Form 424B3 PARKERVISION INC

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Filed pursuant to Rule 424(b)(3)

Registration No. 333-233390

 

PROSPECTUS SUPPLEMENT No. 23

(to Prospectus dated September 11, 2019)

 

PARKERVISION, INC.

 

18,014,164 Shares of Common Stock

 

This
Prospectus Supplement relates to the prospectus dated September 11,
2019, as amended and supplemented from time to time (the
“Prospectus”) which permits the resale by the selling
stockholders listed in the Prospectus of up to 18,014,164 shares of
our common stock, par value $0.01 per share (“Common
Stock”) consisting of (i) up to 5,457,583 shares of Common
Stock issuable upon conversion of, and for the payment of interest
from time to time at our option, for convertible promissory notes
dated June 7, 2019 through July 15, 2019 which have a fixed
conversion price of $0.10 per share (the “Tranche 1
Notes”), (ii) up to 10,131,581 shares of Common Stock
issuable upon conversion of, and for the payment of interest from
time to time at our option, for convertible promissory notes dated
July 18, 2019 which have a fixed conversion price of $0.08 per
share (the “Tranche 2 Notes”), (iii) up to 625,000
shares of Common Stock issued as payment for services in
conjunction with a consulting agreement dated June 7, 2019 (the
“Fisher Consulting Agreement”) and (iv) up to 1,800,000
shares of Common Stock issuable upon exercise of a five-year
warrant with an exercise price of $0.10 per share, subject to
adjustment and issued as payment for services in conjunction with a
consulting agreement dated July 22, 2019 (the “Park
Consulting Warrant”).

 

We will
not receive proceeds from the sale of the shares of Common Stock by
the selling stockholders. To the extent the Park Consulting Warrant
is exercised for cash, we will receive up to an aggregate of
$180,000 in gross proceeds. We expect to use proceeds received from
the exercise of the Park Consulting Warrant, if any, for general
working capital and corporate purposes.

 

This
Prospectus Supplement is being filed to update and supplement the
information previously included in the Prospectus with the
information contained in our Quarterly Report on Form 10-Q filed
with the Securities and Exchange Commission (the “SEC”)
on August 13, 2021. Accordingly, we have attached the 10-Q to this
prospectus supplement. You should read this prospectus supplement
together with the prospectus, which is to be delivered with this
prospectus supplement.

 

Any
statement contained in the Prospectus shall be deemed to be
modified or superseded to the extent that information in this
Prospectus Supplement modifies or supersedes such statement. Any
statement that is modified or superseded shall not be deemed to
constitute a part of the Prospectus except as modified or
superseded by this Prospectus Supplement.

 

This
Prospectus Supplement should be read in conjunction with, and may
not be delivered or utilized without, the Prospectus.

 

Our
Common Stock is listed on the OTCQB Venture Capital Market under
the ticker symbol “PRKR.” 

 

Investing in our securities involves a high degree of risk. See
“Risk Factors”
beginning on page 5 of the prospectus for a discussion of
information that should be considered in connection with an
investment in our securities.

 

Neither the SEC nor any such authority has approved or disapproved
these securities or determined whether this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.

 

The
date of this Prospectus Supplement is August 16, 2021.

 

 

 

UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549

 

FORM 10-Q

(Mark
One)

 

For the quarterly period ended June 30, 2021

 

For the
transition period from ________to____________

 

Commission
file number 000-22904

 

PARKERVISION, INC.

(Exact
name of registrant as specified in its charter)

 

 

4446-1A Hendricks Avenue, Suite 354

Jacksonville, Florida 32207

(Address
of principal executive offices)

 

(904) 732-6100

(Registrant’s
telephone number, including area code)

 

N/A

(Former
name, former address and former fiscal year, if changed since last
report)

 

Securities
registered pursuant to Section 12(b) of the Act:

 

 

Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes ☒   No ☐ .

 

Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months (or for
such shorter period that the registrant was required to submit such
file).
Yes ☒   No ☐ .

 

Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange
Act:

 

 

If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised accounting standards provided pursuant to
Section 13(a) of the Exchange Act. ☐

 

Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes ☐   No ☒

 

As of August 9, 2021, 74,007,485 shares of the issuer’s
common stock, $.01 par value, were
outstanding. 

TABLE OF CONTENTS

 

 

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. Financial Statements (Unaudited)

 

PARKERVISION,
INC.

CONDENSED
CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in
thousands, except par value data)

 

 

 

 

 

 

PARKERVISION,
INC.

CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(in
thousands, except per share data)

 

 

 

PARKERVISION,
INC.

CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(UNAUDITED)

(in
thousands)

 

 

 

 

 

 

 

 

 

PARKERVISION,
INC.

CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in
thousands)

 

 

 

 

 

PARKERVISION,
INC.

NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

 

1. Description of Business

 

ParkerVision,
Inc. and its wholly-owned German subsidiary, ParkerVision GmbH
(collectively “ParkerVision”, “we” or the
“Company”), is in the business of innovating
fundamental wireless technologies and products.

 

We have
designed and developed proprietary radio frequency
(“RF”) technologies and integrated circuits for use in
wireless communication products. We have expended significant
financial and other resources to research and develop our RF
technologies and to obtain patent protection for those technologies
in the United States of America (“U.S.”) and certain
foreign jurisdictions. We believe certain patents
protecting our proprietary technologies have been broadly
infringed by others, and therefore the primary focus of our
business plan is the enforcement of our intellectual property
rights through patent infringement litigation and licensing
efforts. We currently have patent enforcement actions ongoing in
various U.S. district courts against providers of mobile handsets,
smart televisions and other WiFi products and, in certain cases,
their chip suppliers for the infringement of a number of our RF
patents. We have made significant investments in developing and
protecting our technologies.

 

2. Liquidity and Going Concern

 

Our
accompanying condensed consolidated financial statements were
prepared assuming we would continue as a going concern, which
contemplates that we will continue in operation for the foreseeable
future and will be able to realize assets and settle liabilities
and commitments in the normal course of business for a period of at
least one year from the issuance date of these condensed
consolidated financial statements. These condensed consolidated
financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that could
result should we be unable to continue as a going
concern.

 

We have
incurred significant losses from operations and negative cash flows
from operations in every year since inception and have utilized the
proceeds from the sales of debt and equity securities and
contingent funding arrangements with third parties to fund our
operations, including the cost of litigation. For the six months
ended June 30, 2021, we incurred a net loss of approximately
$6.9 million and negative cash flows from operations of
approximately $6.1 million. At June 30, 2021, we had cash and
cash equivalents of approximately $1.5 million, working capital of
approximately $0.1 million, and an accumulated deficit of
approximately $428.0 million. Additionally, a significant
amount of future proceeds that we may receive from our patent
enforcement and licensing programs will first be utilized to repay
borrowings 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 of
one year following the issue date of these condensed consolidated
financial statements.

 

For the
six months ended June 30, 2021, we received aggregate net proceeds
from debt and equity financings of approximately $5.2 million and
proceeds from the exercise of outstanding options and warrants of
approximately $0.8 million. We used a significant portion of these
proceeds to pay current obligations resulting in a reduction in our
accounts payable and accrued expenses of approximately $4.3 million
for the six months ended June 30, 2021. Our current capital
resources may not be sufficient to meet our short-term liquidity
needs and we may be required to seek additional
capital.

 

Our
ability to meet our liquidity needs for the next twelve 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, if
needed. We expect that proceeds received by us from patent
enforcement actions and technology licenses over the next twelve
months may not be sufficient to cover our working capital
requirements.

 

We
expect to continue to invest in the support of our patent
enforcement and licensing programs. The long-term continuation of
our business plan is dependent upon the generation of sufficient
revenues from our technologies and/or products to offset expenses
and contingent payment obligations. In the event that we do not
generate sufficient revenues, 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 revenues, raise additional
capital through debt or equity financings or contingent fee
arrangements, and/or reduce operating costs will have a material
adverse effect on our ability to meet our long-term liquidity needs
and achieve our intended long-term business
objectives.

 

3. Basis of Presentation

 

The
accompanying unaudited condensed consolidated financial statements
for the period ended June 30, 2021 were prepared in accordance with
generally accepted accounting principles (“GAAP”) for
interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Operating results for the
three and six months ended June 30, 2021, are not necessarily
indicative of the results that may be expected for the year ending
December 31, 2021, 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,
2020. 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 Form 10-K for
the year ended December 31, 2020 (“2020 Annual
Report”).

 

The
condensed consolidated financial statements include the accounts of
ParkerVision, Inc. and its wholly-owned German subsidiary,
ParkerVision GmbH, after elimination of all intercompany
transactions and accounts.  

 

4.
Accounting Policies

 

There
have been no changes in accounting policies from those stated in
our 2020 Annual Report, other than as described below. We do not
expect any newly effective accounting standards to have a material
impact on our financial position, results of operations or cash
flows when they become effective.

 

We
adopted Accounting Standards Update (“ASU”) 2020-06,
“Accounting for Convertible Instruments and Contracts in an
Entity’s Own Equity” as of January 1, 2021. ASU 2020-06
simplifies accounting for convertible instruments, eliminating
separation accounting for certain embedded conversion features. We
used the modified retrospective method of adoption which allows for
application of the guidance to transactions outstanding at the
beginning of the fiscal year of adoption with the cumulative effect
of the change being recorded as an adjustment to beginning retained
earnings. Our adoption of ASU 2020-06 resulted in an increase to
our long-term debt of approximately $0.8 million, a decrease in
additional paid-in-capital of approximately $1.1 million, and an
adjustment to our beginning accumulated deficit of

 

$0.3 million
resulting from the elimination of the previously recognized
beneficial conversion feature as a debt discount.

 

5.
Loss per Common Share

 

Basic
loss per common share is determined based on the weighted-average
number of common shares outstanding during each period. Diluted
loss per common share is the same as basic loss per common share as
all common share equivalents are excluded from the calculation, as
their effect is anti-dilutive.

 

We have shares underlying outstanding options, warrants, unvested
restricted stock units (“RSUs”) and convertible notes
that were excluded from the computation of diluted loss per share
as their effect would have been anti-dilutive. These common share
equivalents at June 30, 2021 and 2020 were as follows (in
thousands):

 

 

 

  

6. Prepaid Expenses

 

Prepaid
expenses consist of the following (in thousands):

 

  

Prepaid
services at June 30, 2021 and December 31, 2020 include
approximately $0.5 million and $0.1 million, respectively of
consulting services paid in shares of stock or warrants to purchase
shares of stock in the future.

 

7. Intangible Assets

 

Intangible
assets consist of the following (in thousands):

 

 

8. Debt

 

Notes Payable

 

Related Party Note Payable

We have
an unsecured promissory note of approximately $0.8 million payable
to Sterne, Kessler, Goldstein, & Fox, PLLC
(“SKGF”), a related party, for outstanding unpaid fees
for legal services. The SKGF note, as amended, accrues interest at
a rate of 4% per annum, requires repayments of principal and
interest at a rate of $10,000 per month with a final balloon
payment due in April 2022. We are currently in compliance with all
the terms of the note, as amended. 

 

Secured Note Payable

Our secured note payable as of December 31, 2020 represented
default interest accrued related to a note payable to Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C (“Mintz”) for
outstanding fees and expenses. Additionally, as of December 31,
2020, we had approximately $3.1 million in accounts
payable to Mintz for outstanding fees and expenses.  We
also had approximately $3.6 million in disputed legal fees and
expenses billed by Mintz that we treated as a loss contingency that
was not probable as of December 31, 2020 and accordingly, for which
we recognized no expense in the consolidated financial
statements.  On March 29, 2021, we entered into an agreement
with Mintz to satisfy our outstanding obligations to Mintz. 
Under the terms of the agreement, (i) Mintz waived all past
defaults on the note resulting in a reversal of previously accrued
interest, (ii) we paid Mintz a lump-sum payment
of $3.0 million in satisfaction of all outstanding
obligations including our accounts payable to Mintz and all
disputed and unrecorded billings, and (iii) Mintz agreed to a
significant reduction in future success fees that might be payable
to Mintz from patent-related proceeds.

 

Unsecured Notes Payable

Unsecured
notes payable at December 31, 2020 represented a Paycheck
Protection Program loan of approximately $0.2 million received in
May 2020. The loan was eligible for forgiveness provided that (i)
we used the loan proceeds exclusively for allowed costs including
payroll, employee group health benefits, rent and utilities and
(ii) employee and compensation levels were maintained during the
coverage period. We applied for loan forgiveness in April 2021 and
the loan was forgiven in June 2021. The forgiveness of the loan was
recognized as income and is included in “Other income”
in the accompanying condensed consolidated statement of
comprehensive loss for the three and six months ended June 30,
2021.

 

Convertible Notes

 

Our
convertible notes represent 5-year promissory notes that are
convertible, at the holders’ option, into shares of our
common stock at fixed conversion prices. Interest payments are made
on a quarterly basis

 

and are
payable, at our option, subject to certain equity conditions, in
either cash, shares of our common stock, or a combination thereof.
To date, all interest payments on the convertible notes have been
made in shares of our common stock. We have recognized the
convertible notes as debt in our condensed consolidated financial
statements. The fixed conversion prices of certain of the notes
were below the market value of our common stock on the closing date
resulting in the recognition of a beneficial conversion feature
that was recorded as a discount on the convertible notes at the
note inception date, with a corresponding increase to additional
paid in capital. Upon our adoption of ASU 2020-06 on January 1,
2021, the beneficial conversion feature was eliminated, resulting
in an increase of $0.8 million to convertible debt and a cumulative
adjustment to beginning accumulated deficit of $0.3 million,
representing the discount amortization recognized prior to adoption
of the new standard (see Note 4).

 

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

 

Convertible
notes payable at June 30, 2021 and December 31, 2020 consist of the
following (in thousands):

 

For the
six months ended June 30, 2021, convertible notes with a face value
of $0.4 million were converted, at the option of the holder, into
1,600,000 shares of our common stock and we recognized interest
expense of approximately $0.14 million related to the contractual
interest which we elected to pay

 

in
shares of our common stock. For the six months ended June 30, 2021,
we issued approximately 155,000 shares of our common stock as
interest-in-kind payments on our convertible notes.

 

At June
30, 2021, we estimate our convertible notes have an aggregate fair
value of approximately $2.8 million and would be categorized within
Level 2 of the fair value hierarchy.  

 

Secured Contingent Payment Obligation

 

The following table provides a reconciliation of our secured
contingent payment obligation, measured at estimated fair market
value, for the six months ended June 30, 2021 and the year ended
December 31, 2020 (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 2016 funding agreement,
as amended. Brickell is entitled to priority payments of 55% to
100% of proceeds received from all patent-related actions until
such time that Brickell has been repaid its minimum return. The
minimum return is determined as a multiple of the funded amount
that increases over time. The estimated minimum return due to
Brickell was approximately $45.6 million and $42.0 million as of
June 30, 2021 and December 31, 2020, respectively. In addition,
Brickell is entitled to a pro rata portion of proceeds from
specified legal actions to the extent aggregate proceeds from those
actions exceed the minimum return. The range of potential proceeds
payable to Brickell is discussed more fully in Note 9. As of June
30, 2021, we are in compliance with our obligations under this
agreement.

 

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

 

Unsecured Contingent Payment Obligations

 

The following table provides a reconciliation of our unsecured
contingent payment obligations, measured at estimated fair market
value, for the six months ended June 30, 2021 and the year ended
December 31, 2020 (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 (“CPRs”). 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 Note 9). During the six months ended June 30,
2021, we received proceeds of $1.0 million from the sale of common stock with CPRs,
of which approximately $0.4 million was allocated to the CPRs. Our
aggregate maximum obligation under the unsecured contingent payment
obligations is $10.8 million as of June 30,
2021.

 

9. Fair Value Measurements

 

The
following tables summarize the fair value of our assets and
liabilities measured at fair value on a recurring basis as of June
30, 2021 and December 31, 2020 (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 of 14.36% at June 30, 2021, based on a
risk-free rate of 0.36% as adjusted by 8% for credit risk and 6%
for litigation inherent risk.

 

 

The
following table provides quantitative information about the
significant unobservable inputs used in the measurement of fair
value for both the secured and unsecured contingent payment
obligations at June 30, 2021, including the lowest and highest
undiscounted payout scenarios as well as a weighted average payout
scenario based on relative undiscounted fair value of each cash
flow scenario.

 

 

We
evaluate the estimates and assumptions used in determining the fair
value of our contingent payment obligations each reporting period
and make any adjustments prospectively based on those evaluations.
Changes in any of these Level 3 inputs could result in a
significantly higher or lower fair value measurement.

 

10. 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, including proceedings at the Patent
Trial and Appeal Board of the U.S. Patent and Trademark Office
(“PTAB”).

 

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

 

We were
liable for costs assessed on infringement and validity cases in
Germany in which we did not prevail. A portion of this liability
was covered by bonds posted in Germany. As of June 30, 2021, our
bonds have been fully released and all outstanding statutory court
costs have been satisfied in full. We have no remaining litigation
or related liabilities in Germany.

 

ParkerVision v. Qualcomm (Middle District of Florida)

We have a patent infringement complaint pending in the Middle
District of Florida against Qualcomm Incorporated and Qualcomm
Atheros, Inc. (collectively
“Qualcomm”) seeking approximately $1.3 billion
in damages for infringement of four of our
patents (the “Qualcomm Action”).  HTC
Corporation and HTC America, Inc. (collectively
“HTC”) were also defendants in this case
but we voluntarily dismissed our claims against HTC
and HTC dismissed their related counter-claims
against us in October 2020.  Qualcomm has
pending counterclaims
against us for non-infringement and invalidity for
all patents in the case.  The case was filed in May 2014
and stayed in February 2016 pending decisions in other cases,
including the appeal of a PTAB proceeding with regard to U.S.
patent 6,091,940 (“the ‘940 Patent”) asserted in
this case.  In March 2017, the PTAB ruled in our favor
on three of the six petitions (the method
claims), ruled in Qualcomm’s favor on two of the
six petitions (the apparatus claims) and

 

issued a split decision on the claims covered in the sixth
petition.  In September 2018, the Federal
Circuit upheld the PTAB’s decision with regard
to the ‘940 Patent and, in January 2019, the court lifted the
stay in this case.  In July 2019, the court issued an
order that granted our proposed selection of patent claims from
four asserted patents, including the ‘940 Patent, and denied
Qualcomm’s request to limit the claims and patents. The court
also agreed that we may elect to pursue accused products that were
at issue at the time the case was stayed, as well as new products
that were released by Qualcomm during the pendency of the
stay.  In September 2019, Qualcomm filed a motion for
partial summary judgement in an attempt to exclude certain patents
from the case, including the ‘940 Patent.  The
court denied this motion in January 2020.  In April 2020,
the court issued its claim construction order in which the
court adopted our proposed construction for seven of
the ten disputed terms and adopted slightly modified
versions of our proposed construction for the remaining
terms.  Due to the impact of COVID-19, a number of
the scheduled deadlines in this case were moved including the trial
commencement date which was rescheduled from December 2020 to May
2021.  We are seeking $1.3 billion in royalties owed to
us by Qualcomm for its unauthorized use of our technology, based on
a report submitted by our damages expert in this case in October
2020.  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 a jury and the
court.  Discovery was expected to close in
December 2020; however, the court allowed us to designate a
substitute expert due to medical issues with one of our experts in
the case.  Accordingly, the close of discovery was
delayed approximately one month until January 2021.  As a
result of these delays, the court rescheduled the trial
commencement date from May 3, 2021 to July 6,
2021.  In March 2021, the court further delayed the trial
date citing backlog due to the pandemic, among other
factors.  A new trial date has not yet been set although
the court indicated the case was unlikely to be tried before
November or December 2021.  Fact and expert discovery in
this case are closed, expert reports have been submitted, and
summary judgement and Daubert briefings have been completed by the
parties.  Joint pre-trial statements were submitted in
May 2021. In March 2021, the court granted Qualcomm’s motion
to strike certain of our 2020 infringement contentions.  We
filed a motion to clarify the court’s order and in July 2021,
based on the court’s response to our motion to clarify, we
filed a joint motion for entry of a judgement of non-infringement
of our Patent No. 7,865,177 (“the ‘177 Patent”),
subject to appeal.  A number of outstanding motions are
pending decisions by the court.

 

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

In December 2015, we filed a patent infringement complaint in the
Middle District of Florida against Apple 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
of four of our patents. In February 2016, the district
court proceedings were stayed pending resolution of a corresponding
case filed at the International Trade Commission
(“ITC”). In July 2016, we entered into a patent license
and settlement agreement with Samsung and, as a result, Samsung was
dismissed from the district court action. In March 2017, we filed a
motion to terminate the ITC proceedings and a corresponding motion
to lift the stay in the district court case. This motion was
granted in May 2017. In July 2017, we filed a motion to dismiss LG
from the district court case and re-filed our claims against
LG in the District of New Jersey (see ParkerVision v. LG
below).  Also in July 2017, Qualcomm filed a motion
to change venue to the Southern District of California, and
Apple filed a motion to dismiss for improper venue. In March 2018,
the district court ruled against the Qualcomm and Apple motions.
The parties also filed a joint motion in March 2018 to
eliminate three of the four patents in the case
in order to expedite proceedings leaving our U.S. patent 9,118,528
as the only remaining patent in this case. A claim construction
hearing was held on August 31, 2018. In July 2019, the court issued
its claim construction order in which the court adopted our
proposed claim construction for two of
the six terms and the “plain and ordinary
meaning” on the remaining terms. In addition, the court
denied a motion filed by Apple for summary
judgment.  Fact discovery has closed in this case
and a jury trial was scheduled to begin in August

 

2020.  In March 2020, as a result of the impact of
COVID-19, the parties filed a motion requesting an extension of
certain deadlines in the case.  In April 2020, the court
stayed this proceeding pending the outcome of the
Qualcomm Action. 

 

ParkerVision v. LG (District of New Jersey)

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

 

ParkerVision v. Intel (Western District of Texas)

In
February 2020, we filed a patent infringement complaint in the
Western District of Texas against Intel Corporation
(“Intel”) alleging infringement of eight of our
patents. The complaint was amended in May 2020 to add two
additional patents. In June 2020, we requested that one of the
patents be dropped from this case and filed a second case in the
Western District of Texas that included this dismissed patent (see
ParkerVision v. Intel II
below). Intel’s response to our complaint was filed in June
2020 denying infringement and claiming invalidity of the patents.
Intel has also filed a motion to transfer venue which was denied by
the court. The court issued
its claim construction ruling in
January 2021 in which the majority of the claims were
decided in our favor. The case was scheduled for trial
beginning February 7, 2022. In April 2021, we filed an amended
complaint to include additional Intel chips and products, including
Wi-Fi devices to the complaint. The court suggested that, given the
number of patents at issue, the case would be separated into two
trials and, as a result of the added products, the first trial date
will be scheduled in June 2022. Based on discussions with the
court, we anticipate the second trial date will be scheduled to
begin a few months following the first trial.

 

ParkerVision v. Intel II (Western District of Texas)

In June
2020, to reduce the number of claims in ParkerVision v. Intel, we filed a
second patent infringement complaint in the Western District of
Texas against Intel that included one patent that we voluntarily
dismissed from the original case. In July 2020, we amended our
complaint adding two more patents to the case. In May 2021, we
further amended our complaint to include additional Intel chips and
products, including Wi-Fi devices. Two claim construction hearings
were held and in July 2021, the court issued its claim construction
order in which the majority of the claim terms were construed in
our favor. Based on communications with the Court, the parties
submitted a case schedules setting forth a final pretrial
conference for October 2022 and thereafter expect the trial to
commence in November 2022.

 

Intel v. ParkerVision (PTAB)

Intel
filed petitions for Inter
Partes Review
(“IPR”) against U.S. patent 7,539,474 (“the
‘474 Patent”), U.S. patent 7,110,444 (“the
‘444 Patent”) and U.S. patent 8,190,108 (“the
‘108 Patent”), all of which are patents asserted in our
infringement cases against Intel. In January 2021, the PTAB issued
its decision to institute IPR proceedings for the ‘444 Patent
and the ‘474 Patent. Our responses to the instituted IPRs
have been submitted and our expert has been deposed. In July 2021,
the PTAB issued its decision to institute IPR proceedings for the
‘108 Patent.

 

Additional Patent Infringement Cases

ParkerVision filed a number of additional patent cases in the
Western District of Texas in September and October 2020 including
cases against (i) TCL Industries Holdings Co., Ltd, a Chinese
company, TCL Electronics Holdings Ltd., Shenzhen TCL New Technology
Co., Ltd, TCL King Electrical Appliances (Huizhou) Co., Ltd., TCL
Moka Int’l Ltd. and TCL Moka Manufacturing S.A. DE C.V.
(collectively “TCL”), (ii) Hisense Co., Ltd. and
Hisense Visual Technology Co., Ltd (collectively
“Hisense”), a

 

Chinese company, (iii) Buffalo Inc., a Japanese company
(“Buffalo”) and (iv) Zyxel Communications Corporation,
a Chinese multinational electronics company headquartered in
Taiwan, (“Zyxel”).  Each case alleges
infringement of the same ten patents by products
that incorporate modules containing certain Wi-Fi
chips manufactured by Realtek and/or MediaTek.  Each
of the defendants have filed responses denying infringement and
claiming invalidity of the patents, among other defenses. The court
has set Markman hearings in these cases for October 2021 and
estimated trial dates for December 2022.  In May 2021, we
entered into a patent licensing and settlement agreement with
Buffalo and anticipate dismissal of our claims against Buffalo once
the parties meet the performance obligations under the
agreement. The parties have not fully satisfied their
respective performance obligations under the agreement as of June
30, 2021, therefore, no revenue has yet been recognized from the
contract. In May 2021, we also filed a
patent infringement case against LG Electronics, a South Korean
company, in the Western District of Texas alleging infringement of
the same ten patents.

 

TCL, et. al. v. ParkerVision (PTAB)

In May
2021, TCL, along with Hisense and Zyxel, filed petitions for
Inter Partes Review (“IPR”) against U.S.
patent 7,292,835 (“the ‘835 Patent”) and the
‘444 Patent, both of which are asserted in the infringement
cases against these parties in the Western District of
Texas.

 

11. Stock Issuance

 

Stock and Warrant Issuances – Equity Based
Financings

 

 

Private Placements with Accredited Investors

In
January 2021, we entered into securities purchase agreements with
accredited investors for the sale of an aggregate of 2,976,430
shares of our common stock at a price of $0.35 per share for
aggregate proceeds of $1.0 million. The securities purchase
agreements include CPRs. Approximately $0.4 million of the proceeds
were allocated to unsecured contingent payment obligations based on
the initial fair value estimate of the CPRs (see Note 8). The
shares were registered for resale on a registration statement that
was declared effective on April 26, 2021 (File No.
333-255217).

 

In
March 2021, we entered into securities purchase agreements with
accredited investors for the sale of 3,230,942 shares of our common
stock and 1,619,289 warrants at a price of $1.29 per common share
for aggregate proceeds of approximately $4.2 million. The warrants
have an exercise price of $1.75 per share and expire in March 2026.
The shares, including the shares underlying the warrants, were
registered for resale on a registration statement that was declared
effective on April 26, 2021 (File No. 333-255217). We used $3.0
million of the proceeds from this transaction to satisfy our
obligations to Mintz (see Note 8).

 

Stock Issuances – Payment for Services

 

In January 2021, we amended our business consulting and retention
agreement with Chelsea Investor Relations to increase the
compensation for services over the remaining term and to extend the
term of the agreement through February 2024.  As
consideration for the amended agreement, we issued 500,000 shares
of unregistered common stock in exchange for a
nonrefundable retainer for services valued at approximately
$0.33 million.  The value of the stock issued is
being recognized as consulting expense over the term of the
agreement. The shares were registered for resale on a
registration statement that was declared effective on April 26,
2021 (File No. 333-255217).

 

In January 2021, we also issued 50,000 shares of our
unregistered common stock, valued at approximately
$0.03 million, as compensation for three months of shareholder
awareness services provided by a third party.  In April
2021, we issued this third party an additional 50,000 shares of
our

 

unregistered common stock, valued at approximately $0.07 million as
compensation for services over the remaining term of the agreement.
In June 2021, we issued an additional 100,000 shares of our
unregistered common stock, valued at approximately $0.12 million,
to this same third-party as a retainer for services over a one-year
term through May 31, 2022. The value of the shares issued will be
recognized as consulting expense over the term of the
agreement.

 

In April 2021, we issued 35,000 shares of our unregistered
common stock to a consultant for services over a six-month
term valued at approximately $0.04 million. The value
of the shares issued will be recognized as consulting expense over
the term of the agreement.  

 

Common Stock Warrants

 

As of
June 30, 2021, we had outstanding warrants for the purchase of up
to 9.8 million shares of our common stock. The estimated grant date
fair value of these warrants of $2.8 million is included in
additional paid-in capital in our condensed consolidated balance
sheets. As of June 30, 2021, our outstanding warrants have an
average exercise price of $0.73 per share and a weighted average
remaining life of approximately 3.4 years.

 

12. Share-Based Compensation

 

There
has been no material change in the assumptions used to compute the
fair value of our equity awards, nor in the method used to account
for share-based compensation from those stated in our 2020 Annual
Report.

 

The
following table presents share-based compensation expense included
in our condensed consolidated statements of comprehensive loss for
the three and six months ended June 30, 2021 and 2020, respectively
(in thousands):

 

 

As of
June 30, 2021, there was $4.5 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 1.5
years.

 

During
the six months ended June 30, 2021, our board of directors
(“Board”) amended our 2019 Long-Term Incentive Plan
(“the 2019 Plan”) to increase the number of shares of
common stock reserved for issuance under the 2019 Plan from 12
million to 27 million shares. The Board also approved awards under
the 2019 Plan of 11.9 million nonqualified stock options to
executives and other key employees and an aggregate of 1.1 million
nonqualified stock options to non-employee directors. The options
are exercisable at $0.54 per share, vest in eight equal quarterly
installments commencing March 31, 2021, and expire on January 11,
2026.

 

Non-Employee Compensation

On March 9, 2021, we granted approximately 32,000 shares
under our 2019 Plan to a consultant for business communications
services over a 1-year term valued at approximately
$0.05 million. The value of the shares issued will be
recognized as consulting expense over the term of the agreement.
 

 

ITEM 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations

 

Forward-Looking Statements

 

We
believe that it is important to communicate our future expectations
to our shareholders and to the public. This quarterly report
contains forward-looking statements, within the meaning of the
Private Securities Litigation Reform Act of 1995, including, in
particular, statements about our future plans, objectives, and
expectations contained in this Item. When used in this quarterly
report and in future filings by us with the Securities and Exchange
Commission (“SEC”), the words or phrases
“expects”, “will likely result”,
“will continue”, “is anticipated”,
“estimated” or similar expressions are intended to
identify “forward-looking statements.” Readers are
cautioned not to place undue reliance on such forward-looking
statements, each of which speaks only as of the date made. Such
statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from historical
results and those presently anticipated or projected, including the
risks and uncertainties identified in our annual report on Form
10-K for the fiscal year ended December 31, 2020 (the
“2020 Annual Report”) and in this Item 2 of Part I of
this quarterly report. Examples of such risks and uncertainties
include general economic and business conditions, competition,
unexpected changes in technologies and technological advances, the
timely development and commercial acceptance of new products and
technologies, reliance on key suppliers, reliance on our
intellectual property, the outcome of our intellectual property
litigation and the ability to obtain adequate financing in the
future. We have no obligation to publicly release the results of
any revisions which may be made to any forward-looking statements
to reflect anticipated events or circumstances occurring after the
date of such statements.

 

Corporate Website

 

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

 

Overview

 

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

 

Liquidity and Capital Resources

 

We have
incurred significant losses from operations and negative operating
cash flows in every year since inception, largely as a result of
our significant investments in developing and protecting our
intellectual property, and have utilized the proceeds from sales of
debt and equity securities and contingent funding arrangements with
third-parties to fund our operations, including the cost of
litigation.

 

For the
six months ended June 30, 2021, we incurred a net loss of
approximately $6.9 million, and negative cash flows from
operations of approximately $6.1 million. At June 30, 2021, we
had cash and cash equivalents of approximately $1.5 million,
working capital of approximately $0.1 million, and an accumulated
deficit of approximately $428.0 million. Additionally, a
significant amount of future proceeds that we may receive from our
patent enforcement and licensing programs will first be utilized to
repay borrowings 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 of one year following the issue date of our condensed
consolidated financial statements.

 

We used
cash for operations of approximately $6.1 million and
$3.0 million for the six months ended June 30, 2021 and 2020,
respectively. The increase in cash used for operations from 2020 to
2021 is primarily due to the use of approximately $4.3 million in
cash for the reduction of accounts payables and accrued expenses
during the six months ended June 30, 2021, as compared to a $1.3
million increase in accounts payable and accrued expenses during
the six months ended June 30, 2020. This increase in use of cash is
somewhat offset by a reduction in cash-based operating costs from
2020 to 2021. For the six months ended June 30, 2021, we received
aggregate net proceeds from the sale of debt and equity securities,
including the exercise of outstanding options and warrants, of
approximately $6.0 million compared to approximately $4.7 million
in proceeds received for the six months ended June 30, 2020. We
repaid approximately $0.05 million and $1.2 million, respectively
in debt obligations during the six months ended June 30, 2021 and
2020.

 

Patent
enforcement litigation is costly and time-consuming and the outcome
is difficult to predict. We expect to continue to invest in the
support of our patent enforcement and licensing programs.
Furthermore, we expect that revenue generated from patent
enforcement actions and/or technology licenses in 2021, if any,
after deduction of payment obligations to third-party litigation
funders, legal counsel, and other investors, will not be sufficient
to cover our operating expenses. Therefore, our current capital
resources are not sufficient to meet our short-term liquidity needs
and we may be required to seek additional capital.

 

Our
ability to meet both our short-term and long-term liquidity needs,
including our debt repayment obligations, 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 to third-party
litigation funders, legal counsel, and other investors; (ii) our
ability to control operating costs, and (iii) our ability to raise
additional capital from the sale of debt or equity securities or
other financing arrangements, if needed. Failure to generate
sufficient revenues, raise additional capital through debt or
equity financings or contingent fee arrangements, and/or reduce
operating costs will have a material adverse effect on our ability
to meet our long-term liquidity needs and our ability to achieve
our intended long-term business objectives.

 

Financial Condition

 

We had
working capital of approximately $0.1 million at June 30, 2021,
compared to a working capital deficit of approximately $3.8 million
at December 31, 2020, an increase of approximately $3.9 million.
This increase in working capital is primarily the result of a $4.5
million decrease in accounts payable and

 

accrued
expenses, somewhat offset by a $0.6 million increase in the current
portion of long-term notes payable during the six months ended June
30, 2021. The decrease in accounts payable and accrued expenses
included a $3.0 million payment to a law firm in settlement of
outstanding fees and expenses and a reduction in potential success
fees payable to the firm from future patent-related proceeds. The
increase in the current portion of long-term debt is primarily the
result of a balloon payment on our related-party note that is
payable in April 2022.

 

Our
long-term liabilities increased approximately $2.8 million during
the six months ended June 30, 2021, primarily as a result of the
$2.8 million increase in the estimated fair value of our secured
and unsecured contingent payment obligations.

 

Results of Operations for Each of the Three and Six Months Ended
June 30, 2021 and 2020

 

Revenue and Gross Margin

We
reported no licensing revenue for the three or six-month periods
ended June 30, 2021 or 2020. In May
2021, we entered into a patent licensing and settlement agreement
with Buffalo, Inc. (“Buffalo”) and anticipate dismissal
of our claims against Buffalo once the parties meet the performance
obligations under the agreement. The parties have not fully
satisfied their respective performance obligations under the
agreement as of June 30, 2021, therefore, no revenue has yet been
recognized from the contract.  We expect that the revenue from this
agreement, when recognized, will be fully offset against
out-of-pocket expenses incurred under our contingent fee agreements
and therefore will not impact our cash flows. Although we do
anticipate revenue to result from this and other licensing and
patent enforcement actions, the amount and timing is highly
unpredictable and there can be no assurance that we will achieve
our anticipated results.

 

Selling, General, and Administrative Expenses

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

 

Our
selling, general and administrative expenses decreased by
approximately $0.48 million, or 20%, during the three months
ended June 30, 2021 when compared to the same period in 2020. This
is primarily the result of noncash charges in 2020 of $0.44 million
associated with an amendment to our March 2020 equity transactions
and $0.21 million for impairment of the right-of-use asset
associated with the Lake Mary lease, along with a $0.18 million
decrease in litigation-related fees and expenses and a $0.14
million decrease in losses incurred on asset disposals for the
three months ended June 30, 2021 when compared to the same period
in 2020. These decreases were partially offset by a $0.57 million
increase in share-based compensation for the comparable
periods.

 

Our selling, general and administrative expenses decreased by
approximately $3.7 million, or 47%, during
the six months ended June 30, 2021 when
compared to the same period in 2020. This decrease results, in
part, from a number of one-time, noncash charges in 2020 including
$1.78 million associated with an amendment to certain warrant
agreements, $0.44 million from an amendment to our March 2020
equity transactions and $0.21 million for impairment of the
right-of-use asset associated with our Lake Mary lease. In
addition, we experienced a $2.4 million decrease in litigation fees
and expenses for the six months ended June 30, 2021 when compared
to the same period in 2020. This decrease was partially offset by a
$1.1 million increase in share-based compensation for the
comparable periods.

 

The
increase in our share-based compensation for both the three and six
month periods ended June 30, 2021 is the result of share-based
compensation expense attributed to nonqualified stock options
awarded

 

to
executives, key employees and nonemployee directors in January 2021
as more fully discussed in Note 12 to our condensed consolidated
financial statements. As of June 30, 2021, we had $4.5 million of
total unrecognized compensation cost related to all non-vested
share-based compensation awards that is expected to be recognized
over a period of approximately 1.5 years.

 

The
decrease in litigation fees and expenses for the six month period
ended June 30, 2021 is primarily the result of a stay in our patent
infringement action against Qualcomm and Apple in Florida in April
2020.

 

Change in Fair Value of Contingent Payment Obligations

 

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

 

For the
six months ended June 30, 2021, we recorded an aggregate increase
in the fair value of our secured and unsecured contingent payment
obligations of approximately $2.8 million, compared to an increase
of approximately $3.4 million for the six months ended June 30,
2020. The change in fair value for the six months ended June 30,
2020 included a $1.4 million increase in the fair value of
unsecured payment obligations resulting from a termination fee due
on a failed litigation funding arrangement incurred in March
2020.

 

Off-Balance Sheet Transactions, Arrangements and Other
Relationships

 

As of
June 30, 2021, we had outstanding warrants to purchase
approximately 9.8 million shares of our common stock. The
estimated grant date fair value of these warrants of approximately
$2.8 million is included in shareholders’ deficit in our
condensed consolidated balance sheets. The outstanding warrants
have a weighted average exercise price of $0.73 per share and a
weighted average remaining life of approximately 3.4
years.

 

Critical Accounting Policies

 

There
have been no changes in accounting policies from those stated in
our 2020 Annual Report, except as described in Note 4 of the
interim condensed consolidated financial statements. We do not
expect any newly effective accounting standards to have a material
impact on our financial position, results of operations or cash
flows when they become effective.

 

ITEM 3. Quantitative and Qualitative Disclosures About Market
Risk.

 

Not
applicable.

 

ITEM 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As of
June 30, 2021, our management, with the participation of our Chief
Executive Officer and Chief Financial Officer, evaluated the
effectiveness of our “disclosure controls and
procedures,” as defined in

 

Rule
13a-15(e) and 15d-15(e) under the Securities and Exchange Act of
1934, as amended (the “Exchange
Act”).   Based upon this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that these
disclosure controls and procedures were effective as of June 30,
2021. 

 

 

Changes in Internal Control Over Financial Reporting

 

There
have been no changes in our internal control over financial
reporting identified in connection with the evaluation required by
Rule 13a-15(d) under the Exchange Act that occurred during the last
fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.

 

PART II – OTHER INFORMATION

 

ITEM 1. Legal Proceedings.

 

Reference
is made to the section entitled “Legal Proceedings” in
Note 10 to our unaudited condensed consolidated financial
statements included in this quarterly report for a discussion of
current legal proceedings, which discussion is incorporated herein
by reference.

 

ITEM 1A. Risk Factors.

 

There
have been no material changes from the risk factors disclosed in
Item 1A of Part I of our Annual Report. In addition to the
information in this quarterly report, the risk factors disclosed in
our Annual Report should be carefully considered in evaluating our
business because such factors may have a significant impact on our
business, operating results, liquidity and financial
condition.

 

ITEM 2. Unregistered Sales of Equity Securities and Use of
Proceeds.

 

We issued 50,000 shares of our unregistered common stock
in January 2021, 50,000 shares in April 2021 and 100,000 shares in
June 2021 as eighteen months of compensation for shareholder
awareness services provided by a third party.  The shares
in the aggregate were valued at approximately $0.2 million. The
shares issued were exempt from registration under Section
4(a)(2) of the Securities Act. We have no obligation to register
the shares.

 

In April 2021, we issued 35,000 shares of our unregistered
common stock to a consultant for services over a six-month
term valued at approximately $0.04 million.
The shares issued were exempt
from registration under Section 4(a)(2) of the Securities Act. We
have no obligation to register the shares.

 

ITEM 3. Defaults Upon Senior Securities.

 

None.

 

ITEM 4. Mine Safety Disclosures.

 

Not
applicable.

 

ITEM 5. Other Information.

 

None.

 

ITEM 6. Exhibits.

 

 

*Filed
herewith

 

 

SIGNATURES

 

Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.