2022include approximately $0.2 million of consulting services paid in shares of stock or warrants to purchase shares of stock in the future. There wereno consulting services paid in shares of stock or warrants included in prepaid services at December 31, 2023.*

6. INTANGIBLE ASSETS

Intangible assets consisted of the following at* December 31, 2023and2022* (in thousands):

Amortization expense for the years ended* December 31, 2023and2022* was approximately $0.25 million and $0.30 million, respectively. For the years ended* December 31, 2023and2022*, we recorded losses on the disposal of intangible assets of approximately $0.06 million and $0.12 million, respectively.

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Future estimated amortization expense for intangible assets that have remaining unamortized amounts as of* December 31, 2023* is as follows (in thousands):

7. ACCRUED LIABILITIES

Other accrued expenses consisted of the following at* December 31, 2023and2022* (in thousands):

Advances include amounts received from litigation counsel as advanced reimbursement of out-of-pocket expenses expected to be incurred by us.

8. NOTES PAYABLE

Note Payable to a Related Party

We have an unsecured promissory note payable of $0.5 million to Sterne, Kessler, Goldstein, & Fox, PLLC (“SKGF”), a related party (see Note16), for outstanding unpaid fees for legal services. The note, as amended, accrues interest at 4% per annum and provides for monthly payments of principal and interest of $12,500 with a final balloon payment of approximately $0.02 million due at the maturity date of* April 30, 2027.We are currently in compliance with all the terms of the note, as amended. For the years ended December 31, 2023and2022*, we recognized interest expense of approximately $0.02 million and $0.03 million, respectively related to this note.

At* December 31, 2023*, the aggregate maturities of our notes payable are as follows (in thousands):

The estimated fair value of our notes payable at* December 31, 2023* is approximately $0.39 million based on a risk-adjusted discount rate.

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9. CONVERTIBLE NOTES

Our convertible notes represent promissory notes that are convertible, at the holders’ option, into shares of our common stock at fixed conversion prices. Interest payments are made on a quarterly basis and are payable, at our option and subject to certain equity conditions, in either cash, shares of our common stock, or a combination thereof. The number of shares issued for interest is determined by dividing the interest payment amount by the closing price of our common stock on the trading day immediately prior to the scheduled interest payment date. To date, all interest payments on the convertible notes have been made in shares of our common stock. We have recognized the convertible notes as debt in our consolidated financial statements.

We have the option to prepay the majority of the notes any time following theone-year anniversary of the issuance of the notes, subject to a premium on the outstanding principal prepayment amount of 25% prior to thetwo-year anniversary of the note issuance date,20% prior to thethree-year anniversary of the note issuance date,15% prior to thefour-year anniversary of the note issuance date, or 10% thereafter. The notes provide for events of default that include failure to pay principal or interest when due, breach of any of the representations, warranties, covenants, or agreements made by us, events of liquidation or bankruptcy, and a change in control. In the event of default, the interest rate increases to 12% per annum and the outstanding principal balance of the notes plus all accrued interest due* may*be declared immediately payable by the holders of a majority of the then outstanding principal balance of the notes.

In* September* 2023, we issued a 2.5-year, $0.1 million convertible note with a fixed conversion price of $0.25 per share to a Company director (see Note16). In* January 2023,we sold five-year convertible promissory notes for aggregate proceeds of $0.7 million and a conversion price of $0.16 per share (the "January 2023Notes"). The shares underlying the January 2023Notes, as well as shares reserved for future in-kind interest payments on the notes, were registered on a registration statement that was declared effective on May 11, 2023 (FileNo.* 333-271351). In2022 we soldfive-year convertible promissory notes for aggregate proceeds of $1.7 million and a conversion price of $0.13 per share. The shares underlying the notes, as well as shares reserved for future in-kind interest payments on the notes, were registered on a registration statement that was declared effective on* August 22, 2022 (FileNo.* 333-266777).

For the year ended* December 31, 2023*, we repaid an aggregate of $0.2 million at maturity. For the years ended* December 31, 2023and2022*, convertible notes with a face value of $0.2 million and $0.03 million, respectively, were converted by the holders into 1.5 million and 0.3 million shares of our common stock, respectively. On* September 15, 2023,we amended convertible notes dated September 18, 2018,with an aggregate face value of $0.43 million. The conversion price of the notes was $0.57 per share and the original maturity date of the notes was September 18, 2023.The notes were amended to reduce the conversion price to $0.25 per share and extend the maturity date by 2.5 years, or until March 18, 2026.All other terms of the notes remain unchanged. Additionally, on September 15, 2023,we amended the convertible promissory notes dated February 28, 2019and March 13, 2019with an aggregate face value of $0.75 million to extend the maturity dates from February 28, 2024and March 13, 2024to February 28, 2026and March 13, 2026,respectively. All other terms of the notes, including the $0.25 fixed conversion price, remain unchanged. As a result of these modifications, the notes were considered to be modified under a troubled debt restructuring in accordance with ASC470*-60. No gain or loss was recognized as a result of the restructurings.

At the holders’ option, subject to ownership limitations, the convertible notes outstanding at* December 31, 2023* could be converted into an aggregate of approximately 36.4 million shares of our common stock based on the fixed conversion prices. With the exception of the shares underlying the* September 15, 2023*note to a related party, all of the shares underlying our convertible notes, including shares reserved for future in-kind interest payments on the notes, have been registered for resale.

For the years ended* December 31, 2023and2022*, we recognized interest expense of approximately $0.4 million and $0.3 million, respectively. We have elected to pay contractual interest in shares of our common stock. For the years ended* December 31, 2023and2022*, we issued approximately 3,336,000 and 1,203,000 shares of our common stock, respectively, as interest-in-kind payments on our convertible notes.

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Convertible notes payable at* December 31, 2023and2022*, consist of the following (in thousands):

1 These notes were amended on* September 15, 2023,reducing the conversion rate from $0.57 per share to $0.25 per share and extending the maturity date from September 18, 2023to March 18, 2026.The amendments are accounted for on a prospective basis in accordance with ASC470*-60.

2 These notes were amended on* September 15, 2023,extending the maturity date from February 28, 2024through March 13, 2024to February 28, 2026through March 13, 2026.The amendments are accounted for on a prospective basis in accordance with ASC470*-60.

3 The maturity date* maybe extended byone*-year increments for up to an additionalten years at the holder’s option at a reduced interest rate of 2%.

At* December 31, 2023*, we estimate our convertible notes have an aggregate fair value of approximately $3.7 million and would be categorized within Level2 of the fair value hierarchy.

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10. CONTINGENT PAYMENT OBLIGATIONS

Secured Contingent Payment Obligation

The following table provides a reconciliation of our secured contingent payment obligation measured at estimated fair market value for the years ended* December 31, 2023and2022*, respectively (in thousands):

Our secured contingent payment obligation represents the estimated fair value of our repayment obligation to Brickell Key Investments, LP (“Brickell”) under a* February 2016funding agreement, as amended from time to time. On August 14, 2023,the contingent funding agreement with Brickell was replaced with a secured, non-recourse note (the "Note") and a prepaid forward purchase agreement (the "PPFPA"). The Note has a face value of $45.5 million ("Face Value"), accrues simple interest at a fixed rate, and matures on August 14, 2028.Payments under the Note will be made solely from proceeds from our patent assets, net of contingent fees payable to attorneys ("Distributions"). We are obligated to payone hundred* percent (100%) of thefirst $5.8 million in Distributions to Brickell, and thereafter will pay a percentage of Distributions, which varies depending upon the origin of the Distributions, until the Face Value of the Note, and accrued interest thereon, has been repaid in full. If the amounts payable to Brickell from Distributions are insufficient to repay the face value and interest accrued on the Note by the maturity date, our remaining repayment obligations under the Note will be reduced tozero with future payment obligations, if any, being determined under the PPFPA. The Note is secured by our patent assets and related proceeds and contains standard and customary representations, warranties and covenants. The Note contains events of default including, butnot limited to, (a) failure to pay principal or interest on the Note when due; (b) breach of representations or covenants, (c) impairment in the perfection or priority of Brickell's security interests in the collateral, and (d) bankruptcy or dissolution of the Company. In the event of a default, the outstanding principal and accrued interest on the Note will become immediately due and payable. The PPFPA extends beyond the maturity date of the Note and provides that Brickell is entitled to a specified percentage of monetary recoveries resulting from our patent-related actions to the extentnot already paid to Brickell under the Note, or otherwise prior to the inception of the Note. The PPFPA also contains standard and customary representations, warranties and covenants. The Note and PPFPA are collectively referred to as our secured contingent payment obligation.

To date, we have received aggregate proceeds of $23 million in exchange for Brickell’s right to reimbursement and compensation from gross proceeds resulting from patent enforcement and other patent monetization actions and have repaid an aggregate of $17.3 million from patent license and settlement proceeds. The underlying carrying value of the Note, which includes the Face Value plus accrued interest, was approximately $51.0 million as of* December 31, 2023,which compares to the minimum return due to Brickell under the prior agreement of $56.9 million as of December 31, 2022.The range of potential proceeds payable to Brickell is discussed more fully in Note11.*

Brickell holds a senior security interest in the majority of our assets until such time as the Note, including accrued interest thereon, is paid in full. 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 (andnot subsequently discharged) with respect to us, (iii) our creditors commence actions against us (which arenot subsequently discharged) that affect our material assets, (iv) we, without Brickell’s consent, incur indebtedness other than immaterial ordinary course indebtedness, or (v) there is an uncured non-compliance of our obligations or misrepresentations under the agreement. As of* December 31, 2023*, we are in compliance with our obligations under this agreement.

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We have elected to measure our secured contingent payment obligation at its estimated fair value based on probability-weighted estimated cash outflows, discounted back to present value using a discount rate determined in accordance with accepted valuation methods (see Note11). The secured contingent payment obligation is remeasured to fair value at each reporting period with changes recorded in the consolidated statements of comprehensive income (loss) until the contingency is resolved.

Unsecured Contingent Payment Obligations

The following table provides a reconciliation of our unsecured contingent payment obligations, measured at estimated fair market value, for the years ended* December 31, 2023and2022*, respectively (in thousands):



Our unsecured contingent payment obligations represent amounts payable to others from future patent-related proceeds including (i) a termination fee due to a litigation funder (“Termination Fee”) and (ii) contingent payment rights (“CPRs”) issued to accredited investors primarily in connection with equity financings. We have elected to measure these unsecured contingent payment obligations at their estimated fair value based on probability-weighted estimated cash outflows, discounted back to present value using a discount rate determined in accordance with accepted valuation methods. The unsecured contingent payment obligations will be remeasured to fair value at each reporting period with changes recorded in the consolidated statements of comprehensive income (loss) until the contingency is resolved (see Note11).



The Termination Fee is a result of $1.0 million in advances received under a letter agreement with athird-party funder. Based on the terms of the letter agreement, if a final funding arrangement wasnot executed by* March 31, 2020,we would be obligated to pay, from future patent-related proceeds, an aggregate termination payment equal tofive* times the advances received, or approximately $5.0 million. We didnot consummate a funding agreement and accordingly the advances were recorded as an unsecured contingent payment obligation at* March 31, 2020,when the Termination Fee obligation was incurred. As of December 31, 2023*, the estimated fair value of unsecured contingent payment obligations related to the Termination Fee is $3.5 million.

The CPRs represent the estimated fair value of rights provided to accredited investors who purchased shares of our common stock in2020 and2021 and the fair value of a right issued to athird-party in connection with a service agreement during the year ended* December 31, 2020.No sales of common stock with contingent payment rights were completed during the years ended December 31, 2023and2022*. The terms of the CPRs provide that we will pay each investor an allocated portion of our net proceeds from patent-related actions, after taking into account fees and expenses payable to law firms representing us and amounts payable to Brickell. The investors’ allocated portion of net proceeds will be determined by multiplying the net proceeds recovered by us (up to $10 million) by the quotient of such investors’ subscription amount divided by $10 million, up to an amount equal to each investor’s subscription amount, or an aggregate of $5.8 million. As of* December 31, 2023*, the estimated fair value of our unsecured contingent payment obligations related to the CPRs is $4.1 million.

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11. FAIR VALUE MEASUREMENTS

ASC820, “Fair Value Measurements” establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. Thethree levels of the fair value hierarchy are as follows:

The following table summarizes financial assets and financial liabilities carried at fair value and measured on a recurring basis as of* December 31, 2023and2022*, segregated by classification within the fair value hierarchy (in thousands):

For the years ended* December 31, 2023and2022*, respectively, we hadno transfers of assets or liabilities between the levels of the hierarchy.

The fair values of our secured and unsecured contingent payment obligations were estimated using a probability-weighted income approach based on various cash flow scenarios as to the outcome of patent-related actions both in terms of timing and amount, discounted to present value using a risk-adjusted rate. We used a risk-adjusted discount rate for the secured and unsecured contingent payment obligations of 18.12% and 18.51%, respectively, at* December 31, 2023*, based on a risk-free rate of 4.12% and 4.51%, respectively, as adjusted by 8% for credit risk and 6% for litigation inherent risk.

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The following table provides quantitative information about the significant unobservable inputs used in the measurement of fair value for both the secured and unsecured contingent payment obligations at* December 31, 2023*, including the lowest and highest undiscounted payout scenarios as well as a weighted average payout scenario based on relative undiscounted fair value of each cash flow scenario.

We evaluate the estimates and assumptions used in determining the fair value of our contingent payment obligations each reporting period and make any adjustments prospectively based on those evaluations. Changes in any of these Level3 inputs could result in a significantly higher or lower fair value measurement.

12. INCOME TAXES AND TAX STATUS

Our net income (loss) before income tax for the years ended* December 31, 2023and2022* are from domestic operations as well as losses from our wholly-owned German subsidiary. We elected to treat our German subsidiary as a disregarded entity for purposes of income taxes and accordingly, the losses from our German subsidiary have been included in our operating results.

No current or deferred tax provision was recorded in2023 as a result of net operating loss ("NOL") carryforwardsnot previously recognized as a tax benefit that we expect to be able to utilize in the current year to offset income tax expense related to current period income. No current or deferred tax benefit was recorded in2022 as a result of current losses and fully deferred tax valuation allowances. We have recorded a valuation allowance to state our remaining deferred tax assets at their estimated net realizable value due to the uncertainty related to realization of these assets through future taxable income.

A reconciliation between the provision for income taxes and the expected tax benefit using the federal statutory rate of 21% for each of the years ended* December 31, 2023and2022*, respectively are as follows (in thousands):

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Our deferred tax assets and liabilities relate to the following sources and differences between financial accounting and the tax bases of our assets and liabilities at* December 31, 2023and2022* (in thousands):

At* December 31, 2023*, we had cumulative NOL carry-forwards for income tax purposes of $279.8 million, of which $239.1 million is subject to expiration in varying amounts from2024 to2037. At* December 31, 2023*, we also had research and development tax credit carryforwards of $4.6 million, which expire in varying amounts from2024 through2038.

Our ability to benefit from the NOL and tax credit carry-forwards could be limited under certain provisions of the Internal Revenue Code if there are ownership changes of more than50%, as defined by Section382 of the Internal Revenue Code of1986 (“Section382”). Under Section382, an ownership change* maylimit the amount of NOL, capital loss and R&D credit carry-forwards that can be used annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section382,* results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than50 percentage points over athree-year period. We conduct a study annually of our ownership changes. Based on the results of our studies, we have determined that we donot have any ownership changes on or prior to* December 31, 2023* which would result in limitations of our NOL, capital loss or R&D credit carry-forwards under Section382.

Uncertain Tax Positions

We file income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and Germany. We have identified our Federal and Florida tax returns as our only major jurisdictions, as defined. The periods subject to examination for those returns are the2004 through2023 tax years. The following table provides a reconciliation of our unrecognized tax benefits due to uncertain tax positions for the years ended* December 31, 2023and2022*, respectively (in thousands):

Future changes in the unrecognized tax benefit will haveno impact on the effective tax rate so long as we maintain a full valuation allowance.

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Our policy is that we recognize interest and penalties accrued on any unrecognized tax benefits as a component of our income tax expense. We donot have any accrued interest or penalties associated with any unrecognized tax benefits. For the years ended* December 31, 2023and2022*, we didnot incur any income tax-related interest income, expense or penalties.

13. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, we are subject to legal proceedings and claims which arise in the ordinary course of our business. These proceedings include patent enforcement actions initiated by us against others for the infringement of our technologies, as well as proceedings brought by others against us at the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office (“PTAB”) in an attempt to invalidate certain of our patent claims.

The majority of our litigation, including our PTAB proceedings, is being paid for through contingency fee arrangements with our litigation counsel as well asthird-party litigation financing. In general, litigation counsel is entitled to recoup on a priority basis, from litigation proceeds, any out-of-pocket expenses incurred. Following reimbursement of out-of-pocket expenses, litigation counsel is generally entitled to a percentage of remaining proceeds based on the terms of the specific arrangement between us, counsel and ourthird-party litigation funder.

ParkerVision v. Qualcomm (Middle District of Florida-Orlando Division) - Appealed to U.S. Court of Appeals for the Federal Circuit

In* March 2022,the district court ruled on a number of pre-trial motions in our patent infringement case against Qualcomm. The court granted Qualcomm motions to strike and exclude opinions regarding the alleged infringement and validity issues, essentially precluding infringement and validity opinions by both of our experts at trial. The court also issued an order granting Qualcomm’s motion for summary judgment ruling that Qualcomm didnot* infringe the remainingthree patents in the case. In* April 2022,we filed a notice of appeal to the United States Court of Appeals for the Federal Circuit. A hearing was held on our appellate action on November 6, 2023,*and we are currently awaiting a ruling from the Federal Circuit.

This patent infringement case was originally filed in the Middle District of Florida in* May 2014.The case was stayed in February 2016pending decisions in other cases, including the appeal of a PTAB proceeding with regard to U.S. patent6,091,940* (“the*‘940* Patent”) asserted in this case. In* March 2017,the PTAB ruled in our favor onthree of thesix petitions (the method claims), ruled in Qualcomm’s favor ontwo of thesix petitions (the apparatus claims) and issued a split decision on the claims covered in thesixth* petition. In* September 2018,the Federal Circuit upheld the PTAB’s decision with regard to the‘940* Patent and, in* January 2019,the court lifted the stay in this case. In July 2019,the court issued an order that granted our proposed selection of patent claims from four asserted patents, including the‘940* Patent, and denied Qualcomm’s request to limit the claims and patents. The court also agreed that we* mayelect to pursue accused products that were at issue at the time the case was stayed, as well as new products that were released by Qualcomm during the pendency of the stay. In September 2019,Qualcomm filed a motion for partial summary judgment in an attempt to exclude certain patents from the case, including the‘940* Patent. The court denied this motion in* January 2020.*

In* April 2020,the court issued its claim construction order in which the court adopted our proposed construction forseven of theten disputed terms and adopted slightly modified versions of our proposed construction for the remaining terms. Due to the impact of COVID-19, a number of the scheduled deadlines in this case were moved including the trial commencement date which was rescheduled from December 2020to May 2021.In October 2020,our damages expert submitted a report supporting our damages ask of $1.3 billion for Qualcomm’s unauthorized use of our technology. Such amount excludes additional amounts requested by us for interest and enhanced damages for willful infringement. Ultimately, the amount of damages, if any, will be determined by the court. Discovery was expected to close in December 2020;however, the court allowed us to designate a substitute expert due to medical issues withone* of our experts in the case. Accordingly, the close of discovery was delayed until* January 2021.As a result of these delays, the court rescheduled the trial commencement date from May 3, 2021to July 6, 2021.*

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In* March 2021,the court further delayed the trial date citing backlog due to the pandemic, among other factors. A new trial date wasnot* set and the court indicated the case was unlikely to be tried before* Novemberor December 2021.Fact and expert discovery was completed, expert reports were submitted, and summary judgment andDaubert* briefings were submitted by the parties. Joint pre-trial statements were submitted in* May 2021.In March 2021,the court granted Qualcomm’s motion to strike certain of our2020* infringement contentions. As a result of this ruling, in* July 2021,we filed a joint motion for entry of a judgment of non-infringement of our PatentNo.* 7,865,177 (“the*‘177* Patent”), subject to appeal.

In* January 2022,the court held a hearing to allow the parties to present their respective positions onthree* outstanding motions. In* March 2022,the district court rulings in favor of Qualcomm closed the district court case, subject to our appeal. As a result of the court’s summary judgment motion in favor of Qualcomm, Qualcomm has the right to petition the court for its fees and costs. The court has granted a Qualcomm motion to delay such a petition until30* days following the appellate court’s decision. We are represented in this case on a full contingency fee basis.

ParkerVision v. Apple and Qualcomm (Middle District of Florida-Jacksonville Division)

In* December 2015,we filed a patent infringement complaint in the Middle District of Florida against Apple Inc. (“Apple”), LG Electronics, Inc., LG Electronics U.S.A., Inc., and LG Electronics MobileComm U.S.A., Inc. (collectively “LG”), Samsung Electronics Co. Ltd., Samsung Electronics America, Inc., Samsung Telecommunications America LLC, and Samsung Semiconductor, Inc. (collectively “Samsung”), and Qualcomm alleging infringement offour of our patents. In February 2016,the district court proceedings were stayed pending resolution of a corresponding case filed at the International Trade Commission (“ITC”). In July 2016,we entered into a patent license and settlement agreement with Samsung and, as a result, Samsung was dismissed from the district court action. In March 2017,we filed a motion to terminate the ITC proceedings and a corresponding motion to lift the stay in the district court case. This motion was granted in May 2017.In July 2017,we filed a motion to dismiss LG from the district court case and re-filed our claims against LG in the District of New Jersey (see ParkerVision v. LG below). Also in July 2017,Qualcomm filed a motion to change venue to the Southern District of California, and Apple filed a motion to dismiss for improper venue. In March 2018,the district court ruled against the Qualcomm and Apple motions. The parties also filed a joint motion in March 2018to eliminate three of thefour patents in the case in order to expedite proceedings leaving our U.S. patent9,118,528* 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 fortwo of thesix terms and the “plain and ordinary meaning” on the remaining terms. In addition, the court denied a motion filed by Apple for summary judgment. Fact discovery has closed in this case and a jury trial was scheduled to begin in August 2020.In March 2020,as a result of the impact of COVID-19, the parties filed a motion requesting an extension of certain deadlines in the case. In April 2020,*the court stayed this proceeding pending the outcome of the infringement case against Qualcomm in the Orlando Division of the Middle District of Florida, which is currently pending an appeal.

ParkerVision v. LG (District of New Jersey)

In* July 2017,we filed a patent infringement complaint in the District of New Jersey against LG for the alleged infringement offour patents previously asserted against LG in the Middle District of Florida (seeParkerVision v. Apple and Qualcomm* above). We elected to dismiss the case in the Middle District of Florida and re-file in New Jersey as a result of a Supreme Court ruling regarding proper venue. In* March 2018,the court stayed this case pending a final decision inParkerVision v. Apple and Qualcomm* in the Middle District of Florida. As part of this stay, LG has agreed to be bound by the final claim construction decision in that case.

ParkerVision v. Intel (Western District of Texas)

We filedtwo patent infringement complaints in the Western District of Texas against Intel Corporation (“Intel”) in2020, alleging infringement of approximatelyten of our patents by Intel cellular, WiFi and Bluetooth products. Thefirst case was scheduled for trial commencing* February 6, 2023.Beginning in November 2022,the parties filed a number of pre-trial motions. The court held hearings on these pre-trial motions in January 2023.The court issued its written orders with regard to these motions immediately prior to the February 6, 2023trial start date. As a result of the court's pre-trial rulings, the potential damages in the case decreased significantly. On February 7, 2023,*the parties resolved their outstanding dispute and we dismissed all pending actions against Intel.

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ParkerVision v. TCL (Western District of Texas)

We filedtwo patent infringement actions in the Western District of Texas in2020 and2021 against TCL Industries Holdings Co., Ltd, a Chinese company, TCL Electronics Holdings Ltd., Shenzhen TCL New Technology Co., Ltd, TCL King Electrical Appliances (Huizhou) Co., Ltd., TCL Moka Int’l Ltd. and TCL Moka Manufacturing S.A. DE C.V. (collectively “TCL”) alleging infringement of approximately twelve of our patents. The court issued its claim construction recommendations in thefirst TCL case, adopting our claim constructions in for nearly all of the disputed terms. In* January 2023,*the TCL action was stayed pending final resolution of patent infringement actions filed against Realtek, the manufacturer of the integrated circuits used in TCL's alleged infringing products.

ParkerVision v. LGE (Western District of Texas)

We filed a patent infringement action in the Western District of Texas against LG Electronics, a South Korean company ("LGE") in2021, alleging infringement often of our patents. The court issued its claim construction recommendations in* June 2022,adopting our claim constructions for nearly all of the disputed terms. In January 2023,*the LGE action was stayed pending final resolution of patent infringement actions filed against Realtek and MediaTek as well as final resolution of IPR actions against patents in this case.

ParkerVision v. Realtek (Western District of Texas)

We filedtwo patent infringement actions in the Western District of Texas against Realtek Semiconductor Corp. ("Realtek"), thefirst in2022 and asecond in2023, alleging infringement of an aggregate ofseven of our patents. A claim construction hearing was held in* January 2024in thefirst* Realtek action and the court adopted the majority of our claim constructions. A jury trial for thefirst Realtek action is currently scheduled for* January 2025.*

ParkerVision v. MediaTek (Western District of Texas)

We filedthree patent infringement actions in the Western District of Texas against MediaTek Inc. and MediaTek USA Inc. (collectively, "MediaTek"), thefirst in2022 andtwo additional cases in2023, alleging infringement of an aggregate often of our patents. A claim construction hearing was held in* January 2024in thefirst* MediaTek action and the court adopted the majority of our claim constructions. A jury trial for thefirst MediaTek action is currently scheduled for* December 2024.Thesecond* MediaTek action has a tentative claim construction hearing date scheduled for* May 2024and jury trial in October 2025.*

ParkerVision v. Texas Instruments (Western District of Texas)

We filed a patent infringement action in the Western District of Texas against Texas Instruments ("TI") in2023, alleging infringement ofthree of our patents. In* December 2023,TI filed a motion to change venue to the Northern District of Texas. A ruling hasnot* yet been issued on this motion. A claim construction hearing is tentatively scheduled for* May 2024with a jury trial scheduled in May 2025.*

ParkerVision v. NXP Semiconductors (Western District of Texas)

We filed a patent infringement action in the Western District of Texas against NXP Semiconductors ("NXP") in2023, alleging infringement ofthree of our patents. A claim construction hearing is tentatively scheduled for* May 2024with a jury trial scheduled in August 2025.*

Additional Patent Infringement Cases–* Western District of Texas*

ParkerVision filed a number of patent cases in the Western District of Texas in2020 including cases against (i) Hisense Co., Ltd. and Hisense Visual Technology Co., Ltd (collectively “Hisense”), a Chinese company, (ii) Buffalo Inc., a Japanese company (“Buffalo”) and (iii) Zyxel Communications Corporation, a Chinese multinational electronics company headquartered in Taiwan, (“Zyxel”). Each case alleged infringement of the sameten patents by products that incorporate modules containing certain WiFi semiconductors manufactured by Realtek and/or MediaTek. We dismissed the actions against Buffalo and Zyxel in2021 following satisfaction of the parties' obligations under patent license and settlement agreements. In* November 2022,we dismissedtwo* cases against Hisense following satisfaction of the parties' obligations under a patent license and settlement agreement.

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Intel (USPTO) v. ParkerVision (PTAB)

Intel filed IPR petitions against U.S. patent7,539,474 (“the*‘474* Patent”), U.S. patent7,110,444 ("the*‘444* Patent"), and U.S. patent8,190,108 (“the*‘108* patent”) which were all patents asserted inParkerVision v. Intel in the Western District of Texas. In* January 2022,the PTAB issued its final decision for the'474* Patent, ruling in our favor with respect to theseven challenged claims. In* January 2022,the PTAB also issued its final decision for the'444* Patent, determining that the single challenged claim of the*'444* Patent was unpatentable. In* July 2022,we appealed the PTAB decision on the'444* Patent to the Federal Circuit and in* December 2023,the appellate court issued its written opinion affirming the PTAB's decision. In June 2022,the PTAB issued its final decision for the'108* Patent, determining that the challenged claims of the*'108* Patent were unpatentable. We appealed this decision and anticipate a hearing date on our appeal by* April 2024.Following our February 2023*resolution of the infringement actions against Intel, Intel withdrew from the IPR cases; however the U.S. Patent and Trademark Office ("USPTO") has exercised its right to intervene to defend the PTAB's decisions.



TCL and LGE. v. ParkerVision (PTAB)

TCL, along with Hisense, filed IPR petitions against U.S. patent7,292,835 (“the*‘835* Patent”) and the*‘444* Patent, both of which were asserted in the infringement cases against these parties in the Western District of Texas. In* December 2021,LGE filed nearly identical petitions against the sametwo* patents along with a joinder motion requesting to join the existing petitions, which was granted by the PTAB in* April 2022.Oral hearings for these IPRs were held in September 2022.As part of a patent license and settlement agreement entered into with Hisense in November 2022,Hisense withdrew its participation in these IPR proceedings. In November 2022,the PTAB issued its written decision ruling that the challenged claims for both patents were unpatentable. We have appealed these decisions and anticipate hearing dates on our appeal by April 2024.*

MediaTek v. ParkerVision (PTAB)

MediaTek filed an IPR petition in* November 2023against the‘835* Patent which isone of the patents asserted in thefirst MediaTek infringement action. This matter is still being briefed by the parties.

14. STOCK AUTHORIZATION AND ISSUANCE

Preferred Stock

We have 15 million shares of preferred stock authorized for issuance at the direction of our board of directors (the “Board”). On* November**17,* 2005, our Board designated 0.1 million shares of authorized preferred stock as the Series E Preferred Stock in conjunction with its adoption of a Shareholder Protection Rights Agreement that expired in* November 2023.As of December 31, 2023*, we hadno outstanding preferred stock.

Common Stock

We have 175 million shares of common stock authorized for issuance as of* December 31, 2023*. Our shareholders approved amendments to our articles of incorporation in* September 2022*increasing the number of our authorized shares of common stock from 150 million to 175 million shares.

As of* December 31, 2023*, we have 36.4 million shares reserved for issuance under outstanding warrants and options and 36.4 million shares reserved for issuance upon conversion of our outstanding convertible notes. In addition, we have 1.1 million shares reserved for future issuance under equity compensation plans and 1.4 million shares reserved for future issuance upon payment of interest in-kind on our convertible notes.



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Stock and Warrant Issuances–** Equity Based Financings**

The following table presents a summary of completed equity-based financing transactions for the years ended* December 31, 2023and2022* (in thousands, except for per share amounts):

Private Placements

In* January 2023,we entered into securities purchase agreements with accredited investors for the sale of an aggregate of 843,750 shares of our common stock at a price of $0.16 per share for aggregate gross proceeds of $0.14 million, including 62,500 shares to Sanford Litvack, a member of our Board of Directors. The shares were registered for resale on a registration statement that was declared effective on May 11, 2023 (FileNo.* 333-271651). In* Novemberand December 2022,we entered into securities purchase agreements with accredited investors for the sale of 2,000,000 shares of our common stock at a price of $0.20 per share for aggregate proceeds of $0.4 million. The shares were registered for resale on a registration statement that was declared effective on May 11, 2023 (FileNo.* 333-271351).

Stock, Option and Warrant Issuances–** Payment for Services**

In* April 2023,we entered into a consulting services agreement with Lewis Titterton to provide short-term advisory services to our chief executive officer in connection with the restructuring of the Brickell funding agreements. As consideration for services under the agreement, we issued 250,000 unregistered shares of our common stock valued at approximately $0.03 million. The consideration was recognized fully in thesecond* quarter of2023, prior to Mr. Titterton being appointed to the Board (see Note16).

In* January 2023,we extended a prior consulting agreement with Intro-Act to provide research and shareholder relations services. We issued 75,000 shares of unregistered common stock valued at approximately $0.02 million as consideration for services to be provided during thefirst* quarter of2023. The agreement had been previously extended in* August 2022with the issuance of 150,000 shares of unregistered common stock valued at approximately $0.03 million as consideration for services provided over asix*-month term.

On* November 22, 2022,we entered into an agreement with athird* party to provide consulting services. As consideration for services provided under thetwelve-month term of the agreement, we issued non-plan options to purchase 200,000 shares of unregistered common stock at an exercise price of $0.21 per share valued at approximately $0.03 million. The options vest infour equalthree-month increments beginning* November 22, 2022and will expirethree* years from the date of the grant. The value of the stock issued was recognized as a consulting expense over the term of the agreement. The shares underlying the options were registered on a registration statement that was declared effective* May 11, 2023 (FileNo.* 333-271651).

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In* October 2022,we entered into an agreement with Tailwinds Research Group LLC (“Tailwinds”) to provide continuing digital marketing services to us through December 2024.As consideration for services to be provided under the term of the agreement, we extended the expiration date for warrants previously issued to Tailwinds in2020* under a prior services agreement. The warrants allow for the purchase of up to 200,000 shares of our common stock at an exercise price of $1.00 per share and the expiration date was extended from* March 2023to March 2026.The fair value of the modification of the warrants was valued at approximately $0.02 million using the Black-Scholes method. The expense was being recognized ratably over the term of the new agreement. In June 2023,*we terminated the services agreement and recognized all remaining unamortized expense.

In addition, from time to time, we issue share-based compensation awards under our equity compensation plans tothird-party consultants. During the year ended* December 31, 2023,we issued an aggregate of 170,000 RSAs valued at approximately $0.05 million under our2019* Long-Term Equity Incentive Plan totwo non-employees as compensation under consulting agreements. (See Note15).

Common Stock Warrants

On* December 18, 2023,we modified a2018* warrant agreement with Brickell for the purchase of up to 3.0 million shares of our common stock at $0.16 per share. The modification provides for the extension of the expiration date of the outstanding warrants by18 months, from* December 20, 2023,to June 20, 2025.All other terms of the warrant agreement remain unchanged, including a call provision whereby if the closing price of our common stock for any period offive* (5) consecutive trading days exceedstwo times the exercise price, then we can call for the cancellation of all or a portion of the warrants for which a notice of exercise hasnot been delivered withinfive (5) trading days of our delivery of a call notice to Brickell. The modification resulted in an increase in the fair value of the warrants of $0.3 million, which was recorded as an increase in additional paid in capital and an increase in deferred offering costs, included in other assets, in the accompanying consolidated financial statements at* December 31, 2023.*

We had outstanding warrants for the purchase of up to 10.3 million shares of our common stock as of* December 31, 2023and2022*. The estimated grant date fair value of these warrants of $3.5 million and $3.2 million for the years ended* December 31, 2023and2022,* respectively, is included in shareholders’ deficit in our consolidated balance sheets. As of* December 31, 2023*, our outstanding warrants have an average exercise price of $0.75 per share and a weighted average remaining life of approximately 1.5 years.

15. SHARE-BASED COMPENSATION

For the years ended* December 31, 2023and2022*, we recognized share-based compensation expense of approximately $0.5 million and $3.1 million, respectively. Share-based compensation is included in selling, general, and administrative expenses in our consolidated statements of comprehensive income (loss). As of* December 31, 2023*, there was $0.15 million of total unrecognized compensation cost related to all non-vested share-based compensation awards. That cost is expected to be recognized over a weighted-average period of approximately 1.4 years.

Stock Incentive Plans

2019 Long-Term Incentive Equity Plan

We adopted a long-term incentive equity plan in* August 2019that, as amended in January 2021and January 2023,provides for the grant of stock-based awards to employees, officers, directors, and consultants,not to exceed 30.0 million shares of common stock (the“2019* Plan”). The2019 Plan provides for benefits in the form of nonqualified stock options, stock appreciation rights, restricted stock awards, and other stock-based awards. Forfeited and expired options under the2019 Plan become available for reissuance. The plan provides that non-employee directors* may**not* be granted awards during any calendar year that exceed the lesser of 1.0 million shares or $175,000 in value, calculated based on grant-date fair value. At* December 31, 2023*, we had outstanding options for the purchase of up to 24,730,086 shares and we had 1,136,467 shares of common stock available for future grants under the2019 Plan.

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2011 Long-Term Incentive Equity Plan

We adopted a shareholder approved long-term incentive equity plan in* September 2011that was amended in2014,* 2016 and2017 and provided for the grant of stock-based awards to employees, officers, directors and consultants,not to exceed 3.0 million shares of common stock (the*“2011* Plan”). In* January 2023,we ceased any future grants under the2011* Plan. At* December 31, 2023*, we had outstanding options for the purchase of up to 1,103,969 shares under the2011 Plan. Upon the exercise or expiration of these remaining outstanding options, the2011 Plan will be terminated.

2008 Equity Incentive Plan

We adopted an equity incentive plan in* August 2008 (the“2008* Plan”) for the grant of stock-based awards to employees (excluding named executives), directors and consultants,not to exceed 50,000 shares of common stock. We hadno outstanding options for purchase of shares under the2008 Plan and in* January 2023,the2008* Plan was terminated.

Restricted Stock Awards

RSAs are issued as executive and employee incentive compensation and as payment for services to others. The value of the award is based on the closing price of our common stock on the date of grant. RSAs are generally immediately vested. From time to time, we issue fully vested share-based compensation awards tothird parties as prepaid retainers for services over a specified period. The grant date fair value of these awards is recorded as prepaid services and expensed to selling, general and administrative expense over the service period (see Note5).

Restricted Stock Units

RSUs are issued as incentive compensation to executives, employees, and non-employee directors. Each RSU represents a right toone share of our common stock, upon vesting. The RSUs arenot entitled to voting rights or dividends, if any, until vested. RSUs generally vest over aone tothree year period for employee awards and aone year period for non-employee director awards. The fair value of RSUs is generally based on the closing price of our common stock on the date of grant and is amortized to share-based compensation expense over the estimated life of the award, generally the vesting period.

RSAs and RSUs

The following table presents a summary of RSA and RSU activity under the2011 and2019 Plans (collectively, the “Stock Plans”) as of* December 31, 2023* (shares in thousands):

The total fair value of RSAs and RSUs vested under the Stock Plans for the years ended* December 31, 2023and2022* was approximately $0.1 million and $0.03 million, respectively.

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Stock Options

Stock options are issued as incentive compensation to executives, employees, consultants and non-employee directors. Stock options are granted with exercise prices at or above fair market value of the underlying shares at the date of grant. Fair market value of the underlying shares is determined based on observable market prices at the date of the grant. The fair value of options granted is estimated using the Black-Scholes option pricing model. Generally, fair value is determined as of the grant date. Options for employees, including executives and non-employee directors, are generally granted under the Stock Plans.

The following table presents a summary of option activity under the Stock Plans for the year ended* December 31, 2023* (shares in thousands):

The weighted average per share fair value of options granted under the Stock Plans during the years ended* December 31, 2023and2022* was $0.24 and $0.17, respectively. The total fair value of option shares vested was $0.4 million and $3.0 million for the years ended* December 31, 2023and2022*, respectively.

The fair value of option grants under the Stock Plans for the years ended* December 31, 2023and2022*, respectively, was estimated using the Black-Scholes option-pricing model with the following assumptions:

1 The expected term was generally determined based on historical activity for grants with similar terms and for similar groups of employees and represents the period of time that options are expected to be outstanding. For employee options, groups of employees with similar historical exercise behavior are considered separately for valuation purposes.

2 The stock volatility for each grant is measured using the weighted average of historical daily price changes of our common stock over the most recent period equal to the expected option life of the grant.

3 The risk-free interest rate for periods equal to the expected term of the share option is based on the U.S. Treasury yield curve in effect at the measurement date.

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Options by Price Range

The options outstanding at* December 31, 2023* under the Stock Plans have exercise price ranges, weighted average contractual lives, and weighted average exercise prices as follows (weighted average lives in years and shares in thousands):

We issue new shares of our common stock upon exercise of options or vesting of RSUs or RSAs under the Stock Plans. The shares underlying the Stock Plans are registered. Cash received from option exercises for the years ended* December 31, 2023and2022*, was $0.004 million and $0.083 million, respectively.

16. RELATED PARTY TRANSACTIONS

We paid approximately $0.05 million and $0.01 million in2023 and2022, respectively, for patent-related legal services to SKGF, of which Robert Sterne,one of our directors since* September 2006,is a partner. In addition, we paid approximately $0.2 million and $0.1 million in2023* and2022, respectively, for principal and interest on the SKGF Note (see Note8). The SKGF Note has an outstanding balance, including accrued interest, of approximately $0.5 million at* December 31, 2023*.

In* April 2023,we entered into a consulting services agreement with Lewis Titterton to provide short-term advisory services to our chief executive officer in connection with the restructuring of the Brickell funding agreements. As consideration for services under the agreement, we issued 250,000 unregistered shares of our common stock valued at approximately $0.03 million. The consideration was recognized fully in thesecond* quarter of2023, prior to Mr. Titterton being appointed to the Board. As of* December 31, 2023,Mr. Titterton holds an aggregate of $0.33 million in promissory notes, convertible into 2.7 million shares of common stock, that were purchased from2019* to2022 prior to being appointed to the Board.

In* May 2022,we sold an aggregate of $0.1 million in promissory notes, convertible into shares of our common stock at a fixed conversion price of $0.13 to Paul Rosenbaum,one of our directors. In September 2023,we sold an additional $0.1 million in promissory notes, convertible into shares of our common stock at a fixed conversion price of $0.25 to Mr. Rosenbaum. As of December 31, 2023*, Mr. Rosenbaum holds $0.2 million of our convertible promissory notes convertible into 1.2 million shares of common stock.

In* August 2022,we sold an aggregate of $0.03 million in promissory notes, convertible into approximately 0.2 million shares of our common stock at a fixed conversion price of $0.13 to Sanford Litvack, who became an independent director in October 2022.In January 2023,*Mr. Litvack purchased 62,500 shares of our common stock at $0.16 per share in a private placement transaction.

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17. CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject us to a concentration of credit risk principally consist of cash and cash equivalents. Cash and cash equivalents are primarily held in bank accounts and overnight investments. At times our cash balances on deposit with banks* may*exceed the balance insured by the Federal Deposit Insurance Corporation (F.D.I.C.).

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