PARKERVISION INC

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements (Unaudited)

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value data)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands, except per share data)

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(in thousands)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business

ParkerVision, Inc. (“ParkerVision”, “we” or the “Company”) is in the business of innovating fundamental wireless hardware technologies and products.

We have designed and developed proprietary radio frequency (“RF”) technologies and integrated circuits based on those technologies, and we license those technologies to others for use in wireless communication products. We currently have five licensees of our technologies. 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.

2. Liquidity and Going Concern

For thenine months ended* September 30, 2024*, we incurred a net loss of approximately $11.8 million and incurred negative cash flows from operations of approximately $2.1 million. At* September 30, 2024*, we had cash and cash equivalents of approximately $0.8 million and an accumulated deficit of approximately $445.5 million. At* September 30, 2024*, we had $2.4 million in current liabilities, including approximately $1.1 million in convertible debt that matures over the nexttwelve months. In addition, a significant amount of future proceeds that we* mayreceive from our patent enforcement and licensing programs willfirst* be utilized to repay borrowings and legal fees and expenses under our contingent funding arrangements. 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 condensed consolidated financial statements.

Approximately $0.64 million in convertible notes, including accrued interest thereon, were converted by the holders into shares of our common stock subsequent to* September 30, 2024,and all of our remaining convertible notes have conversion prices that are substantially below the market price of our common stock as of September 30, 2024.We anticipate that all of our outstanding convertible notes will be converted by the holders prior to their scheduled maturity dates. However, even with the anticipated conversions of our convertible debt, our current capital resources arenot* sufficient to meet our liquidity needs for the nexttwelve months and we will be 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, and/or (iii) 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 will have a material adverse effect on our ability to meet our long-term liquidity needs and achieve our intended long-term business objectives.

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3. Basis of Presentation

The unaudited condensed consolidated financial statements for thethree andnine month periods ended* September 30, 2024* were prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form10-Q and Rule10-01 of Regulation S-X. Operating results for thenine months ended* September 30, 2024*, arenot necessarily indicative of the results that* maybe expected for the year ending December 31, 2024*, or future years. 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 audited financial statements for the year ended* December 31, 2023*. Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with GAAP have been omitted from these interim condensed consolidated financial statements. These interim condensed consolidated financial statements should be read in conjunction with our latest Annual Report on Form10-K for the year ended* December 31, 2023* (“2023 Annual Report”). Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

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. ParkerVision GmbH was dissolved and any remaining assets reverted back to the parent company as of* September 30, 2024.*

4. Accounting Policies

There have beenno changes in accounting policies from those stated in our2023 Annual Report. We donot 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.

5. Revenue

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* may*receive payments as part of a settlement or in the form of court-awarded damages for a patent infringement dispute. We recognize such payments as revenue in accordance with Accounting Standards Codification (“ASC”)606, “Revenue from Contracts with Customers.”

No revenue was recognized during thenine months ended* September 30, 2024*. We recognized $25.0 million of revenue during thenine-month period ended* September 30, 2023* from a patent license and settlement agreement with athird party for their use of our technologies. Our performance obligations were satisfied, and therefore revenue recognized, upon transfer of the licensed rights and dismissal of all patent enforcement actions between the parties.

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6. (Loss) Earnings per Common Share

Basic (loss) 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 thethree andnine months ended* September 30, 2024* as all common share equivalents are excluded from the calculation because 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 is calculated using the if-converted method. The following table shows the computation of basic and diluted (loss) earnings per share for thethree andnine months ended* September 30, 2024and2023* (net (loss) income and shares in thousands):

Diluted (loss) earnings per common share for thethree andnine months ended* September 30, 2024and2023* excludes shares underlying options, warrants, and convertible notes that are anti-dilutive. The anti-dilutive common share equivalents at* September 30, 2024and2023* were as follows (in thousands):

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7. Intangible Assets

Intangible assets consist of the following (in thousands):

8. Related Party Note Payable

We have an unsecured promissory note of approximately $0.4 million payable to Sterne, Kessler, Goldstein, & Fox, PLLC (“SKGF”), a related party, for outstanding unpaid fees for legal services. The SKGF note, as amended from time to time, accrues interest at a rate of 4% per annum, requires monthly payments of principal and interest of $12,500 with a final balloon payment of approximately $0.02 million in* April 2027.We are currently in compliance with all the terms of the note.  At September 30, 2024*, we estimate the note has an aggregate fair value of approximately $0.3 million and would be categorized within Level2 of the fair value hierarchy.

9. Convertible Notes

For thethree andnine months ended* September 30, 2024*, convertible notes with a face value of $0.3 million were converted, at the option of the holder, into approximately 3.6 million shares of our common stock.No convertible notes were repaid during thethree months ended* September 30, 2024,and during thenine* months ended* September 30, 2024* we repaid an aggregate of $0.05 million of notes at maturity. For thethree andnine months ended* September 30, 2024*, we recognized interest expense of approximately $0.1 million and $0.3 million, respectively, related to the contractual interest on our convertible notes. During thethree months ended* September 30, 2024,we elected to pay $0.10 million of interest payments in shares of our common stock and issued approximately 0.65 million shares of our common stock as interest-in-kind payments. During thenine* months ended* September 30, 2024*, we elected to pay $0.28 million of interest payments in shares of our common stock and issued approximately 1.7 million shares of our common stock as interest-in-kind payments.

At* September 30, 2024*, 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.

Convertible notes payable at* September 30, 2024* and* December 31, 2023* consist of the following (in thousands):

Subsequent to* September 30, 2024,*notes with an aggregate face value of $0.64 million were converted into shares of our common stock at conversion prices ranging from $0.10 to $0.25.

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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 value, for thenine months ended* September 30, 2024* and the year ended* December 31, 2023* (in thousands):

Our secured contingent payment obligation consists of a secured, non-recourse note (the "Note") and a prepaid forward purchase contract (the "PPFPA") with Brickell Key Investments, LP (“Brickell”). 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.

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 condensed consolidated statements of comprehensive income (loss) until the contingency is resolved.

The underlying carrying value of the Note, which includes the Face Value plus accrued interest, was approximately $57.1 million and $51.0 million as of* September 30, 2024* and* December 31, 2023*, respectively. The range of potential proceeds payable to Brickell is discussed more fully in Note11. As of* September 30, 2024*, we are in compliance with our obligations under the Note and the PPFPA.

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Unsecured Contingent Payment Obligations

The following table provides a reconciliation of our unsecured contingent payment obligations, measured at estimated fair value, for thenine months ended* September 30, 2024* and the year ended* December 31, 2023* (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 and (ii) contingent payment rights issued to accredited investors 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 condensed consolidated statements of comprehensive loss until the contingency is resolved (see Note11).

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11. Fair Value Measurements

The following tables summarize the fair value of our contingent payment obligations measured at fair value on a recurring basis as of* September 30, 2024* and* December 31, 2023* (in thousands):

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 17.58% and 17.82%, respectively, at* September 30, 2024*, based on a risk-free rate of 3.58% and 3.82%, 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* September 30, 2024*, 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. 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 in an attempt to invalidate certain of our patent claims.

The majority of our litigation 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.

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

On* September 6, 2024,the U.S. Court of Appeals for the Federal Circuit ("CAFC") issued its opinion, ruling in our favor on each of the issues we appealed and remanding the case back to the Middle District of Florida (Orlando) where the case will be reopened. The CAFC appeal was the result of several district court rulings on pre-trial motions issued in March 2022in our patent infringement case against Qualcomm, a case that was originally filed in May 2014.The district court granted Qualcomm motions to strike and exclude our technical expert report, essentially precluding the support of infringement testimony at trial and also issued an order granting Qualcomm's motion for summary judgment ruling that Qualcomm didnot* infringe the remainingthree patents in the case. We appealed these rulings to the CAFC and oral arguments were heard in* November 2023.In July 2024,the CAFC issued an order indicating that it didnot* have jurisdiction over this case as the district court hadnot entered a final judgement on Qualcomm's counterclaims of invalidity. The parties filed a motion with the district court requesting an order dismissing Qualcomm's counterclaims of invalidity without prejudice. On* August 1, 2024,the district court issued such an order, and on August 7, 2024,the matter was transferred back to the CAFC for its decision which was then issued on September 6, 2024.* On* November 4, 2024,*we filed a motion with the district court requesting a scheduling conference, trial setting, and identification of issues that require the court's resolution before trial.

As a result of the district court's summary judgment motion in favor of Qualcomm in2022, Qualcomm had the right to petition the court for its fees and costs. The court granted Qualcomm's motion to delay such a petition until after the issuance of the appellate court’s mandate. Given the favorable decision by the CAFC, Qualcomm isnot entitled to its fees and costs in relation to the now-vacated2022 summary judgment decision. We are represented in this case on a full contingency fee basis.

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

We have a patent infringement case in the Middle District of Florida against Apple Inc. (“Apple”) and Qualcomm, filed in* December 2015,alleging infringement offour of our patents, which was subsequently reduced toone patent. 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 in the Middle District of Florida (seeParkerVision v. Apple and Qualcomm* above). We elected to dismiss the case originally filed against LG in the Middle District of Florida and re-file in New Jersey as a result of a Supreme Court ruling regarding venue. In* March 2018,*the court stayed this case pending a final decision in ParkerVision v. Apple and Qualcomm in the Middle District of Florida. As part of this stay, LG has agreed to be bound by the final claim construction decision in that case.

ParkerVision v. Intel (Western District of Texas)

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.

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 scheduled for* July 2025**.A claim construction hearing was held in June 2024in thesecond* Realtek action, and the special master appointed by the court recommended the majority of the claim constructions in our favor. A trial date hasnot yet been scheduled in thesecond Realtek action.

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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 for nearly all of the disputed terms. In* January 2023,*the TCL action was stayed pending final resolution of patent infringement action filed against Realtek, the manufacturer of the integrated circuits used in TCL's alleged infringing products.

ParkerVision v. MediaTek (Western District of Texas)

We filed three 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. One of the patents was dropped from thefirst MediaTek case following aninter partes review ("IPR") petition filed by MediaTek which was subsequently terminated. 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* June 2025.A claim construction hearing was held in June 2024in thesecond* MediaTek action, and the special master appointed by the court recommended the majority of the claim constructions in our favor. A jury trial is scheduled for* February 2026in thesecond* MediaTek action.No schedule has been established by the court for thethird MediaTek action.

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. 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 which the court denied in August 2024.A claim construction hearing was held in June 2024,and the special master appointed by the court recommended the majority of the claim constructions in our favor. A jury trial is tentatively scheduled for 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 was held in* June 2024,and the special master appointed by the court recommended the majority of the claim constructions in our favor. A jury trial is tentatively scheduled for August 2025**.*

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Intel (USPTO) v. ParkerVision (PTAB)

We appealed an IPR action, originally filed by Intel, against our U.S. patent8,190,108, ("the*'108* Patent") which was asserted in ParkerVision v. Intel in the Western District of Texas. Following our* February 2023resolution 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. 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 to the CAFC and oral arguments were presented on* May 9, 2024.On May 16, 2024,*the CAFC issued its decision upholding the PTAB ruling that the challenged claims are unpatentable.

TCL and LGE v. ParkerVision (PTAB)

We appealedtwo IPR actions filed by TCL and LGE against our U.S. patent7,292,835 (“the*‘835* Patent”) and U.S. patent7,110,444 ("the*‘444* Patent"), both of which are asserted in the infringement cases against these parties in the Western District of Texas. Oral hearings for these IPRs were held by the PTAB in* September 2022.In November 2022,the PTAB issued its written decision ruling that the challenged claims for both patents were unpatentable. We appealed these decisions to the CAFC and oral arguments for both appeals were presented to the CAFC on June 3, 2024.On June 5, 2024,the CAFC issued its final decision, in the form of a Rule36,* in both of these cases, affirming the PTAB rulings. On* November 4, 2024,we submitted a petition for a Writ of Certiorari with the U.S. Supreme Court challenging the CAFC's use of Rule36* to affirm PTAB decisions without a written opinion.

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. On* May 23, 2024,the PTAB instituted the IPR petition. MediaTek withdrew its petition and the IPR was terminated in September 2024,following our dismissal of the'835* Patent from the patent infringement action against MediaTek. On* May 21, 2024,MediaTek filed asecond* IPR petition against the*'686* Patent which isone of the patents asserted in thesecond MediaTek infringement action, and on* October 18, 2024,MediaTek filed athird* IPR petition against our*'593* Patent,one of the patents asserted in thethird MediaTek action. The PTAB hasnot yet issued its decision regarding institution of thesecond andthird MediaTek IPR petitions.

TI v. ParkerVision (PTAB)

In* May 2024,TI filed IPR petitions against allthree of the patents asserted in our infringement action against them. The PTAB hasnot* yet issued its decision regarding institution of any of these IPR petitions.

NXP v. ParkerVision (PTAB)

In* June 2024,NXP filed IPR petitions againsttwo of thethree* patents asserted in our infringement action against them. Both of the IPR challenges are against patents also challenged in IPR petitions filed by TI. The PTAB hasnot yet issued its decision regarding institution of any of these IPR petitions.

Other Contingencies

In* July 2024,a public relations firm engaged by us in late2019* threatened to file a claim against us for the collection of payment for billed and unbilled services totaling approximately $0.3 million purportedly performed by them under our engagement agreement during the period from* December 2019through May 2021.In November 2024,the parties reached an agreement to resolve the disputed fees, and we have accrued our negotiated payment obligation in the consolidated financial statements for the period ended September 30, 2024.*

13. Stock Authorization and Issuance

Stock Authorization

On* October 28, 2024,*our shareholders approved an amendment to our amended and restated articles of incorporation to increase our authorized common shares from 175 million to 225 million.

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Stock Issuances

Payment for Services

On* January 2, 2024,we entered into an agreement with athird* party to provide shareholder relations services. As consideration for services provided under thetwelve-month term of the agreement, we issued 120,000 shares of unregistered common stock for a non-refundable retainer for services valued at approximately $0.02 million. The value of the shares issued is being recognized as consulting expense over the term of the agreement.

On* August 1, 2024,we entered into an agreement with athird* party to provide financial advisory services with respect to future development of our intellectual property. As consideration for services provided under thetwelve-month term of the agreement, we issued 250,000 shares of unregistered common stock as a non-refundable retainer for services valued at approximately $0.04 million. The value of the shares issued was recognized as consulting expense during thethree months ended* September 30, 2024.*

Common Stock Warrants

During thethree andnine months ended* September 30, 2024*,2.6 million warrants with an exercise price of $0.16 were exercised for proceeds to us of $0.4 million. As of* September 30, 2024*, we had remaining outstanding warrants for the purchase of up to 7.7 million shares of our common stock. The estimated grant date fair value of these warrants of $3.2 million is included in additional paid-in capital in our condensed consolidated balance sheets. As of* September 30, 2024*, our outstanding warrants have an average exercise price of $0.95 per share and a weighted average remaining life of approximately 0.8 years.

14. Share-Based Compensation

There has beenno 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 our2023 Annual Report.

For thethree months ended* September 30, 2024and2023,* we recognized share-based compensation expense of approximately $0.08 million and*$0.09* million, respectively. For thenine months ended* September 30, 2024and2023*, we recognized share-based compensation expense of approximately $0.2 million and $0.4 million, respectively. Share-based compensation is included in selling, general and administrative expenses in the condensed consolidated statements of comprehensive (loss) income. As of* September 30, 2024*, there was $0.13 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 remaining life of approximately 0.7 years.

15. Income Taxes

The Company's effective income tax rate was 0.0% for each of thethree andnine months ended* September 30, 2024and2023* as we expect to be able to utilize net operating loss carryforwardsnot previously recognized as a tax benefit to offset any income tax expense related to income, if any, for the2023 and2024 tax years.

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16. Related Party Transactions

On* May 10, 2024,we amended convertible notes held bythree* of our directors. A* June 19, 2019note with a principal balance of $25,000 and a September 13, 2019note with a principal balance of $50,000, both held by Lewis Titterton, were amended to extend the maturity dates to March 15, 2026,reduce the interest rate from 8% to 5% and to replace the quarterly interest payments with a single payment of unpaid, accrued interest at the earlier of conversion or maturity of the notes. On September 24, 2024,*Mr. Titterton converted each of these notes, including aggregate accrued interest, into an aggregate of 772,110 shares of our common stock.

On* May 10, 2024,additional convertible notes with an aggregate principal balance of $475,000 were also amended to replace the quarterly interest payment dates with a single payment of unpaid, accrued interest at the earlier of conversion or maturity of the notes. These additional amended notes include a $50,000 convertible note dated January 8, 2020and a $200,000 convertible note dated May 10, 2022,both held by Lewis Titterton, a $100,000 convertible note dated May 10, 2022and a $100,000 convertible note dated September 15, 2023,both held by Paul Rosenbaum, and a $25,000 convertible note dated August 3, 2022held by Sanford Litvak. On September 24, 2024,Mr. Titterton converted his January 8, 2020note, including accrued an unpaid interest, into 405,524 shares of our common stock. In addition, on October 29, 2024,Mr. Rosenbaum converted his May 10, 2022and September 15, 2023*convertible notes, including accrued and unpaid interest, into an aggregate of 1,252,391 shares of our common stock.

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