© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day, and welcome to the ParkerVision Second Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.
I would now like to turn to turn the conference over to Ms. Jean Young, from The Piacente Group. Ma'am, you may begin.
Thank you, Brian. Good afternoon, everyone. Thank you all for joining us today. Before we begin, I'd like to remind you that this conference call will contain forward-looking statements, which involve known and unknown risks and uncertainties about our business and the economy as well as other factors that may cause our actual results to differ materially from expected achievements and anticipated results.
Included in these risks are the Company's ability to maintain technological advances in the marketplace, the ability to secure new customers for our products and technologies, maintaining our patent protection and the outcome of litigation, among others. Given these uncertainties as well as other factors related to our business, we caution you not to place undue reliance on any forward-looking statements contained in this conference call. Additional information concerning these and other risks can be found in our periodic filings with the U.S. Securities and Exchange Commission.
On today’s call, we will hear from Cindy Poehlman, Chief Financial Officer, who will provide a review of the Company’s financial results for the second quarter 2018. Following Cindy’s remarks, Jeffrey Parker, Chief Executive Officer, will provide an update on the Company’s business.
Thank you, again for joining us. And with that, I’d like to turn the call over to Cindy. Please go ahead.
Thank you, Jean, and good afternoon to those of you joining us for ParkerVision’s second quarter 2018 conference call. We reported this afternoon a net loss of $4.5 million or $0.18 per share for the second quarter of 2018, compared to a net loss of $3.7 million or $0.21 per share for the second quarter of 2017.
The increase in our net loss is primarily the result of a $500,000 increase in the estimated fair value of our secured contingent payment obligation that's payable to our litigation funding partner along with increases in operating expenses primarily related to our Milo product line.
On a non-GAAP basis, our adjusted net loss was $3.6 million or $0.14 per share for the second quarter of 2018, compared to $3.2 million or $0.18 per share for the second quarter of 2017. For the first half of the year in 2018, we reported a net loss of $8.8 million or $0.39 per share which compares to a net loss of $8.5 million or $0.52 per share for the first half of 2017.
The increase in net loss on a year-to-basis is again the result of nearly $1 million increase in the loss recognized from the change in estimate of our secured contingent payment obligation, and that increase was partially offset by decreases in research and development expenses and share-based compensation.
On a non-GAAP basis, our adjusted net loss was $7.1 million from $0.32 per share for the first half of this year, compared to $7.5 million or $0.46 per share for the first half of last year. We did see a decrease in our Milo revenue in the second quarter when compared to the first quarter of this year. We believe this decrease is a result of our decision to divert advertising dollars towards our national television campaign which launched last week. We will be closely evaluating results of this campaign over the coming weeks as we work to maximize the potential revenue growth that it can generate.
Liquidity continues to be an area of focus for the Company. During the second quarter of 2018, we used amounts available under our ATM agreement and our Aspire equity line as well as additional proceeds from our litigation funding partner to provide working capital. We also recently entered into a private transaction with the Aspire Capital for the sale of up to $2 million in equity securities in two tranches; the first of which closed on July 26.
Before I turn the call over to Jeff for his comments, I want to talk briefly about our NASDAQ listing. As we reported in our earnings release today, we have failed to regain compliance with NASDAQ’s continued listing requirements, despite the extension granted to us by NASDAQ’s Hearing Panel in March of 2018.
It's our understanding that the Hearing Panel is unable to grant extensions beyond August 13, 2018, which was yesterday. So although, we have yet to receive the official notice from NASDAQ, we do anticipate a notice in the coming days. We have preemptively applied for listing on the OTC market and expect that we will be able to transition to the OTC market without delay. I am available for questions at the end of today’s call, but for now, I would like to turn things over to Jeff for his business update.
Thank you, Cindy and good afternoon to those of you who are attending our second quarter conference call today. So following up from Cindy's update and our comments on the earnings release today regarding our NASDAQ compliance, one of the significant contributing factors to our noncompliance is our nearly $16 million deficit in shareholder equity. Because of the manner in which we must account for the contingent liability to our litigation funder, we have an $18.4 million liability on our balance sheet that creates this deficit. A liability that is completely contingent upon the receipt of future proceeds to be realized.
While this accounting treatment certainly defies logic, we are certain of the manner in which we've accounted for this contingent obligation is in accordance with Generally Accepted Accounting Principles or GAAP, we along with our funding partner, made significant efforts to try to find a way to modify the agreement such as investment the funder has made in our patent enforcement program is classified as equity rather than a long-term liability, but despite everyone's best efforts, we've been unable to achieve that goal.
So I guess one could ask has this investment been worth it? Should we continue to pursue the unauthorized use of our most valuable asset, our patent-protected intellectual property? We believe the answer is, resounding, absolutely. Because of the significant contribution, our innovations have made to one of the largest ever product categories, namely mobile wireless products and the communications associated with that, the infringement of our patented technology is widespread, currently shipping in the billions of units just here in United States.
And so while the cost of ParkerVision and its shareholders has been significant, the value of the damages that we believe will ultimately be recognized makes this investment very worthwhile and one that we should remain steadfast to pursue. It's frustrating beyond what I can express, the inability to timely enforce patent infringement in the United States.
It's led to the United States being ranked number 12 in the world in patents for the first time in history, it's led venture investor to now place more investment in China than the United States for the first time in history, and it sends a clear signal that the kind of innovation that needs patent protection, which historically has been our most important and valuable advances, should be developed and protected in other countries than the United States where innovators are protected and the risks that they take are recognized.
The encouraging news is that a recent dialogue in Capitol Hill has shifted away from an obsession with patent troll mania and abolishing bad patents and it's shifted to a concern about the health of the overall innovation economy of the United States, and the need to have a patent system that supports innovation by truly protecting innovators in a timely manner.
There are now multiple bills in Congress, that are being readied by both side of the aisle, that aim to bring back the kinds of patent enforcement protections for innovators that have been eroded or taken away altogether in recent times. The Stronger Patent Act, which is working its way through committee in both, the Senate and The House with sponsorships by both parties, aims to bring back conjunctions, curtail or eliminate IPR patent challenges and to advance our patent systems to create better quality patents not indiscriminately eliminate patents.
So while our endeavor to enforce the infringement of our patented technology has taken much longer than we could have ever imagined. We remain committed to the successful conclusion of our enforcement. There appears to be the start of the trend to put an effective system back in place for the health and future welfare of our country's economy.
As hopeful as we are however, the near-term result that can achieve significant success for ParkerVision are to be found in our enforcement actions ironically enough in Germany, where we have three cases underway. One case each against Apple and LG using Qualcomm chips and one case against Apple using Intel chips. All three of these cases have the opportunity to give an injunction in the near term, we believe this year, if the court finds favorably for ParkerVision. Any one of these cases, we believe, can achieve meaningful results for the Company.
So as I said earlier, we are going to remain steadfast in the enforcement of our intellectual property. It is a little ironic that the larger the value that the invention brings, the more difficult it is to actually get a result that makes any kind of sense.
Anyway onto the progress of the sales and marketing of our Milo WiFi products, we launched a national direct response TV campaign a week ago. The key to successful direct response campaign is the continuous analysis and adjustment in order to maximize the potential of the campaign with the goal of scaling of the campaign once we've calibrated the efficiency of the program. We're in the very early stages of this campaign and are determining on a nearly real-time basis, which markets are most effective and continuously adjusting and improving our media plan to reinforce the effectiveness on the campaign.
Candidly, I wish our call was a few weeks later because I think we have more to talk about. But we look forward to bringing you an update once we have some weeks under our belt probably just several weeks of this campaign under our belt. And then in the meantime, you can see the Milo commercials for yourself on channels such as ESPN news, ESPN Classic, Bravo, Discovery and many other channels.
And so, I think, that's about our update for this quarter. And I'd like to open the questions – the call to your questions?
Thank you. [Operator Instructions] And our first question comes from the line of Jon Hickman from Ladenburg. Sir, your line is open.
Hey, Jeff. This is Jon. I kind got a little bit late. Could you give us any kind of implication of the number of advertisements that have been delivered so far either in print, radio, Internet, TV from the national ad campaign?
Jon, I think, the first week is – I don't have the exact – the way that the direct marketing campaign looks at this is not so much by the number of air I mean they partially look at the number of advertisement, but it's more on what they call the number of impressions. Impressions meaning how many people were watching the commercials when you aired those advertisements, and so our first week was probably somewhere between $1 million and maybe $1.25 million impressions.
And that's just a very beginning of the program. Ultimately, that will be scaled of to a multiple of that and it wouldn't surprise me if we get to a multiple of that by the end of this week. But that’s really how the direct response campaigns are measured, it's how many people were watching your ads and then from there you look for certain response, and then you look for a certain conversion from that response depending upon whether it's calls into the 800 numbers or calls – or response to the website where people can order.
But it's – I find this to be a very interesting campaign because you really can see things happen in the real-time. And you can make changes – you can't make changes quite real time, but you can make changes compared to where have alpha been involved in almost in real time.
And we’re working with people who've done a lot of campaigns and have placed a lot of dollars in advertising and we're getting a lot of good guidance on what to do next and what to expect. And I'm, right now, pretty encouraged. But let’s wait and see this things play out over the coming weeks and then we'll give you an update.
Okay, how many weeks did you say?
Several weeks, probably more than a couple, but not a month, so three weeks – maybe a month, something like that.
So out of all of your legal things the one is more interesting to me in near-term is that the Germany case that with Intel chips against Apple. Can you give us any kind of further update on where we are with like a final hearing or ruling from the judge or something – Germany's on occasion, what can you say about that?
Sure. So I share your interest in that case, I also believe that case has some very interesting elements to it. First of all, I think the patent in that case is clear about what's being infringed. I've been closely working with the briefs and I candidly like our position a lot.
And I think, I reported in the earlier conference calls that last year and we had the judge called out the Apple litigator for changing his position roughing around and not telling the truth. And so I can just tell you that the final brief that Apple's filed in this case did not bring anything new to the argument. It was really the same thing they've been saying in the past.
The only thing that I've seen that's new, which, I think, is interesting is that they expressed what they claim is used inside of the phone to do the down conversion. And they specifically signed a patent today that they show. And I find it pretty incredible because there's no way that what they're saying can be used in the phone – will be used in the phone.
So in any offense, what we expect next is that the court will set for two things, it's possible according to our litigator that the judge will issue a preliminary ruling. And I would hope that he'd issue a preliminary ruling at the minimum of infringement. He certainly wouldn't make us an happy if you issued a preliminary ruling of an injunction, which, I think, they’ve earned, but that's his call, not ours.
And then he will likely set a final hearing date, which we've been told will be in the very near term, he's going to have to find dates that both parties can accommodate. But we're expecting that would be hopefully in September, hopefully not past October, but some time in that time range. And that should the final hearing and from there, he should make a decision. And my view is that we currently see that the decision should be in injunction unless Apple would like to figure out a way to come to a business agreement on this.
And what about you – do you – from the IPR appeal, you have anything on that yet, I take it?
No, that appeal occurred on Tuesday of last week. You can listen to the recording, it's available. I was there and I was in the recording a couple of times. And I think that our litigator did a very good job of explaining our position and I thought the judges, we have a three-judge panel at the appellate court. I thought the judges were engaged and actually quite knowledgeable about the case.
And just as a synopsis, the lower courts, which is the PCAOB rule that the method claims of the challenged patents were not invalid, so they've found for ParkerVision and they ruled that the apparatus claims were anticipated and so those were not – those will not remain, not in the hood. And so we appealed the apparatus claims, Qualcomm appealed the method claims and now we await for the court to make a decision on that.
If they were going to make a fast decision, which would have just affirm the lower court ruling, they would have done what's called Rule 36, which is basically a single sentence that says we affirm the lower court. And typically, Rule 36s occur, I've been told, within 10 business days or less. And from what I've seen at Rule 36 is usually more like five days, six days. So we're kind of getting to the point where it doesn't look like we're going to get a Rule 36, but it's possible, again, I'd say up to about 10 days is not unheard of.
If we don't get a Rule 36, that means that they're going to write an opinion. And that can take one, two, three months, you just don't know. But if you'll listen to the recording, you can kind of come to your own conclusion, but the opinion, if they are not going to do a Rule 36 means that they're likely going to flip the ruling at the PTAB in one direction or the other, meaning, they're either going to say okay, we don't think that the lower court got the correct decision either by invalidating the apparatus claims or by giving us the method claims, it's one or the other, so it's probably all going to go one way or the other.
I think that from the conversation in the hearing, well, I'll tell you why. I don't want to predict what the judge is going to do, I've been doing this too long now to foray into that. Let's just say I like our position a lot, and we'll have to wait and see what they do. But it seems like it's becoming less likely there is going to be a Rule 36 and more likely there's going to be a full opinion. So let's wait and see what they do.
Okay. Thank you.
Thank you, Jon.
And our next question comes from the line of [Louis Teardon], Private Investor. Sir, your line is now open.
Hi Jeff.
Hi Lu.
How are you?
I am doing fine. Thank you. How about yourself?
Good. Well, obviously, and Cindy alluded to this, liquidity is just a huge deal right now. And you did do the deals with this buyer, and that's going to flat liquidity. But there is a giant hope out there that the sales of Milo do well, and I know it's early in the game – it is nine days, since you started. This is our ninth day, since you started. So can you give us some idea of unit sold?
Lu, I'd rather not give guidance on that till we get little further in. I can only tell you this, the guys who do this for living and who've been doing it for decades and we're working with firms who've been doing this for 30-plus years have told us that what you really expect to see in a campaign like this, you can start to get some kind of meaningful analysis at the earliest at the end of the second-week and more likely in the third and fourth-week. So right now, I think, it's hopeful from what we've seen, but I want to see how this thing evolves and I want to see how this thing scales.
Part of the campaign – part of the trick of the campaign is how many times can you repeat the commercial? And you got to mind the bets between the cost of that commercial and the repetition and the profile of the customer that you think is the right buyer and who watches those channels et cetera to be candid with you, if we unlock the secret to all that, which I'm kind of optimistic that we will, the last place I'm going to communicate that is going to be on the conference call.
We work too hard and spend too much money for me to give to our competition the recipe and the key to the store. So what I hope to be able to bring you guys is hey, here's a nice result, you how we're getting them? Good, you shouldn't. Okay, so I don't think – we kind of joke about it, but honestly, this is a really a ton of effort and work that the team has put into this. And I'm beginning to see how this kind of campaign can really provide a meaningful revenue growth for the company and if we're able to get to that goal and right now, I think, that we can, we're going be pretty tight-lipped about how we did it.
Okay. Follow-up, because I'm just obviously there is an liquidity, I think every investor is. You filed your S1 the other day, right? Can you sort of tell us that has to be approved so that you can do the second drawdown from the Aspire, can you tell us where that all sits?
Currently, the way it's been organized is once we have the registration statement approved then we get the next tranche of funding. And we'll also likely working with the Aspire on putting our equity line into a situation that is also usable, they've extremely support and helpful and from my conversations with them is, they want to continue to remain very supportive of this campaign.
This is Cindy. It's a little bit early, it's only been may be twofold, may be threefold business days since we filed the S1. So it's too early yet to say how quick it can go effective, but we it hadn't gone effective as early as a week to 10 days after we filed it. So we should hear something in the next few days.
Okay. That’s all I have.
Thank you, Lu. Thanks for taken the time to – through the update, you bet.
Okay.
End of Q&A
And this concludes our Q&A session. I will now turn the call back to Jeff Parker, CEO for any closing remarks.
Well, folks, thank you for tuning in to hear the update today. As I mentioned earlier, we wish our call was a little bit few weeks from now so we can give you more sense on the Milo, but we will keep everybody updated and we'll talk with you again soon. Have a good evening. Bye-bye.
Ladies and gentlemen, thank you for your participation in today's conference call. This concludes today’s program, and you may all disconnect. Everyone have a great day.