Real-time Form 4 intelligence. Smarter insider tracking.
YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.05pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.01pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.11pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Risk Factors (Item 1A)
4,377 words
Item 1A. Risk Factors.
In addition to other risks and uncertainties described in this Annual Report, the following risk factors 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. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements.
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Financial and Operating Risks
Our financial condition raises substantial doubt as to our ability to continue as a going concern.
We have had significant losses and negative cash flows in nearly every year since inception, and continue to have an accumulated deficit which, at December 31, 2025, was approximately $455.6 million. Our net loss for the years ended December 31, 2025 and 2024 was approximately $7.4 million and $14.5 million, respectively. Our independent registered public accounting firm has included in their audit opinion on our consolidated financial statements as of and for the year ended December 31, 2025, a statement with respect to substantial about our ability to continue as a going . Note 2 to our consolidated financial statements included in Item 8 includes a discussion regarding our liquidity and our ability to continue as a going . Our consolidated financial statements have been prepared assuming we will continue to operate as a going , which contemplates the realization of assets and the of liabilities in the normal course of business. If we become to continue as a going , we may have to our assets and the values we receive for our assets in or could be significantly lower than the values reflected in our consolidated financial statements. The substantial as to our ability to continue as a going may affect our ability to negotiate reasonable terms with our vendors and may affect our ability to raise additional capital in the future.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
against+1
postponed+1
pretrial+1
arguments+1
Positive rising
satisfaction+2
MD&A (Item 7)
4,090 words
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
We have had a history of losses which may ultimately compromise our ability to implement our business plan and continue in operation.
With the exception of the year ended December 31, 2023, our technologies and products have not produced revenues sufficient to cover our operating costs. We will continue to make expenditures on patent protection and enforcement and general operations in order to continue our current patent enforcement and licensing efforts. Those efforts may not produce a successful financial outcome in 2026, or at all. Without a successful financial outcome from one or more of our patent enforcement and licensing efforts, we will not achieveprofitability. If we are not able to generate sufficient revenues or obtain sufficient capital resources, we may not be able to implement our business plan or meet our current obligations due within the twelve months after the issuance date of our consolidated financial statements and investors will suffer a loss in their investment. This may also result in a change in our business strategies.
We will need to raise substantial additional capital in the future to fund our operations. Failure to raise such additional capital may prevent us from implementing our business plan as currently formulated.
Because we have a history of net losses and negative cash flow from operations, we have funded our operating costs primarily from the sale of debt and equity securities, including our secured and unsecured contingent debt obligations. Our current capital resources include cash and cash equivalents of $4.4 million at December 31, 2025, which will not alone be sufficient to meet our working capital needs for the twelve months following the issuance of our consolidated financial statements. Our business plan will continue to require expenditures for patent protection and enforcement and general operations. If we do not generate sufficient revenues from our licensing and patent enforcement programs, we will require additional capital to fund our operations. Additional capital may be in the form of debt securities, the sale of equity securities, including common or preferred stock, additional litigation funding, or a combination thereof. Failure to raise additional capital may have a material adverse impact on our ability to achieve our business objectives.
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Raising additional capital by issuing debt securities or additional equity securities may result in dilution and/or impose covenants or restrictions that create operational limitations or other obligations.
We may require additional capital to fund our operations and meet our current obligations due within the twelve months after the issuance date of our consolidated financial statements. Financing, if any, may be in the form of debt or sales of equity securities, including common or preferred stock. Debt instruments or the sale of preferred stock may result in the imposition of operational limitations and other covenants and payment obligations, any of which may be burdensome to us and may have a material adverse impact on our ability to implement our business plan as currently formulated. The sale of equity securities, including common or preferred stock, may result in dilution to the current shareholders’ ownership and may be limited by the number of shares we have authorized and available for issuance.
We may be obligated to repay outstanding notes at a premium upon the occurrence of an event of default.
We have $3.1 million in outstanding principal under convertible notes at December 31, 2025. If we fail to comply with the various covenants set forth in each of the notes, including failure to pay principal or interest when due or consummating a change in control, we could be in default thereunder. Upon an event of default under each of the notes, the interest rate of the notes will increase to 12% per annum and the outstanding principal balance of the notes plus all accrued unpaid interest may be declared immediately payable by the holders. We may not have sufficient available funds to repay the notes upon an event of default, and we cannot provide assurances that we will be able to obtain other financing at terms acceptable to us, or at all.
Our ability to utilize our tax benefits could be substantially limited if we fail to generate sufficient income or if we experience an “ ownership change. ”
We have cumulative net operating loss carryforwards (“NOLs”) totaling approximately $254.7 million at December 31, 2025, of which $203.9 million is subject to expiration in varying amounts from 2026 to 2037. Our ability to fully recognize the benefits from those NOLs is dependent upon our ability to generate sufficient income prior to their expiration. In addition, our NOL carryforwards may be limited if we experience an ownership change as defined by Section 382 of the Internal Revenue Code (“Section 382”). In general, an ownership change under Section 382 occurs if one or more 5% shareholders increase their collective ownership of the aggregate amount of our outstanding shares by more than 50 percentage points over a relevant lookback period. We have sold a significant number of equity securities over the relevant lookback period which increases the risk of triggering an ownership change under Section 382 from the future sale of additional equity securities. An ownership change under Section 382 will significantly limit our ability to utilize our tax benefits.
Our litigation funding arrangements may impair our ability to obtain future financing and/or generate sufficient cash flows to support our future operations.
We have funded much of our cost of litigation through contingent financing arrangements with Brickell and others and contingent fee arrangements with legal counsel. The repayment obligation to Brickell is secured by the majority of our assets. Furthermore, our contingent arrangements will result in reductions in the amount of net proceeds retained by us from litigation, licensing, and other patent-related activities. The contingent fees payable to legal counsel, Brickell and others will consume all of our initial future proceeds up to specified limits and will likely exceed half of our proceeds thereafter depending on size and timing of proceeds, among other factors. The long-term continuation of our business plan is dependent upon our ability to secure sufficient financing to support our business, and our ability to generate revenues and/or patent related proceeds sufficient to offset expenses and meet our contingent payment obligations. Failure to generate revenue or other patent-related proceeds sufficient to repay our contingent obligations may impede our ability to obtain additional financing which will have a material adverse effect on our ability to achieve our long-term business objectives.
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Our litigation can be time-consuming, costly and we cannot anticipate the results.
Since 2011, we have spent a significant amount of our financial and management resources to pursue patent infringementlitigationagainst third parties. We believe this litigation will continue to consume management and financial resources for long periods of time. There can be no assurance that our litigation matters will ultimately result in a favorable outcome for us or that our financial resources will not be exhausted before achieving a favorable outcome. In addition, even if we obtain favorable interim rulings or verdicts in particular litigation matters, they may not be predictive of the ultimate resolution of the matter. Unfavorable outcomes could result in exhaustion of our financial resources and could hinder our ability to pursue licensing and/or product opportunities for our technologies in the future. Failure to achievefavorable outcomes from one or more of our patent enforcement actions will have a material adverse impact on our financial condition, results of operations, cash flows, and business prospects.
If our patents and intellectual property rights do not provide us with the anticipated market protections, our competitive position, business, and prospects will be impaired.
We rely on our intellectual property rights, including patents and patent applications, to provide competitive advantage and protect us from theft of our intellectual property. We believe that our patents are for entirely new technologies and that our patents are valid, enforceable, and valuable. However, third parties have made claims of invalidity with respect to certain of our patents and other similar claims may be brought in the future. For example, the PTAB has issued a number of rulings invalidatingclaims of certain of our patents as a result of third-party challenges filed by defendants in our patent enforcement actions. If our patents are shown not to be as broad as currently believed or are otherwise challenged such that some or all of the protection is lost, we will sufferadverse effects from the loss of competitive advantage and our ability to offer unique products and technologies. As a result, there would be an adverse impact on our financial condition and business prospects. Furthermore, defendingagainstchallenges to our patents may give rise to material costs for defense and divert resources away from our other activities.
Our business, results of operations, and financial condition may be impacted by risks related to pandemics and other similar outbreaks.
The COVID-19 pandemic created significant volatility and uncertainty in financial markets and negatively impacted the timing of our current patent enforcement actions as a result of travel restrictions, office closures and court closures. Future pandemics or other similar outbreaks could likewise adversely impact our business, results of operations and financial condition. For example, market volatility and uncertainty could impact our ability to raise additional capital on terms that are acceptable to us, or at all. Additionally, business shut-downs, court closures, and travel restrictions resulting from future outbreaks could cause material delays in our patent enforcement and licensing program which is currently our sole source of revenue. The extent to which future pandemics or similar outbreaks impact our ongoing business strategy, as well as our results of operations and financial condition, generally, will depend on future developments which are highly uncertain and cannot be predicted, including the severity and duration of the outbreak and the actions taken by governments and private businesses to contain or treat its impact, among others. If the disruptions posed by future pandemics or outbreaks continue for an extensive period of time, our business, results of operations, and financial condition may be materially adversely affected.
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We are subject to outside influences beyond our control, including new legislation that could adversely affect our licensing and enforcement activities and have an adverse impact on the execution of our business plan.
Our licensing and enforcement activities are subject to numerous risks from outside influences, including new legislation, regulations and rules related to obtaining or enforcing patents. For instance, over the past decade, the U.S. has enacted sweeping changes to the U.S. patent system including changes that transition the U.S. from a “first-to-invent” to a “first-to-file” system and other changes that alter the processes for challenging issued patents. To the extent that we are unable to secure patent protection for our future technologies and/or our current patents are challenged such that some or all of our protection is lost, we will sufferadverse effects to our ability to offer unique products and technologies. As a result, there would be an adverse impact on our financial position, results of operations and cash flows and our ability to execute our business plan.
Our industry is subject to rapid technological changes which if we are unable to match or surpass, will result in a loss of competitive advantage and market opportunity.
Because of the rapid technological development that regularly occurs in the wireless technology industry, along with shifting user needs and the introduction of competing products and services, we have historically devoted substantial resources to developing and improving our technology and introducing new product offerings. As a result of our limited financial resources, we have ceased our research and development activities which could result in a loss of future market opportunity which could adversely affect our future revenue potential.
We are highly dependent on Mr. Jeffrey Parker as our chief executive officer. If his services were lost, it would have an adverse impact on the execution of our business plan.
Because of Mr. Parker’s leadership position in the Company, the relationships he has garnered in both the industry in which we operate and the investment community and the key role he plays in our patent litigation strategies, the loss of his services might be seen as an impediment to the execution of our business plan. If Mr. Parker was no longer available to the Company, investors might experience an adverse impact on their investment. We maintain a $1.5 million key-man life insurance policy on Mr. Parker.
If we are unable to retain key highly skilled employees, we will not be able to execute our current business plans.
Our business is dependent on having skilled and specialized key employees to conduct our business activities. The inability to retain these key employees would have an adverse impact on the technical support activities and the financial reporting and regulatory compliance activities that our business requires. These activities are instrumental to the successful execution of our business plan.
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Any disruptions to our information technology systems or breaches of our network security could interrupt our operations, compromise our reputation, and expose us to litigation, government enforcement actions, and costly response measures and could have a material adverse effect on our business, financial condition, and results of operations.
We rely on information technology systems, including third-party hosted servers and cloud-based servers, to keep business, financial, and corporate records, communicate internally and externally, and operate other critical functions. If any of our internal systems or the systems of our third-party providers are compromised due to computer virus, unauthorized access, malware, and the like, then sensitive documents could be exposed or deleted, and our ability to conduct business could be impaired. Cyber incidents can result from deliberate attacks or unintentional events. These incidents can include, but are not limited to, unauthorized access to our systems, computer viruses or other malicious code, denial of service attacks, malware, ransomware, phishing, SQL injection attacks, human error, or other events that result in security breaches or give rise to the manipulation or loss of sensitive information or assets. Cyber incidents can be caused by various persons or groups, including disgruntled employees and vendors, activists, organized crime groups, and state-sponsored and individual hackers. Cyber incidents can also be caused or aggravated by natural events, such as earthquakes, floods, fires, power loss, and telecommunications failures. The risk of cybersecurity breach has generally increased as the number, intensity, and sophistication of attempted attacks from around the world has increased. While we have cyber security procedures in place, given the evolving nature of these threats, there can be no assurance that we will not suffer material losses in the future due to cyber-attacks.
To date, we have not experienced any material losses relating to cyber-attacks, computer viruses or other systems failures. Although we have taken steps to protect the security of data maintained in our information systems, it is possible that our security measures will not be able to prevent the systems’ improper functioning or the improper disclosure of personally identifiable information, such as in the event of cyber-attacks. In addition to operational and business consequences, if our cybersecurity is breached, we could be held liable to our customers or other parties in regulatory or other actions, and we may be exposed to reputation damages and loss of trust and business. This could result in costlyinvestigations and litigation, civil or criminalpenalties, fines, and negative publicity.
Risks Relating to our Common Stock
Our outstanding options and warrants may affect the market price and liquidity of the common stock.
At December 31, 2025, we had 143.2 million shares of common stock outstanding and had outstanding options, restricted share units, and warrants for the purchase of up to 29.3 million additional shares of common stock, the majority of which were exercisable as of December 31, 2025. In addition, as described more fully below, holders of convertible notes may elect to receive up to 24.7 million shares of common stock upon conversion of the notes, and we may elect to pay accrued interest on the notes in shares of our common stock. The majority of the shares of common stock underlying these securities are currently registered for sale to the holder or for public resale by the holder. The amount of common stock reserved for issuance may have an adverse impact on our ability to raise capital and may affect the price and liquidity of our common stock in the public market. In addition, the issuance of these shares of common stock will have a dilutive effect on current shareholders’ ownership.
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The conversion of outstanding convertible notes into shares of common stock, and the issuance of common stock by us as payment of accrued interest upon the convertible notes, could materially dilute our current shareholders.
We have an aggregate principal amount of $3.1 million in convertible notes outstanding at December 31, 2025. The notes are convertible into shares of our common stock at fixed conversion prices, which may be less than the market price of our common stock at the time of conversion. If the entire principal were converted into shares of common stock, we would be required to issue an aggregate of up to 24.7 million shares of common stock. If we issue all of these shares, the ownership of our current shareholders will be diluted.
Further, we may elect to pay interest on the notes, at our option, in shares of common stock, at a price equal to the then-market price for our common stock. From 2018 to 2025, we issued an aggregate of approximately 10.1 million shares of common stock as in-kind interest payments on our convertible notes. We currently do not believe that we will have the financial ability to make payments on the notes in cash when due. Accordingly, we currently intend to make such payments in shares of our common stock to the greatest extent possible. Such interest payments could further dilute our current shareholders.
The price of our common stock may be subject to substantial volatility.
The trading price of our common stock has been and may continue to be volatile. Between January 1, 2024 and March 1, 2026, the reported high and low sales prices for our common stock ranged between $0.09 and $1.18 per share. The price of our common stock may continue to be volatile as a result of a number of factors, some of which are beyond our control. These factors include, but are not limited to, developments in outstanding litigation, our performance and prospects, general conditions of the markets in which we compete, and other economic and financial conditions. Such volatility could materially and adversely affect the market price of our common stock in future periods.
Our common stock is quoted on OTCQB, an over-the-counter market. There can be no assurance that our common stock will continue to trade on the OTCQB or on another over-the-counter market or securities exchange.
Our common stock began trading on the OTCQB, an over-the-counter market, in August 2018 under the symbol “PRKR”. The over-the-counter market is a significantly more limited market than a nationally-recognized securities exchange such as Nasdaq, and the quotation of our common stock on the over-the-counter market has resulted in a less liquid market available for existing and potential shareholders to trade shares of our common stock. Securities traded in the over-the-counter market generally have less liquidity due to factors such as the reduced number of investors that will consider investing in the securities, the reduced number of market makers in the securities, and the reduced number of securities analysts that follow such securities. As a result, holders of shares of our common stock may find it difficult to resell their shares at prices quoted in the market or at all. We are also subject to additional compliance requirements under applicable state laws relating to the issuance of our securities. This could have a long-term adverse effect on our ability to raise capital, which ultimately could adversely affect the market price of our common stock. We cannot provide any assurances as to if or when we will be in a position to relist our common stock on a nationally-recognized securities exchange.
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Our common stock has been classified as a “ penny stock ” from time to time under SEC rules, which means broker-dealers who make a market in our stock may be subject to additional compliance requirements.
Our common stock has been deemed to be a "penny stock" in prior periods, as defined in the Securities Exchange Act of 1934 (the “Exchange Act”). Penny stocks are stocks (i) with a price of less than five dollars per share; (ii) that are not traded on a recognized national exchange; (iii) whose prices are not quoted on an automated quotation system sponsored by a recognized national securities association; or (iv) whose issuer has net tangible assets less than $2,000,000 (if the issuer has been in continuous operation for at least three years); or $5,000,000 (if continuous operations for less than three years); or with average revenues of less than $6,000,000 for the last three years. The Exchange Act requires broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account. Potential investors in our common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be “penny stock.” Further, the Exchange Act requires broker-dealers dealing in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. These procedures require the broker-dealer to (i) obtain from the investor information concerning his, her or its financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor, and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Although our stock is not currently classified as a penny stock, there can be no assurance that we will not revert to penny stock status in the future. Compliance with the penny stock requirements may affect the ability or willingness of broker-dealers to sell our securities, and accordingly would affect the ability of shareholders to sell their securities in the public market. These additional procedures could also limit our ability to raise additional capital in the future.
We do not currently pay dividends on our common stock and thus shareholders must look to appreciation of our common stock to realize a gain on their investments.
We do not currently pay dividends on our common stock and intend to retain our cash and future earnings, if any, to fund our business plan. Our future dividend policy is within the discretion of our Board and will depend upon various factors, including our business, financial condition, results of operations and capital requirements. We therefore cannot offer any assurance that our Board will determine to pay special or regular dividends in the future. Accordingly, unless our Board determines to pay dividends, shareholders will be required to look to appreciation of our common stock to realize a gain on their investment. There can be no assurance that this appreciation will occur.
Provisions in our certificate of incorporation and by-laws could have effects that conflict with the interest of shareholders.
Some provisions in our certificate of incorporation and by-laws could make it more difficult for a third party to acquire control of us. For example, our Board is divided into three classes with directors having staggered terms of office, our Board has the ability to issue preferred stock without shareholder approval, and there are advance notification provisions for director nominations and submissions of proposals from shareholders to a vote by all the shareholders under the by-laws. Florida law also has anti-takeover provisions in its corporate statute.
We are in the business of innovating and licensing our fundamental wireless technologies. We have designed and developed proprietary RF technologies and integrated circuits based on those technologies, and we license our technologies to others for use in wireless communication products. We have expended significant financial and other resources to research and develop our RF technologies and to obtain patent protection for those technologies in the U.S. and certain foreign jurisdictions. We believe certain patents protecting our proprietary technologies have been broadly infringed by others and therefore our business plan primarily consists of enforcement of our intellectual property rights through patent licensing efforts and infringementlitigation. We currently have patent enforcement actions ongoing in various U.S. district courts against mobile handset, smart television and other WiFi product providers, as well as semiconductor suppliers, for the infringement of a number of our RF patents. We have made significant investments in developing and protecting our technologies, the returns on which are dependent upon the generation of future revenues for realization.
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We continue to aggressively pursue licensing opportunities with wireless communications companies that make, use or sell semiconductors and/or products that incorporate RF technologies. We believe there are a number of wireless communications companies that can benefit from the use of the RF technologies we have developed, whether through a license or, in certain cases, a joint product venture that may include licensing rights. Our licensing efforts to date have required litigation in order to enforce and/or defend our intellectual property rights. Since 2011, we have been involved in patent infringementlitigationagainst Qualcomm and subsequently others for the unauthorized use of our technology. Refer to Note 12 to our consolidated financial statements included in Item 8 for a complete discussion of our legal proceedings. We have expended significant resources since 2011 and incurred significant debt for the enforcement and defense of our intellectual property rights. As of December 31, 2025, we had five licensees for our technologies.
Recent Developments
Legal Proceedings
In March 2026, our patent enforcement trial against MediaTek, scheduled to commence in the Western District of Texas, was postponed by the court pending updates to expert reports and related briefings by the parties. The court will issue a revised pretrial and trial schedule following its receipt of these submissions.
In January 2026, the CAFC granted our motion for an expected appeal of district court decisions in our patent infringement action against Qualcomm in the Middle District of Florida (Orlando division). Briefings by both parties are expected to be completed by March 2026 with oral arguments scheduled by the CAFC for the next available session after completion of briefing.
Refer to Note 12 to our consolidated financial statements included in Item 8 for a complete discussion of our patent enforcement proceedings.
Financing
In March 2026, we issued 3.3 million shares of our common stock in satisfaction of approximately $0.7 million in convertible debt and related accrued interest that was scheduled to mature in March 2026.
In November 2025, we completed two registered direct offerings with accredited investors under a shelf registration statement ("Shelf") for net proceeds of approximately $4.4 million. These proceeds are being used to fund our ongoing operations.
Liquidity and Capital Resources
With the exception of the year ended December 31, 2023, we have incurred significant losses from operations and negative cash flows in every year since inception, largely as a result of our significant investments in developing advanced technologies and protecting our intellectual property. We have utilized the proceeds from sales of debt and equity securities and contingent funding arrangements with third parties to fund our operations, including the cost of litigation to enforce our intellectual property rights. At December 31, 2025, we had cash and cash equivalents of approximately $4.4 million, working capital of $2.3 million, and an accumulated deficit of approximately $455.6 million.
For the year ended December 31, 2025, we incurred a net loss of approximately $7.4 million and used cash for operations of approximately $5.1 million. A significant amount of future proceeds that we may receive from our patent enforcement and licensing programs will be utilized to repay borrowings, legal fees, and litigation expenses under our contingent funding arrangements. We have $0.9 million in convertible debt, at conversion prices ranging from $0.08 to $0.13 per share, with maturity dates between July 2026 and January 2027 that we anticipate will be converted or extended in accordance with the current terms of the notes. Additionally, we issued 3.3 million shares of our common stock in March 2026 in satisfaction of $0.7 million in convertible debt and related accrued interest that matured in March 2026. Although all of our remaining convertible notes have conversion prices that are below the market price of our common stock, conversion is at the option of the holder and there can be no assurance that the holders will exercise their conversion option prior to maturity. Our independent registered public accounting firm has included in their audit report an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. See Note 2 to our consolidated financial statements included in Item 8 for a discussion of our liquidity and our ability to continue as a going concern.
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We used cash for operations of approximately $5.1 million and $3.2 million for the years ended December 31, 2025 and 2024, respectively. The increase in cash used for operations from 2024 to 2025 is primarily due to reductions in wages payable and other accrued liabilities from 2024 to 2025, along with an increase in prepaid insurance and prepaid services in 2025.
We paid approximately $0.1 million and $0.2 million in debt obligations during the years ended December 31, 2025 and 2024, respectively. During the years ended December 31, 2025 and 2024, we received aggregate net proceeds from equity-based financings and option and warrant exercises of approximately $4.8 million and $5.8, respectively.
Significant portions of our litigation costs to date have been funded by contingent payment arrangements with legal counsel. Fee discounts offered by legal counsel in exchange for contingent payments upon successful outcome in our litigation are not recognized in expense until such time that the related proceeds on which the contingent fees are payable are considered probable. Contingent fees vary based on each firm’s specific fee agreement. We currently have contingent fee arrangements in place for all of our active cases. In addition to our contingent fee agreements with legal counsel, we have secured and unsecured contingent payment obligations to third parties that have priority payments due from patent-related proceeds as discussed more fully under “Financial Condition - Contingent Payment Obligations” below.
Based on our current outstanding legal proceedings, funding arrangements and contingent payment arrangements, we estimate that up to 100% of our initial future proceeds will be used to repay contingent payment arrangements at least until the first $5.8 million of outstanding principal under our secured contingent payment obligation has been repaid. After repayment of $5.8 million in principal, we estimate that at least 75% of future proceeds could be payable to others until such time that certain minimum repayments have been achieved or our non recourse note matures in August 2028. The amount of proceeds payable to others depends on the proceeding and the nature, amount and timing of proceeds, among other factors.
Patent enforcement litigation is costly and time-consuming, and the outcome is difficult to predict. We expect to continue to invest in the support of our patent enforcement and licensing programs. We expect that cash flows generated from proceeds received from patent enforcement actions and/or technology licenses in 2026, after deduction of contingent payment obligations, may not be sufficient to cover our operating expenses and debt repayment obligations. In the event we do not generate revenues, or other patent-related proceeds, sufficient to cover our operational costs and contingent repayment obligations, we will be required to raise additional working capital through the sale of debt or equity securities or other financing arrangements.
The long-term continuation of our business plan is dependent upon our ability to secure sufficient financing to support our business, and our ability to generate revenues and/or patent-related proceeds sufficient to offset expenses and meet our contingent payment obligations and other long-term debt repayment obligations. Failure to generate sufficient revenues, raise additional capital through debt or equity financings, and/or reduce operating costs could have a material adverse effect on our ability to meet our short and long-term liquidity needs and achieve our intended long-term business objectives.
Financial Condition
Intangible Assets
We consider our intellectual property, including patents, patent applications, trademarks, copyrights, and trade secrets to be significant to our business. Our intangible assets are pledged as security for our secured contingent payment obligation with Brickell. The net book value of our intangible assets was approximately $0.7 million and $0.8 million as of December 31, 2025 and 2024, respectively. The cost basis for our intangible assets represents capitalized legal costs and agency filing fees for securing intellectual property protection and does not include the costs expended in developing the underlying intellectual property. The cost of our intangible assets is amortized using the straight-line method over their estimated period of benefit, generally fifteen to twenty years. The decrease in the carrying value of our intangible assets is primarily the result of $0.2 million in patent amortization expense recognized in 2025 as our portfolio matures. Management evaluates the recoverability of intangible assets periodically and considers events or circumstances that may warrant revised estimates of useful lives or that may indicate impairment exists. As part of our ongoing patent maintenance program, we may, from time to time, abandon a particular patent if we determine fees to maintain the patent exceed its expected recoverability.
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Contingent Payment Obligations
We have secured and unsecured contingent payment obligations recorded at an aggregate estimated fair value of $46.1 million and $46.7 million as of December 31, 2025 and 2024, respectively. These repayment obligations are contingent upon receipt of proceeds from patent enforcement and other patent monetization actions. We have elected to account for these contingent payment obligations at their estimated fair values which are subject to significant estimates and assumptions as discussed in “Critical Accounting Policies” below. Refer to Note 10 to our consolidated financial statements included in Item 8 for a discussion of the fair value measurement of our contingent payment obligations. The fair value of our contingent payment obligations may fluctuate significantly from period to period based on unpredictable changes in the status of our various patent litigation actions.
Our secured contingent payment obligation is payable to Brickell as a result of $23 million in aggregate borrowings under litigation funding arrangements initiated in 2016. As of December 31, 2025, we have repaid Brickell an aggregate of $17.3 million to date under these agreements. The contingent payment obligation to Brickell is recorded at its estimated fair market value of $39.7 million at December 31, 2025, a decrease of $1.1 million or 3% from the estimated fair market value at December 31, 2024. This decrease in fair value is primarily the result of changes in the estimated amounts and timing of projected future cash flows due to changes in probabilities and time frames based on the status of various patent infringement actions.
Brickell is entitled to the first $5.8 million in proceeds received by us, net of contingent legal fees, from any patent-related actions. Thereafter, Brickell is entitled to a prorated percentage of net proceeds. The underlying carrying value of the contingent payment obligation is represented by a non recourse note with a face value of $45.5 million, plus accrued interest of approximately $21.9 million as of December 31, 2025. The note matures on August 14, 2028. If our repayments to Brickell are insufficient to repay the face value of the note plus accrued interest by the maturity date, our remaining repayment obligations under the note will be reduced to zero with future payment obligations, if any, being determined under a separate prepaid forward purchase agreement that entitles Brickell to a specified percentage of monetary recoveries resulting from patent-related actions to the extent not already paid to Brickell under the note or previous litigation funding agreements.
In addition, we have incurred unsecured contingent payment obligations in connection with various funding arrangements. These contingent payment obligations are payable from our share of patent-related proceeds after satisfaction of our priority obligation to Brickell and payment of contingent fees to legal counsel. These unsecured contingent payment obligations are recorded at an aggregate estimated fair value of $6.4 million at December 31, 2025, representing an increase of $0.5 million, or 8.5% from the estimated fair market value at December 31, 2024. This increase is primarily the result of changes in the estimated amounts and timing of projected future cash flows due to changes in probabilities and time frames based on the status of various patent infringement actions. The maximum payment obligation for our unsecured contingent payment obligations is $10.8 million at December 31, 2025.
See “Change in Fair Value of Contingent Obligations” included in “Results of Operations” below for a discussion of the changes in the estimated fair values of our secured and unsecured contingent payment obligations.
Note Payable
As of December 31, 2025, we have a $0.2 million unsecured note payable to Sterne, Kessler, Goldstein, & Fox, PLLC (“SKGF”), a related party. The note calls for monthly payments of $12,500 through March 2027 with a final payment of approximately $0.02 million in April 2027. Failure to comply with the payment terms of this note constitutes an event of default which, if uncured, will result in the entire unpaid principal balance of the note and any unpaid, accrued interest to become immediately due and payable. In addition, an event of default results in an increase in the interest rate under the notes to a default rate of 12% per annum. Notes payable are discussed more fully in Note 7 to our consolidated financial statements included in Item 8.
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Convertible Notes
As of December 31, 2025 and 2024, we had $3.1 million and $3.5 million, respectively in notes, convertible at the holders’ option, into shares of our common stock at fixed conversion prices ranging from $0.08 to $0.25 per share. The decrease in the carrying value of our convertible notes is the result of approximately $0.4 million in notes that were converted into approximately 3.0 million shares of our common stock during 2025. The outstanding convertible notes as of December 31, 2025 mature at varying dates from January 2026 to January 2028. Notes representing approximately 45% of the outstanding principal balance are held by a single party and contain provisions for automatic extension of the maturity dates of the notes by up to ten one-year periods, if not revoked at the option of the holder.
The notes bear interest at stated rates ranging from 7.5% to 9% per annum and interest is generally payable quarterly. We have the option, subject to certain conditions, to pay the quarterly interest in-kind with shares of our common stock based on the market price of our common stock at the interest payment date. To date, nearly all of the interest payments under these convertible notes have been paid in-kind, and we anticipate that future payments of interest will also be paid in-kind to the extent allowable. The notes provide for events of default that include failure to pay principal or interest when due, breach of any of the representations 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 notes. Our convertible notes payable are more fully discussed in Note 8 to our consolidated financial statements included in Item 8.
Deferred Tax Assets and Related Valuation Allowance
Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established to reduce deferred tax assets when, based on available objective evidence, it is more likely than not that the benefit of such assets will not be realized. As of December 31, 2025, we had net deferred tax assets of approximately $79.9 million, primarily related to our NOL carryforwards, which were fully offset by a valuation allowance due to the uncertainty related to realization of these assets through future taxable income. In addition, our ability to benefit from our NOL and other tax credit carryforwards could be limited under Section 382 as more fully discussed in “Risk Factors” and in Note 11 to our consolidated financial statements included in Item 8.
Results of Operations for Each of the Years Ended December 31, 2025 and 2024
Revenues and Gross Margins
We reported no licensing revenue for the years ended December 31, 2025 and 2024. Our licensing revenue is from patent licensing and settlement agreements resulting from patent enforcement actions filed by us. To date, all of our license and settlement agreements have consisted of a one-time, lump sum payment with no recurring future revenue. We recognized revenue from each contract when the parties’ performance obligations were met. Cost of sales related to the licensing revenue consists of amortization expense for the patents covered under the license agreements. Our licensing revenue is expected to vary based on the market size of the licensee and the specific terms of the license and settlement agreement.
Although we anticipate additional revenue to result from our licensing and patent enforcement actions, the amount and timing is highly unpredictable and there can be no assurance that we will achieve our anticipated results.
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Selling, General, and Administrative Expenses
Selling, general and administrative expenses consist primarily of executive, director, technical support, and finance and administrative personnel and third-party consulting costs, including share-based compensation, costs incurred for insurance, shareholder relations and outside legal and professional services, including litigation expenses, and maintenance expenses related to our patent assets.
Our selling, general and administrative expenses were approximately $7.6 million for the year ended December 31, 2025, as compared to approximately $4.3 million for the year ended December 31, 2024, representing an increase of approximately $3.3 million or 78%. This increase results primarily from a $2.9 million increase in total share-based compensation and a $0.8 million increase in third-party consulting and lobbying fees, partially offset by a $0.4 million decrease in personnel related expenses.
The increase in share-based compensation is the result of new share-based compensation awards to non-employee directors and third-party consultants, as well as a one-time, noncash charge of $2.5 million which reflects the compensation cost recognized upon the modification of awards for executives and key employees during the second quarter of 2025 to extend the maturity date of those awards by five years. The increases in third-party consulting and lobbying fees is a result of increased expenditures related to our social media and public awareness campaigns and business and financial advisory services incurred in 2025. The decrease in personnel related expenses is due to 2024 bonuses to executives and other key employees, partially offset by increased base salaries for executives and key employees in 2025.
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 material 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 resulting from increases in funded amounts, changes in estimated potential proceeds, the passage of time, and changes in the probabilities based on the litigation status of the funded actions.
For the year ended December 31, 2025, we recorded a net decrease in the aggregate fair value of our secured and unsecured contingent payment obligations of approximately $0.6 million, compared to an increase in the aggregate fair value of approximately $9.6 million for the year ended December 31, 2024. The majority of the change in fair value is attributable to changes in the estimated amounts and timing of projected future cash flows due to changes in the litigation status of various patent infringement actions. The significant increase in fair value in 2024 was, in part, the result of a September 2024 favorable CAFC decision that remanded our infringement action against Qualcomm to the district court.
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Critical Accounting Policies
We believe that the following are critical accounting policies and estimates that significantly impact the preparation of our consolidated financial statements:
Contingent Payment Obligations
We have accounted for our secured and unsecured contingent payment obligations as long-term debt. Our repayment obligations are contingent upon the receipt of proceeds from patent enforcement or other patent monetization actions. We have elected to measure our contingent payment obligations at their estimated fair values based on the variable and contingent nature of the repayment provisions. We have determined that the fair value of our secured and unsecured contingent payment obligations falls within Level 3 in the fair value hierarchy, which involves significant estimates and assumptions including projected future patent-related proceeds and the risk-adjusted rate for discounting future cash flows. Actual results could differ materially from the estimates made. Changes in fair value, including the component related to imputed interest, are included in the consolidated statements of comprehensive loss under the heading “Change in fair value of contingent payment obligations.” Refer to Note 10 to our consolidated financial statements included in Item 8 for a discussion of the significant estimates and assumptions used in estimating the fair value of our contingent payment obligations.
New Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses. This update requires disclosure of the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense line item on the income statement. The standard also requires a qualitative description of other amounts included in each relevant expense line item on the income statement that are not separately disclosed. In addition, entities are required to disclose the nature and amount of selling expenses. The amendments in ASU 2024-03 are effective for annual periods beginning after December 15, 2026, which for the Company would be applicable to fiscal year 2027, and for subsequent interim periods. Early adoption is permitted and the amendments should be applied on a prospective basis. Retrospective application is permitted. Adoption of this guidance will result in additional disclosures, but we do not expect the adoption of ASU 2024-03 to materially impact our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20) - Induced Conversions of Convertible Debt Instruments. This update clarifies the assessment of whether a transaction should be accounted for as an induced conversion or extinguishment of convertible debt when changes are made to conversion features as part of an offer to settle the instrument. ASU 2024-04 is effective for reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods. Early adoption is permitted for entities that have adopted ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity (Subtopics 470-20 and 815-40). We are currently evaluating the impact of this new accounting guidance.
Off-Balance Sheet Transactions
As of December 31, 2025, we had outstanding warrants to purchase 4.3 million shares of our common stock. The estimated grant date fair value of these warrants of approximately $3.0 million is included in shareholders’ deficit in our consolidated balance sheet for the year ended December 31, 2025. The outstanding warrants have an average exercise price of $1.05 per share and a weighted average remaining life of approximately 2.1 years.
