UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended December 31, 2015

or

For the transition period from      to             

Commission File Number: 001-16073

UNWIRED PLANET, INC.

(Exact name of registrant as specified in its charter)

(650) 518-7111

(Registrant’s telephone number, including area code)

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  x     No   o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x     No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 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   o     No  x

As of February 4, 2016 there were 9,429,948 shares of the registrant’s Common Stock outstanding.

UNWIRED PLANET, INC.

Table of Contents

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

UNWIRED PLANET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

Unaudited

See accompanying notes to condensed consolidated financial statements

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UNWIRED PLANET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Unaudited

See accompanying notes to condensed consolidated financial statements

4

UNWIRED PLANET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

Unaudited

See accompanying notes to condensed consolidated financial statements

5

UNWIRED PLANET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Unaudited

See accompanying notes to condensed consolidated financial statements

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UNWIRED PLANET, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

(1) Organization and Basis of Presentation

Organization

Unwired Planet, Inc. (referred to as “Unwired Planet” or the “Company”) is an intellectual property licensing company with a portfolio of worldwide mobile technology patents and patent applications. Our patents are held in two subsidiaries, Unwired Planet LLC, a Nevada corporation, and Unwired Planet International Limited, an Irish company, and cover a wide range of technology in the mobile ecosystem.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of December 31, 2015 and June 30, 2015, and the results of its operations for the three and six months ended December 31, 2015 and 2014, and cash flows for the six months ended December 31, 2015 and 2014. The following information should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2015.

On December 4, 2015, the Company’s stockholders approved a one-for-twelve (1:12) reverse stock split of its common stock.  The reverse stock split was effective on January 5, 2016. The number of authorized shares of common stock was reduced from one billion to 350 million with the effectiveness of the reverse stock split. All per share amounts in these unaudited condensed consolidated financial statements and accompanying notes have been retroactively adjusted to the earliest period presented for the effect of this reverse stock split.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with the accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of cash and highly liquid investments with remaining maturities of 90 days or less at the date of purchase. Cash equivalents consist primarily of exchange traded money market funds. The Company is exposed to credit risk in the event of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured by the FDIC or SIPC.

Recently Issued Accounting Pronouncements

There are no recently issued accounting pronouncements that are expected to have a material impact on the Company’s financial position, results of operations, or cash flows.

(2) Stockholders’ Equity

Common Stock

As of December 31, 2015, the Company had  9,449,739 shares of common stock issued and 9,428,285 shares of common stock outstanding.

During the six months ended December 31, 2015, the Company:

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Options

During the six months ended December 31, 2015, the Company granted stock options to both employees and non-employees.  The fair value of options is estimated on the date of grant using a Black-Scholes-Merton option pricing model.

The following table illustrates the assumptions used in estimating the fair value of the options during the six month period ended December 31, 2015:

A summary of option activity is presented below (in thousands except per share and year amounts):

The estimated grant date fair value of options granted during the six months ended December 31, 2015 was $0.7 million. No options were granted during the six months ended December 31, 2014. As of December 31, 2015, there was $2.4 million of unrecognized compensation costs related to outstanding options.

Restricted Stock Awards and Units

During the six months ended December 31, 2015 and 2014, the Company granted 42,000 and 91,334 restricted stock units, respectively, with a grant date fair value of $0.5 million and $1.8 million, respectively.  As of December 31, 2015 the Company had 71,000 outstanding restricted stock units with unrecognized compensation cost totaling $0.8 million.

During the three months ended December 31, 2015 and 2014, the Company recognized stock based compensation of $0.6 million and $0.5 million, respectively; and $1.2 and $0.9 million for the six months ended December 31, 2015, and 2014, respectively.

(3) Borrowings

Senior Secured Notes

The Company’s Senior Secured Notes (“Notes”) are summarized below (in thousands):

For the six months ended December 31, 2015 and 2014, the Company recognized interest expense of $2.5 million and $2.1 million, respectively, inclusive of in-kind note issuances, and discount and issuance cost amortization.  Interest expense of $1.3 million and $1.1 million was recognized during the three months ended December 31, 2015 and 2014, respectively.

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In December 2015, the Company extended the maturity date of the Notes from June 30, 2018 to June 30, 2019.  The extension of the maturity date did not result in a material modification to the present value of the cash flows associated with the payment due at maturity.

(4) Net Loss Per Share

The following table sets forth potential shares of Company common stock that are not included in the diluted net loss per share calculation because to do so would reduce net loss per share for the periods indicated below (in thousands): 

(5) Financial Instruments

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements do not include transaction costs.  A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values.  Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.  The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The carrying amount of cash and cash equivalents approximates fair value because of the short-term maturity and is based on Level 1 fair value hierarchy inputs.  The carrying amount of the Company’s other current assets and liabilities, with the exception of short-term investments, approximate fair value based on the short-term maturity of the instruments using Level 2 inputs.

Investments - the Company’s investment policy is consistent with the definition of available-for-sale securities. From time to time, the Company may sell certain securities but the objectives are generally not to generate profits on short-term differences in price.  The fair value of the Company’s short-term investments, which approximate amortized cost using Level 1 inputs, was zero and $11.7 at December 31, 2015 and June 30, 2015, respectively.

Long-Term Notes Payable - The Company’s long-term notes payable were recognized on a fair value basis using Level 3 inputs on the date of entry into the obligation and are not subject to fair value estimation on a recurring basis.

(6) Commitments and Contingencies

Contingent Legal Expenses

In connection with patent infringement litigation filed by the Company in the U.S. and Europe, the Company entered into two engagement agreements for legal services rendered to Unwired Planet, Inc. and its subsidiaries, both of which included a blended fixed fee and contingent “success fee” arrangement.  In both cases, the fixed fee element of both engagement agreements concluded on June 30, 2015, but the contingent fee arrangement continues.  In the case of the European litigation engagement agreement, the contingent fee arrangement was payable upon the first finding of validity and infringement in the United Kingdom, which occurred in December 2015.  The parties continue to discuss the exact amount of the contingent fee due to the law firm; however, the Company has accrued an estimated obligation due at December 31, 2015 of $4.3 million and does not expect to incur obligations in excess of this amount.  With respect to the U.S. litigation, the engagement letter with the law firm provides that the contingency fee is based upon proceeds net of Ericsson’s fee share under the terms of the Master Sale Agreement by and among Telefonaktiebolaget L M Ericsson, Cluster LLC, Unwired Planet, Inc., Unwired Planet IP Holdings, Inc., Unwired Planet IP Manager, LLC, and Unwired Planet, LLC dated January 10, 2013, as amended (the “MSA”).  In both of the U.S. cases covered by this contingency fee arrangement, the trial courts ruled against the Company, and the matters are now on appeal to the U.S. Court of Appeals for the

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Federal Circuit.  Given the initial rulings against the Company, it is unclear whether the contingency fee provisions of the fee arrangement for the U.S. litigation will ever be triggered.

Under court rules in the United Kingdom, parties to litigation are entitled to reimbursement of its attorney’s fees with respect to portions of the case on which it prevails.  The Company will become liable for the opposing parties’ attorney fees and costs if it loses all or a portion of the pending litigation in the United Kingdom.  The Company has not accrued for any such losses as of December 31, 2015 because the amount of such loss was not reasonably estimable nor was a loss in the pending United Kingdom litigation probable as of December 31, 2015.

In August 2015, the Company engaged a consultant to assist in the progression of its international patent enforcement litigation efforts, primarily focused in the United Kingdom (“UK”).  As part of this engagement, the Company agreed to pay the consultant for various types of favorable outcomes as mutually agreed by the Company and the consultant.  The fees, paid on a per outcome basis, range from $100,000 to $200,000 depending on the various components of the litigation.  At December 31, 2015, the Company accrued $200,000 of success fees payable associated with a UK High Court ruling in November 2015.  The Company cannot reasonably determine the likelihood of additional favorable outcomes related to other on-going litigation and has not recognized additional success fees payable as of December 31, 2015.

Other Legal Matters

From time to time, the Company may be involved in litigation or other legal proceedings, including those noted above, relating to or arising out of its day-to-day operations or otherwise. Litigation is inherently uncertain and the Company could experience unfavorable rulings. Should the Company experience an unfavorable ruling, there exists the possibility of a material adverse impact on its financial condition, results of operations, cash flows, or on its business for the period in which the ruling occurs and/or in future periods.

Operating Lease

In September 2015, the Company entered into a three year lease with a base monthly rent of $11,250 to move its corporate headquarters to Los Altos, California. Upon execution of the lease, the Company paid a $50,000 refundable deposit. For the periods ended December 31, 2016, 2017, and 2018 the Company is obligated to pay approximately $100,000 per year.

(7) Patent License and Patent Purchase Agreements

In March 2014, the Company entered into a Patent License Agreement (“License Agreement”) with a subsidiary of Lenovo Group Limited (“Lenovo”). License fee revenue is recognized ratably over the estimated licensing term of seven years and the Ericsson fee share is 20% of the gross licensing revenue.

The following table summarizes gross license revenue, fee share, and net revenue for the six month period ended December 31, 2015 (in thousands):

The following table summarizes the licensing revenue recognition and Ericsson fee share for the License Agreement over the remaining term of the License Agreement:

The net revenue amounts above are recorded as deferred revenue on the Condensed Consolidated Balance Sheets.

(8) Subsequent Events

On January 6, 2016, the Board of Directors of Unwired Planet, Inc. (the “Company”) appointed H. Steven Wilson to the Board of Directors. Mr. Wilson will serve on the Company’s Audit Committee and the Nominating and Corporate Governance Committee.  As

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a newly appointed non-employee director, Mr. Wilson is entitled to receive equity compensation for his services on the Board of Directors of the Company.  Pursuant to the Company’s Second Amended and Restated 1999 Directors’ Equity Compensation Plan, the Company has granted Mr. Wilson 7,639 restricted stock units. The restricted stock units vest in full on December 4, 2016, contingent upon Mr. Wilson’s continued service on the Board of Directors of the Company.

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

Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are based upon current expectations and beliefs of our management and are subject to risks and uncertainties that may cause actual events and results of performance to differ materially from those indicated by these statements. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, and similar expressions identify such forward-looking statements. Such statements address future events and conditions concerning intellectual property acquisition and development, licensing and enforcement activities, investment plans, capital expenditures, earnings, litigation, regulatory matters, markets for our services, liquidity and capital resources, and accounting matters. Actual results in each case could differ materially from those anticipated in such statements by reason of factors such as future economic conditions, changes in demand for our technology, legislative, regulatory and competitive developments in markets in which we and our subsidiaries operate, results of litigation, and other circumstances affecting anticipated revenues and costs. The occurrence of the events described above or below could harm our business, results of operations, and financial condition. These forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements except as required by law. Readers should carefully review the risk factors described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2015, and additional risk factors disclosed in Part II., Other Information, Item 1A., Risk Factors in this Form 10-Q. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2015 and the unaudited condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q.

Overview of Our Business

Unwired Planet, Inc. and, along with our subsidiaries, reporting on a consolidated basis, (referred to as “Unwired Planet”, the “Company”, “our”, “we”, or “us”) is an intellectual property licensing company with a portfolio of mobile technology patents and patent applications.

Our strategy includes direct licensing, litigation when necessary, sale of our patents, joint ventures, and partnering with one or more intellectual property specialists. We intend to generate revenue by licensing our patented innovations and technologies to companies that develop mobile communications, software infrastructure, or hardware, and/or develop mobile communications products. Our goal is to obtain compensation for the use of our patented ideas through fair and reasonable royalties on our intellectual property.

In addition, we continue to believe that a number of factors have made implementing our direct licensing strategy more challenging, including on-going uncertainty for intellectual property rights created largely by conflicting and evolving patent case law, such as the U.S. Supreme Court’s decision in Alice Corporation Pty. Ltd. v. CLS Bank International, which has resulted in divergent opinions regarding the validity of certain types of patents and has created uncertainty as to the enforceability of our patents.

Significant Accounting Policies and Judgments

There have not been any material changes to the significant accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2015.

Results of Operations

Overview of Financial Results During the Three and Six Months Ended December 31, 2015, and December 31, 2014

Revenues

We anticipate generating revenue primarily from licensing our intellectual property.

We recognized $1.3 million and $2.5 million in net revenue during the three and six months ended December 31, 2015, respectively, consisting of amounts previously recorded as deferred revenue under the Lenovo Licensing Agreement, net of the fee share under the Ericsson MSA. These amounts were consistent with the Lenovo Licensing revenue recognized in prior comparable period.

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Operating Expenses

The following table represents operating costs and expenses for the three and six months ended December 31, 2015 and 2014, respectively (in thousands):

Patent Licensing Expenses

Patent licensing expenses include legal and consulting costs related to technical and economic evaluation, licensing, maintaining, and defending or asserting our patents, as well as salary and benefit expenses and travel expenses for our employees engaged in these activities on a full-time basis. We need to react to legal developments as they occur and some of our licensing expenses are and will be related to the actions taken by defendant companies. Since our strategy focuses on enforcing our patent rights as necessary, we incur significant costs defending our patents and initiating litigation against entities we believe have infringed our patents.

During the three and six months ended December 31, 2015, patent licensing expenses increased by 9% and 6%, respectively, compared with the same periods of the 2015 fiscal year. The increase in patent licensing expenses during the three months ended December 31, 2015 compared with the same period of the 2015 fiscal year is primarily due to the occurrence of three trials in the United Kingdom (UK) and Germany.

On November 23, 2015 the UK High Court – the UK trial court of first instance – issued its judgment that cell phone manufacturers Samsung and Huawei infringe an LTE standards-essential patent (SEP) held by us. As a result of the favorable judgement we have accrued a liability for a success fee of $4.3 million; however, under the terms of our engagement with our UK legal counsel, the exact amount due remains unclear and subject to negotiation. At a hearing on December 16, 2015, the Court ordered the defendants to make an initial payment to the Company of £1,270,800 (approximately $1.9 million) as partial reimbursement for our costs of litigating the case. If the parties are unable to agree upon the remaining fees that the defendants must reimburse us, the Court will hold a further hearing; that hearing has not yet been scheduled.  In addition, the defendants have appealed the High Court’s decision; no date has been set for a hearing on the defendants’ appeal.  

The second UK trial commenced on December 1, 2015.  On January 29, 2016, the court handed down its judgment ruling in favor of defendants, finding that patents EP (UK) 2,119,287 and EP (UK) 2,485,514 were invalid in the United Kingdom due to prior art.  We are currently evaluating our grounds for appeal.

The third UK trial was scheduled to commence on February 2, 2016, but trial was delayed approximately one week due to personal circumstances involving one of the witnesses in the trial.  The fourth and fifth patent trials are currently scheduled to commence during the last week of April, and in early July 2016.

A sixth trial is scheduled for October 2016 in which the court will consider commercial law questions, including the question of how to apply “fair, reasonable and non-discriminatory,” or “FRAND,” licensing principles to the standards-essential patents at issue in this series of cases. The outcome of the commercial case will establish the measure of damages to be awarded.

Additionally, a parallel trial on three patents commenced on November 26, 2015, in Germany. On January 21, 2016, the German court published its order in that case.  The court held Samsung, Huawei and LG Electronics’ cellular handsets infringe all three patents, which read to the LTE and UMTS standards.  In addition, the Court ruled that Samsung and Huawei infringe one of our patents that

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covers LTE infrastructure equipment.  Two further infringement trials are scheduled in Germany, one will begin on June 30, 2016 and the other is scheduled for February 7, 2017.

The increase in patent licensing expense during the six months ended December 31, 2015 compared with the same period of the 2015 fiscal year is primarily due to the same events associated with our ongoing litigation in the UK described above. In addition, prosecution and maintenance expense in the current period was $1.0 million lower and licensing support expense was $0.5 million lower compared with the same expenses in the prior period.

We expect our quarterly patent licensing expenses to vary in accordance with our litigation activities. 

General and Administrative Expenses

General and administrative expenses consist principally of salary and benefit expenses, travel expenses, and facility costs for our finance, legal, information services, and executive personnel. General and administrative expenses also include outside accounting and corporate legal fees, public company costs, and expenses associated with the board of directors.

General and administrative expense for the three and six months ended December 31, 2015, increased approximately 32% and decreased approximately 25% from the same periods of the 2015 fiscal year. The increase in general and administrative expense during the three months ended December 31, 2015 compared with the same period of the 2015 fiscal year is primarily attributable to increases of $0.3 million in stock-based compensation expense and $0.3 million of other employee expense in the current period associated with the changes on our board of directors and new executive management.

The decrease in general and administrative expense during the six months ended December 31, 2015, compared with the same period of the 2015 fiscal year is primarily attributable to $1.9 million expense related to the evaluation of several strategic options and plans to raise additional capital in the prior period.

We expect our quarterly general and administrative expenses to remain relatively consistent on a quarterly basis during fiscal 2016, excluding currently unknown significant transactions or other unique events. 

Interest Expense

During the three and six months ended December 31, 2015, we incurred interest expense of $1.3 million and $2.5 million compared to $1.1 million and $2.1 million in the same periods of the 2015 fiscal year. Interest expense on our Senior Secured Notes consists of in-kind interest payments and amortization of debt discounts and deferred issue costs. For the remainder of the 2016 fiscal year, we expect our interest expense to increase as compared to the prior periods based upon the compounding nature of the in-kind interest payments.

Working Capital and Capital Resources

As of December 31, 2015, our working capital was approximately $53.5 million, a decrease of approximately $21.9 million from June 30, 2015. The decrease in our working capital was primarily the result of increases in our patent litigation and the use of cash to pay other operational expenses.  We do not expect our working capital to stabilize or increase until we enter into additional cash generating transactions.

The following table presents our cash flows for the six months ended December 31, 2015 and 2014 (in thousands):

Cash Used In Operating Activities

Cash used in operating activities during the six months ended December 31, 2015, was approximately $17.2 million compared to cash used by operating activities of $40.0 million during the prior period.  The decrease is primarily related the settlement of a non-recurring fee obligation of approximately $20.0 million incurred during the period ended December 31, 2014, as well as a larger net loss recognized for the same period.

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Cash Provided by Investing Activities

Cash provided by investing activities during the six months ended December 31, 2015, was approximately $11.7 million compared to cash provided by investing activities of $20.0 million during the same period of the 2015 fiscal year. The decrease during the current period is primarily related to the Company’s cash use in operations resulting in less cash available for investing activities.  The Company does not anticipate significant changes in its investment activities for at least the next twelve months.

Cash Flows Provided by Financing Activities

During the six months ended December 31, 2015 and 2014, the Company did not conduct significant financing activities.  Throughout the remainder of fiscal 2016 the Company expects to incur immaterial cash outflows associated with purchases of treasury stock.

While we believe that our current working capital and anticipated cash flows from operations will be adequate to meet our cash needs for daily operations and capital expenditures for at least the next 12 months, we may elect to raise additional capital through the sale of additional equity or debt securities to fund growth activities. If additional funds are raised through the issuance of additional debt securities, these securities could have rights, preferences and privileges, senior to current holders of our common stock and the terms of any debt could impose restrictions on our operations. The sale of additional equity or convertible debt securities could result in additional dilution to our current stockholders and additional financing may not be available in amounts or on terms acceptable to us. We also may pursue contingency arrangements related to our legal cases and/or alternative litigation financing contracts.

There is no assurance that we will be able to raise additional capital in amounts sufficient to meet our long-term requirements, if at all. If additional financing is necessary and we are unable to obtain the additional financing, we may be required to reduce the scope of our planned intellectual property activities, which could harm our business, financial condition, and operating results.

Long-Term Debt Obligations and Commitments

As of December 31, 2015, our principal long-term debt obligation consisted of our outstanding notes payable obligation initially entered into on June 28, 2013.  The Company is not obligated to make any payments and is incurring in-kind interest charges at an annual rate of 12.875%.

Since June 2015, we have had the option to redeem some or all of the Notes using net cash proceeds from the sale, lease, conveyance, transfer or other disposition of its patents at a redemption price equal to 110% of principal and accrued and unpaid interest or redeem some or all of the Notes at a redemption price initially equal to 110% of principal and declining over time plus accrued and unpaid interest.  As of the date of this report, we did not elect any of our available redemption options.

In May of 2015, the Company was notified that Indaba Capital Fund LP, the initial holder of the notes, sold our Notes in their entirety to MAST Capital Management, LLC as part of a private transaction. Upon subsequent correspondence, we identified MAST Capital Management, LLC as a significant shareholder. The sale of the Notes did not have any impact on the original terms including the maturity date, in-kind interest accruals, or principal amount.

In December 2015, we and funds managed by MAST Capital Management LLC agreed to extend the maturity date of the Notes from June 30, 2018 to June 30, 2019, and that agreement was memorialized in a supplemental indenture that we have previously filed with the SEC.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the market risks discussed in Item 7A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2015

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our President as Principal Executive Officer and our Chief Financial Officer, as Principal Financial Officer, the effectiveness of our disclosure controls and procedures as of December 31, 2015. We identified a significant deficiency in our internal control over financial reporting during the period ending September 30, 2015, which we have taken steps that we believe will remediate the cause of the significant deficiency. We believe this significant deficiency does not change the effectiveness of our disclosure controls and procedures covered in this report. Based on the above evaluation, our President and Chief Financial Officer, have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective at the reasonable assurance level to ensure that the information required to be disclosed by us in this Quarterly Report was (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and regulations and (ii) accumulated and communicated to our management, including our President and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) is a process designed by, or under the supervision of, our Principal Executive and Principal Financial Officer and affected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2015, 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

From time to time, the Company may be involved in litigation or other legal proceedings, including those noted below, relating to or arising out of its day-to-day operations or otherwise. Litigation is inherently uncertain and the Company could experience unfavorable rulings. Should the Company experience an unfavorable ruling, there exists the possibility of a material adverse impact on its financial condition, results of operations, cash flows, or on its business for the period in which the ruling occurs and/or in future periods.

Openwave Systems Inc.(Unwired Planet) v. Apple Inc. (“Apple”), Research in Motion Ltd, and Research in Motion Corp. (“RIM”) (now known as Blackberry)

In August 2011, the Company filed a complaint in the Federal District Court for the District of Delaware against Apple and RIM, alleging that Apple and RIM products infringe certain of the Company’s patents, seeking, among other things, a declaration that the Company’s patents cited in the complaint have been infringed by Apple and RIM (the “Defendants”) and that these patents are valid and enforceable, damages as a result of the infringement, and an injunction against further infringement. This matter was stayed pending a parallel case filed with the International Trade Commission (“ITC”), which the Company withdrew in October 2012. The Federal District Court in Delaware lifted the stay in January 2013, and a claims construction, or “Markman,” hearing on one claim was held in November 2013. In February 2014, the Court issued a Memorandum Opinion regarding the results of the claim construction hearing. Based on the results of the claim construction order, the parties stipulated to judgment of non-infringement and the Company has appealed to the Federal Circuit regarding the claim construction order issued by the District Court. The oral argument for the appeal took place on November 3, 2015. In an order published on January 15, 2016, the court rejected the Company’s arguments and upheld the trial court judgment. The Company has no plans to appeal this ruling.

Unwired Planet LLC v. Apple Inc. (“Apple”)

In September 2012, the Company filed a complaint in the U.S. District Court for the District of Nevada. The case charges infringement of ten patents related to smart mobile devices, cloud computing, digital content stores, push notification technologies, and location-based services such as mapping and advertising. Five of these patents were dismissed without prejudice to simplify the case. In August 2013, the U.S. District Court for the District of Nevada granted Apple’s motion to transfer venue from the District of Nevada to the Northern District of California. A Markman hearing was held in August 2014 and a claim construction order was issued in November 2014. Based upon the claim construction order, the parties stipulated to non-infringement on one patent. A hearing on motions for summary judgment and other pre-trial motions was held in April 2015. On May 26, 2015, the Court granted summary judgment of non-infringement on three of the remaining four patents in the case, and partial summary judgment of non-infringement

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on the fourth patent in the case. Unwired Planet and Apple stipulated to dismiss the remaining elements of infringement related to the fourth patent. The Company has appealed the summary judgment ruling and Markman order to the Federal Circuit.

Unwired Planet LLC v. Google, Inc. (“Google”)

In September 2012, the Company filed a complaint in the U.S. District Court for the District of Nevada. The case charges infringement of ten patents related to cloud computing, digital content stores, push notification technologies, and location-based services such as mapping and advertising. Google filed an application in August 2013 for inter partes reexamination with the USPTO relating to three patents and sought and obtained a partial stay on those patents. In July 2014, the Company voluntarily dismissed infringement claims on three of ten patents (one of which was stayed pending reexamination). A Markman hearing on five patents was held in August 2014 and the Court issued a Markman order in December of 2014. Unwired Planet and Google stipulated to non- infringement on four of the patents based on the Markman results. Unwired Planet has appealed the Markman order to the Federal Circuit. The remaining two patents that were stayed have been invalidated by the Patent Trial and Appeal Board (PTAB). The Company is also appealing the invalidations to the Court of Appeals for the Federal Circuit.

Unwired Planet LLC v. Square Inc. (“Square”)

In October 2013, the Company filed a complaint in the U.S. District Court for the District of Nevada, charging Square with infringing three patents related to mobile payment technologies, and seeking unspecified monetary damages. A Markman hearing was held on September 22, 2014 and a claim construction order was issued in October of 2014. Square petitioned for inter partes review of two of the asserted patents, and covered business method review of the third asserted patent. The USPTO/PTAB instituted the requested reviews, and Unwired Planet and Square agreed to stay the Nevada litigation pending the outcome of the PTAB reviews. The final hearings at the PTAB were conducted in August and September 2015. On October 30, 2015, the PTAB issued a final decision invalidating all of the challenged claims of one of the three asserted patents (US Patent No. 8,275,359). The PTAB held that all patent claims challenged by Square were invalid. The Company timely filed an appeal on December 31, 2015.

Unwired Planet International Ltd v. Samsung, Google, Huawei, et.al (collectively “EU Defendants”)

In March 2014, the Company filed parallel patent infringement actions in the United Kingdom (“UK”) and Germany, alleging that the EU Defendants infringe six patents originally granted by the European Patent Office and now effective in both the UK and Germany, and seeking unspecified monetary damages. Four of the patents at issue in both cases were acquired by the Company from Ericsson pursuant to the MSA; one patent lists Openwave Systems as the assignee and the last patent lists Unwired Planet as the assignee. The UK lawsuit alleges that Samsung, Google, and Huawei infringe all six UK patents related to technologies fundamental to wireless communications found in mobile devices and network equipment, including the use of LTE telecommunication standards and push notification technology underpinning the Android ecosystem. The German lawsuit alleges that Samsung, Google, Huawei, LG, and HTC infringe the six German equivalents. Due to the number of defendants and the number of patents, both the UK and German courts have scheduled several trial dates rather than litigating all of the patents against all of the defendants in one trial.

The first German trial took place in June 2015. Following the hearing, the court dismissed the action against Huawei only with respect to one patent (EP (DE) 2,229,744). A second trial took place in Germany beginning on November 26, 2015. On January 21, the Court published its order, finding that cellular handsets made by LG Electronics, Samsung and Huawei infringed EP (DE) 2,119,287; 2,385,514; and 1,230,818. In addition, the Court found that cellular infrastructure equipment made by Samsung and Huawei infringed the ‘287 patent. Two additional trials are scheduled in Germany, one will begin June 30, 2016, and the other will begin on February 16, 2017.

The first patent infringement case in the UK was held in October 2015. The trial addressed Huawei and Samsung’s infringement of Patent No. EP (UK) 2,229,744. On November 23, 2015, the Court handed down its judgment that Huawei and Samsung infringed the ‘744 patent. At a subsequent hearing on January 16, 2016, the Court awarded the Company an initial payment of £1,270,800, or approximately $1.9 million, as partial reimbursement of our cost of litigating the case. If the parties are unable to agree upon the remaining fee that defendants must reimburse the Company, the Court will hold a further hearing to rule on the fees; that hearing has not yet been scheduled. In addition, defendants have filed an appeal of the High Court’s decision; a date for the appeal hearing has not been scheduled.

A second trial in the UK commenced on December 30, 2015, with respect to two patents EP(UK) 2,119,287 and 2,485,514. After a multi-day trial the Court entered judgment on January 29, 2016, finding that the two patents were invalid based upon prior art. The Company is evaluating whether to appeal the Court’s judgment.

Three other trials will take place in 2016. A trial is scheduled to proceed the first week of February 2016 on our patent EP (UK) 1,230,818, a second trial will commence during the last week of April 2016 on our patent EP (UK) 1,105,991, and a third trial is scheduled for late June 2016 on our patent EP (UK) 0,989,712.

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The defendants in both the German and UK actions have filed defenses and counterclaims against the Company in both courts alleging that the original transaction under the Ericsson MSA violates EU competition law and is void. Further, the defendants allege that the Company engaged in anticompetitive business practices that did not adhere to fair, reasonable and non-discriminatory (FRAND) standards. Samsung further alleges that even if the MSA is valid, it has a license to certain patents because of its existing license agreement with Ericsson. The claims by the defendants in the German lawsuit are currently expected to be adjudicated in the same proceedings as the underlying patent infringement cases. In the UK, these defenses and counterclaims will be adjudicated separately from the underlying infringement claims, in a trial scheduled for October 2016.

HTC has filed an appeal with the German Supreme Court seeking to overturn a decision by the trial court, which the decision has been affirmed by the regional appellate court, that Unwired Planet is not required to post a bond as security for costs in the event HTC is ultimately successful on the merits.

For a further discussion of the UK and German litigation, and the possible effects on the Company’s results, see the risk factors described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2015.

Unwired Planet, Inc. v. Microsoft

In July 2014, the Company filed suit in the U.S. District Court of Delaware alleging Microsoft breached a patent license agreement the two companies entered into in September 2011. The Company is seeking a declaratory judgment and damages for breach of contract. The parties have stipulated to simplify the case and reduce some of the issues, and discovery is now underway with respect to the issues remaining in the case. Summary judgment motions are due to be filed with the Court in the fall of 2015. A hearing on Unwired Planet’s motion for summary judgement has been scheduled for February 12, 2016.

Item 1A. Risk Factors

Except as set forth below, there have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2015 and those disclosed on our Quarterly Report on Form 10-Q for the period ended September 30, 2015.

If we are unable to substantially utilize our net operating loss carry-forwards, our financial results may be adversely affected, and protections implemented by us to preserve our NOLs may have unintended anti-takeover effects.

As of June 30, 2015, we had net operating loss, or NOL, carry-forwards for U.S. federal and state income tax purposes of approximately $1.69 billion and $290.0 million, respectively. In order to preserve our substantial tax assets associated with NOLs and built-in-losses under Section 382 of the Internal Revenue Code, we adopted a Tax Benefits Preservation Agreement (“Rights Agreement”). Under Section 382 of the Internal Revenue Code, a corporation that undergoes an “ownership change” may be subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders (generally 5% stockholders, applying certain look-through and aggregation rules) increases by more than 50% over such stockholders’ lowest percentage ownership during the testing period (generally three years). Purchases of our common stock in amounts greater than specified levels, which will be beyond our control, could create a limitation on our ability to utilize our NOLs for tax purposes in the future. The Rights Agreement is intended to impose certain ownership limitations to prevent the purchase of our common stock in amounts that could jeopardize our ability to utilize our NOLs. While we entered into the Rights Agreement in order to preserve our NOLs, the Rights Agreement could inhibit acquisitions of significant stake in us and may prevent a change in our control. As a result, the Rights Agreement may have an “anti-takeover” effect. Similarly, the limits on the amount of common stock that a stockholder may own may make it more difficult for stockholders to replace current management or members of the board of directors. Although we have taken steps intended to preserve our ability to utilize our NOLs, including the adoption of the Rights Agreement, such efforts may not be successful.

This and other limitations imposed on our ability to utilize NOLs could cause U.S. federal and state income taxes to be paid earlier than they would be paid if such limitations were not in effect and could cause such NOLs to expire unused, in each case reducing or eliminating the benefit of such NOLs. For example, if and when we seek to apply our NOL carry-forwards to reduce our tax liability, we will have the burden of proof with respect to the losses we incurred —in some cases up to 20 years ago. We may not meet our burden of proof if these records are difficult to locate or otherwise are unavailable, which could diminish the value of the available NOL carry-forwards. Furthermore, we may not be able to generate sufficient taxable income to utilize our NOLs before they expire. If any of these events occur, we may not derive some or all of the expected benefits from our NOLs. In addition, at the state level there may be periods during which the use of NOLs is suspended or otherwise limited, which would accelerate or may permanently increase state taxes owed. See Note 12 of the Notes to the Consolidated Financial Statements contained in our Annual Report filed on Form 10-K for the fiscal year ended June 30, 2015 for more details.

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Our alternative fee arrangements with litigation counsel could limit our net proceeds derived from any successful patent enforcement actions.

We have entered into agreements for legal services in which we have agreed to pay our outside counsel a combination of fixed or hourly fees and a success fee for our patent enforcement matters. These agreements typically require payment of a fixed fee for a period of time, hourly fees, and payment of a contingency fee upon a settlement or collection of a judgment. Contingency fees in our agreements are usually based upon a percentage of the amount of a settlement or a judgment. Some of the agreements contain dollar limits on the total contingency fee that may be earned. We are responsible for the current payment of out of pocket expenses incurred in connection with the patent enforcement matters.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

See the Index to Exhibits, which follows the signature page of this Quarterly Report on Form 10-Q and which is incorporated herein by reference.

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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.

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INDEX TO EXHIBITS

The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

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