UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from ________to____________
Commission file number 0-22904
PARKERVISION, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2971472
(State or other jurisdiction of I.R.S. Employer ID No.
incorporation or organization)
8493 BAYMEADOWS WAY
JACKSONVILLE, FLORIDA 32256
(904) 737-1367
(Address of principal executive offices)
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 [ ].
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ].
APPLICABLE ONLY TO CORPORATE ISSUERS
As of April 30, 2001, 13,775,263 shares of the Issuer's Common Stock, $.01 par
value, were outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PARKERVISION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31,
2001 December 31,
ASSETS (unaudited) 2000
------ ------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 31,873,441 $ 31,371,904
Investments available for sale 8,030,000 7,947,120
Accounts receivable, net of allowance for doubtful
accounts of $103,199 at March 31, 2001 and
December 31, 2000 1,189,708 2,343,916
Inventories, net 4,881,084 3,993,009
Prepaid expenses and other 3,347,529 3,391,595
------------ ------------
Total current assets 49,321,762 49,047,544
PROPERTY AND EQUIPMENT, net 7,278,829 7,522,645
OTHER ASSETS, net 6,931,571 7,037,705
------------ ------------
Total assets $ 63,532,162 $ 63,607,894
============ ============
The accompanying notes are an integral part of these balance sheets.
2
PARKERVISION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31,
2001 December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited) 2000
------------------------------------ ------------ ------------
CURRENT LIABILITIES:
Accounts payable $ 883,003 $ 893,406
Accrued expenses:
Salaries and wages 721,848 697,675
Warranty reserves 192,000 198,140
Sales tax payable 3,210 110,720
Other accrued expenses 97,395 564,735
Deferred revenue 676,563 983,044
------------ ------------
Total current liabilities 2,574,019 3,447,720
DEFERRED INCOME TAXES 139,769 139,769
COMMITMENTS AND CONTINGENCIES (Notes 5, 7 and 8)
------------ ------------
Total liabilities 2,713,788 3,587,489
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, 5,000,000 shares authorized,
27,356 and 114,019 shares issued and outstanding at
March 31, 2001 and December 31, 2000, respectively 27,356 114,019
Common stock, $.01 par value, 100,000,000 shares
authorized, 13,726,463 and 13,445,675 shares issued
and outstanding at March 31, 2001 and December
31, 2000, respectively 137,265 134,457
Warrants outstanding 16,884,305 15,659,035
Additional paid-in capital 87,231,912 83,937,839
Accumulated other comprehensive income (loss) 30,000 (52,880)
Accumulated deficit (43,492,464) (39,772,065)
------------ ------------
Total shareholders' equity 60,818,374 60,020,405
------------ ------------
Total liabilities and shareholders' equity $ 63,532,162 $ 63,607,894
============ ============
The accompanying notes are an integral part of these balance sheets.
3
PARKERVISION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
----------------------------
March 31, March 31,
2001 2000
------------ ------------
Revenues, net $ 1,986,589 $ 2,740,031
Cost of goods sold 1,158,243 1,738,077
------------ ------------
Gross margin 828,346 1,001,954
Research and development expenses 3,158,672 2,111,742
Marketing and selling expenses 903,154 940,103
General and administrative expenses 977,260 1,002,976
------------ ------------
Total operating expenses 5,039,086 4,054,821
------------ ------------
Loss from operations (4,210,740) (3,052,867)
Interest income 490,341 193,014
------------ ------------
Net loss $ (3,720,399) $ (2,859,853)
============ ============
Basic and diluted net loss per common share $ (0.27) $ (0.24)
============ ============
The accompanying notes are an integral part of these statements.
4
PARKERVISION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
------------------------------
2001 2000
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,720,399) $ (2,859,853)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 664,260 328,516
Provision for obsolete inventories 30,000 30,000
Stock compensation 455,445 198,669
Changes in operating assets and liabilities:
Accounts receivable, net 1,154,208 115,655
Inventories (918,075) (570,500)
Prepaid and other expenses 44,066 (178,156)
Accounts payable and accrued expenses (567,220) 1,607,164
Deferred revenue (306,481) (424,890)
------------ ------------
Total adjustments 556,203 1,106,458
------------ ------------
Net cash used in operating activities (3,164,196) (1,753,395)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturity of investments 0 4,000,000
Purchase of property and equipment (231,142) (411,351)
Payment for patent costs and other assets (416,438) (517,315)
------------ ------------
Net cash (used in) provided by investing activities (647,580) 3,071,334
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 2,500,000 0
Proceeds from exercise of options and warrants 1,813,313 1,088,091
------------ ------------
Net cash provided by financing activities 4,313,313 1,088,091
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 501,537 2,406,030
CASH AND CASH EQUIVALENTS, beginning of period 31,371,904 2,128,742
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 31,873,441 $ 4,534,772
============ ============
The accompanying notes are an integral part of these statements.
5
PARKERVISION, INC. AND SUBSIDIARY
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ACCOUNTING POLICIES
-------------------
The accompanying unaudited consolidated financial statements of
ParkerVision, Inc. and subsidiary (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. All adjustments which, in the opinion of management, are
necessary for a fair presentation of the financial condition and results of
operations have been included. Operating results for the three-month period
ended March 31, 2001 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2001.
These interim consolidated financial statements should be read in
conjunction with the Company's latest Annual Report on Form 10-K for the
year ended December 31, 2000.
There have been no changes in accounting policies from those stated in the
Annual Report on Form 10-K for the year ended December 31, 2000.
COMPREHENSIVE INCOME. The Company's other comprehensive income is comprised
of net unrealized gains on investments available-for-sale which are
included in accumulated other comprehensive income (loss) in the
consolidated balance sheets. The Company's other comprehensive income for
the three-month periods ended March 31, 2001 and 2000 was $82,880 and
$53,480, respectively. The Company's total comprehensive loss for the three
month periods ended March 31, 2001 and 2000 was $(3,637,519) and
$(2,806,373), respectively.
STATEMENTS OF CASH FLOWS. In March 2000, the Company issued Preferred Stock
for the acquisition of substantially all of the assets of Signal
Technologies, Inc. ("STI") valued at $1,996,700 (see Note 8). In addition,
the Company issued Preferred Stock and restricted common stock under its
1993 Stock Option Plan ("1993 Plan") as signing bonuses and prepaid
compensation totaling approximately $3,600,000.
NEW ACCOUNTING PRONOUNCEMENTS. The Company has evaluated the effect of
adopting Statement of Financial Accounting Standard ("FASB") No.133,
"Accounting for Derivative Instruments and Hedging Activities", as amended
by FASB Statement No. 138. As of January 1, 2001, the Company has evaluated
its contracts and financial instruments and has determined that it does not
have any derivative instruments or hybrid instruments that contain embedded
derivative instruments to which this FASB would apply.
RECLASSIFICATIONS. Certain reclassifications have been made to the 2000
financial statements in order to conform to the 2001 presentation.
6
2. LOSS PER SHARE
--------------
Basic loss per share is determined based on the weighted average number of
common shares outstanding during each period. Dilutive loss per share is
the same as basic loss per share as all common share equivalents are
excluded from the calculation as their effect is anti-dilutive. The
weighted average number of common shares outstanding for the three month
periods ended March 31, 2001 and 2000 is 13,544,745 and 11,828,868,
respectively.
3. INVENTORIES:
------------
Inventories consist of the following:
March 31, December 31,
2001 2000
------------ ------------
Purchased materials $ 3,368,487 $ 2,970,724
Work in process 180,564 161,447
Finished goods 612,997 486,525
Demonstration inventory 1,516,419 1,142,598
------------ ------------
5,678,467 4,761,294
Less allowance for inventory obsolescence (797,383) (768,285)
------------ ------------
$ 4,881,084 $ 3,993,009
============ ============
4. OTHER ASSETS:
------------
Other assets consist of the following:
March 31, December 31,
2001 2000
------------ ------------
Patents and copyrights, net $ 5,328,852 $ 5,066,915
Prepaid compensation 939,052 1,272,322
Noncompete 143,750 181,250
Other intangible assets 238,155 268,557
Deposits and other 281,762 248,661
------------ ------------
$ 6,931,571 $ 7,037,705
============ ============
5. CONCENTRATIONS OF CREDIT RISK
-----------------------------
For the quarter ended March 31, 2001, Vtel Corporation ("VTEL") and one
broadcast customer accounted for approximately 10% and 12%, respectively of
the Company's total revenues. For the quarter ended March 31, 2000, Vtel
Corporation ("VTEL") and one broadcast customer accounted for approximately
19% and 21%, respectively of the Company's total revenues. The Ackerley
Group, a broadcast ownership group, accounted for approximately 48% of
accounts receivable at March 31, 2001. The Company closely monitors
extensions of credit and has never experienced significant credit losses.
7
6. BUSINESS SEGMENT INFORMATION
----------------------------
The Company's segments include the Video Products Division ("Video
Division") and the Wireless Technology Division ("Wireless Division").
Segment results are as follows (in thousands):
Three months ended
-------------------------
March 31, March 31,
2001 2000
---------- ----------
NET SALES:
Video Division $ 1,987 $ 2,740
Wireless Division 0 0
---------- ----------
Total net sales $ 1,987 $ 2,470
========== ==========
LOSS FROM OPERATIONS:
Video Division $ (442) $ (573)
Wireless Division (3,769) (2,480)
---------- ----------
Total loss from operations $ (4,211) $ (3,053)
========== ==========
DEPRECIATION:
Video Division $ 136 $ 137
Wireless Division 339 115
---------- ----------
Total depreciation $ 475 $ 252
========== ==========
AMORTIZATION OF INTANGIBLES
AND OTHER ASSETS:
Video Division $ 19 $ 16
Wireless Division 170 85
---------- ----------
Total amortization $ 189 $ 101
========== ==========
CAPITAL EXPENDITURES:
Video Division $ 75 $ 82
Wireless Division 156 329
---------- ----------
Segment capital expenditures $ 231 $ 411
========== ==========
March 31, December 31,
2001 2000
---------- ----------
ASSETS:
Video Division $ 7,954 $ 8,208
Wireless Division 13,896 14,302
---------- ----------
Segment assets $ 21,850 $ 22,510
========== ==========
8
A reconciliation of segment assets to total assets reported in the
accompanying balance sheets is as follows:
March 31, December 31,
2001 2000
---------- ----------
Business segment assets $ 21,850 $ 22,510
Corporate assets:
Cash and investments 39,903 39,319
Prepaid expenses and other 1,067 1,067
Property and equipment, net 648 680
Other assets 64 32
---------- ----------
Total assets $ 63,532 $ 63,608
========== ==========
7. STOCK OPTIONS AND WARRANTS
--------------------------
For the three month period ended March 31, 2001, the Company granted stock
options under the 2000 Performance Equity Plan (the "2000 Plan") to
purchase an aggregate of 113,200 shares of its common stock at exercise
prices ranging from $23.00 to $37.125 per share in connection with hiring
and retention of employees. These options vest ratably over five years and
expire five years from the date they become vested.
The Company also granted stock options under the 2000 Plan to its
non-employee directors for the purchase of an aggregate of 170,000 shares
of its common stock at exercise prices ranging from $31.00 to $35.125 per
share. Options for 100,000 shares vest ratably over two years and expire
ten years from the date they become vested. Options for the remaining
70,000 shares are fully vested and expire ten years from the grant date.
As of March 31, 2001 options to purchase 3,639,200 shares of common stock
were available for future grants under the 2000 Plan.
In March 2001, in connection with a private placement transaction (see note
8), the Company issued warrants for the purchase of 83,451 shares of the
Company's common stock to Texas Instruments, Inc. These warrants are
immediately vested with exercise prices ranging from $29.96 to $39.84 per
share and expire ten years from the date of grant. The warrants have an
estimated fair market value of $16.88 per share, or approximately $1.4
million. The fair value was estimated as of the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions: risk free interest rate of 6.3%, no expected dividend yield,
expected life of five years and expected volatility of 63%.
8. STOCK AUTHORIZATION AND ISSUANCE
--------------------------------
In March 2001, the Company issued 83,451 shares of its Common Stock to
Texas Instruments, Inc. in a private placement transaction. The shares
represent less than 1% of the Company's outstanding
9
common stock and were sold at a price of $29.96 per share for net proceeds
of approximately $2.5 million.
In March 2000, the Company issued 79,868 shares of Series D Preferred
Stock, $1.00 par value, for the acquisition of substantially all of the
assets of Signal Technologies, Inc., a subchapter S corporation
specializing in radio-frequency design services. These assets, which
include property and equipment, accounts receivable and intangible assets,
were acquired for a purchase price of $1,996,700 which was fully paid in
Series D Preferred Stock. Also in connection with the acquisition, the
Company issued an aggregate of 34,151 shares of Class A, B and C Preferred
Stock and 92,112 shares of restricted stock under its 1993 Plan as signing
bonuses and prepaid compensation for the employees of STI. In March 2001,
the Series A and D preferred shares were converted into approximately
70,000 shares of Common Stock.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward-Looking Statements
- --------------------------
When used in this Form 10-Q and in future filings by the Company with the
Securities and Exchange Commission, the words or phrases "will likely result",
"management expects" or "Company expects", "will continue", "is anticipated",
"estimated" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Readers are cautioned not to place undue reliance on such
forward-looking statements, each of which speak only as of the date made. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected, including the timely development and acceptance of new
products, sources of supply and concentration of customers. The Company has no
obligation to publicly release the results of any revisions, which may be made
to any forward-looking statements to reflect, anticipated events or
circumstances occurring after the date of such statements.
Results of Operations for Each of the Three Month Periods Ended March 31, 2001
- --------------------------------------------------------------------------------
and 2000
- --------
Revenues
- --------
Revenues for the three months ended March 31, 2001 decreased by $753,442 as
compared to the same period in 2000. This decrease in revenues is primarily due
to a decline in camera system sales from 300 systems in first quarter of 2000 to
167 systems in the first quarter of 2001. This decrease is offset somewhat by an
increase in the average selling price per system from $6,800 in 2000 to $8,000
in 2001. The decrease in system sales is primarily due to a decrease in sales to
VTEL while the increase in average selling price is due to sales of the
Company's new digital camera systems. In addition, the Company's studio revenues
declined in the first quarter of 2001 when compared to the same period in 2000.
Although the Company sold two studio systems in each period, due to the mix of
products sold, the average selling price per studio site decreased from
approximately $342,000 in 2000 to approximately $212,000 in 2001.
Gross Margin
- ------------
For the three-month periods ended March 31, 2001 and 2000, gross margins as a
percentage of sales were 41.7% and 36.6%, respectively. The increase in margin
is primarily due to the mix of products sold and cost reductions in
manufacturing.
10
Research and Development Expenses
- ---------------------------------
The Company's research and development expenses for the three-month period ended
March 31, 2001 increased $1,046,930 as compared to the same period in 2000. This
increase is primarily due to personnel and overhead expenses related to the
California and Orlando wireless design locations. In March and April 2001, the
Company relocated a portion of its California engineering activities to its
Orlando center resulting in a reduction of staffing in the California facility.
Marketing and Selling Expenses
- ------------------------------
Marketing and selling expenses for the three-month period ended March 31, 2001
decreased $36,949 as compared to the same period in 2000. This decrease is
primarily due to decreases in promotional expense and outside consulting fees in
the video division, offset somewhat by increases in marketing activities in the
wireless division.
General and Administrative Expenses
- -----------------------------------
For the three month period ended March 31, 2001, general and administrative
expenses decreased $25,716 over the same period in 2000. This decrease is due to
decreases in professional fees, offset somewhat by increases in personnel and
insurance costs.
Interest Income
- ---------------
Interest income for the three-month period ended March 31, 2001 increased
$297,327 from the same period in 2000. This increase is primarily due to
interest earned on the proceeds from the sale of equity securities in May 2000.
Loss and Loss per Share
- -----------------------
The Company's net loss increased by $860,546 or $0.03 per common share from the
three-month period ended March 31, 2000 to the same period in 2001. This
increase in net loss was primarily due to a $1.3 million increase in operating
expenses related to the Company's Wireless Division, offset somewhat by
decreases in operating expenses for the Video Division and increases in interest
income.
Backlog
- -------
The Company had camera backlog of approximately $19,000 at March 31, 2001.
Camera backlog consists of orders received, which generally have a specified
delivery schedule within three to five weeks of receipt. In addition, the
Company had a backlog of PVTV studio sales and services of approximately
$291,000 at March 31, 2001.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At March 31, 2001, the Company had working capital of $46.7 million, an increase
of $1.1 million from $45.6 at December 31, 2000. This increase is primarily due
to the sale of equity securities to Texas Instruments and the exercise of
employee stock options during the first quarter of 2001, offset by the use of
cash to fund operations during the same period. The Company's principal source
of liquidity at March 31, 2001 consisted of $39.9 million in cash and short-term
investments. Until the Company generates sufficient revenues from system and
other sales, it will be required to continue to utilize its cash and investments
to cover the continuing expense of product development, marketing, and general
administration. Based on the Company's current estimates, it believes its cash
and investments will provide sufficient resources to meet its cash requirements
for the next twelve months, as well as on a longer-term basis.
11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. Not Applicable.
ITEM 2. CHANGES IN SECURITIES.
Sales of Unregistered Securities
- --------------------------------
Consideration received and Exemption If option, warrant or
description of underwriting or from convertible security,
Date of sale Title of Number other discounts to market price registration terms of exercise or
security sold afforded to purchasers claimed conversion
- -------------------------------------------------------------------------------------------------------------------
1/23/01 Options to 70,000 Option granted - no 4(2) Options are fully vested
purchase consideration received by at an exercise price of
common stock Company until exercise $35.125 per share and
granted to expire ten years from
directors the date of grant
2/21/01 Options to 100,000 Option granted - no 4(2) Exercisable for ten
purchase consideration received by years from the vesting
common stock Company until exercise date, options vest
granted to ratably over two years
director at an exercise price of
$31.00 per share
1/01-3/01 Options to 113,200 Option granted - no 4(2) Exercisable for five
purchase consideration received by years from vesting date,
common stock Company until exercise options vest ratably
granted to over five years at
employees exercise prices ranging
from $23.00 to $37.125
per share
3/9/01 Common stock 83,451 Received proceeds of 4(2) n/a
$2,500,000
3/9/01 Warrants to 83,451 Option granted - no 4(2) Exercisable for ten
purchase consideration received by years from the date of
common stock Company until exercise grant; exercise prices
granted to are $29.96 per share for
Texas 41,725 shares, $37.45
Instruments per share for 20,863
shares and $39.84 per
share for 20,863 shares
3/9/01 Common stock 70,031 Series A and D Preferred Stock 4(2) Partial conversion of
preferred stock in
accordance with
conversion formulas
12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not Applicable.
ITEM 5. OTHER INFORMATION. Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. Not applicable.
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.
ParkerVision, Inc.
Registrant
May 15, 2001 By: /s/ Jeffrey L. Parker
----------------------
Jeffrey L. Parker
Chairman and Chief Executive Officer
May 15, 2001 By: /s/ Cynthia L. Poehlman
------------------------
Cynthia L. Poehlman
Chief Accounting Officer
13