2. Liquidity and Going Concern

For the six months ended June 30, 2026, we incurred a net loss of approximately $1.4 million and incurred negative cash flows from operations of approximately $1.7 million.  At June 30, 2026, we had cash and cash equivalents of approximately $2.5 million and an accumulated deficit of approximately $457.0 million.  At June 30, 2026, we had working capital of $0.8 million, a decrease of approximately $1.5 million from working capital at December 31, 2025.  Our current liabilities at June 30, 2026 include $1.1 million in convertible debt that matures over the next twelve months if not converted, extended under the terms of the note, or otherwise modified.  The timing and amount of proceeds, if any, from our patent enforcement actions are difficult to predict.  Furthermore, a significant amount of future proceeds that we may receive from our patent enforcement and licensing programs will be utilized to repay borrowings and legal fees and expenses under our contingent funding arrangements.  These circumstances indicate there is 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 unaudited condensed consolidated financial statements. 

We expect that proceeds received by us from patent enforcement actions and technology licenses over the next twelve months may not alone be sufficient to cover our working capital requirements.  We anticipate that all of our outstanding convertible notes will either (i) be converted by the holders prior to their scheduled maturity dates, or (ii) have their maturity dates automatically extended as provided under the terms of certain agreements; however, conversion and/or extension is at the option of the holder and there can be no assurance with respect to the holder's behavior.  Even with the conversions or extensions of our convertible debt by the holders, our current capital resources are not sufficient to meet our liquidity needs for the next twelve months 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, (iii) the behavior of our convertible note holders, and/or (iv) our ability to obtain additional debt or equity financing. 

We expect to continue to invest in the support of our patent licensing and enforcement program.  The long-term continuation of our business plan is dependent upon the generation of sufficient cash flows from our technology licenses to offset expenses and debt obligations.  In the event that we do not generate sufficient cash flows, we will be required to obtain additional funding through public or private debt or equity financing or contingent fee arrangements and/or reduce operating costs.  Failure to generate sufficient cash flows, raise additional capital through debt or equity financings or contingent fee arrangements, and/or reduce operating costs will have a material adverse effect on our ability to meet our long-term liquidity needs and achieve our intended long-term business objectives.