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, 2002
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from ________to____________
Commission file number 0-22904
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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, 2002, 13,951,529 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,
2002 December 31,
ASSETS (unaudited) 2001
------ ------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 2,467,382 $ 4,563,535
Short-term investments 24,185,831 26,908,362
Accounts receivable, net of allowance for
doubtful accounts of $84,103 at March 31,
2002 and December 31, 2001 1,876,959 946,635
Interest and other receivables 337,748 406,133
Inventories, net 4,967,807 4,319,539
Prepaid expenses and other 2,498,133 2,642,966
------------ ------------
Total current assets 36,333,860 39,787,170
PROPERTY AND EQUIPMENT, net 6,624,686 7,003,465
OTHER ASSETS, net 7,662,690 7,383,169
------------ ------------
Total assets $ 50,621,236 $ 54,173,804
============ ============
The accompanying notes are an integral part of these balance sheets.
2
PARKERVISION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31,
2002 December 31,
LIABILITIES AND SHAREHOLDERS' (unaudited) 2001
----------------------------- ------------ ------------
CURRENT LIABILITIES:
Accounts payable $ 1,401,746 $ 938,488
Accrued expenses:
Salaries and wages 737,966 1,184,780
Warranty reserves 225,288 212,107
Sales tax payable 112,574 6,927
Other accrued expenses 704,200 267,812
Deferred revenue 639,028 985,612
------------ ------------
Total current liabilities 3,820,802 3,595,726
DEFERRED INCOME TAXES 30,748 30,748
COMMITMENTS AND CONTINGENCIES
(Notes 5, 7 and 8)
------------ ------------
Total liabilities 3,851,550 3,626,474
------------ ------------
SHAREHOLDERS' EQUITY:
Convertible preferred stock, $1 par value, 5,000,000
shares authorized, 13,678 and 27,356 shares
issued and outstanding at March 31, 2002 and
December 31, 2001, respectively 13,678 27,356
Common stock, $.01 par value, 100,000,000 shares
authorized, 13,936,729 and 13,913,806 shares
issued and outstanding at March 31, 2002 and
December 31, 2001, respectively 139,367 139,138
Warrants outstanding 16,807,505 16,807,505
Additional paid-in capital 89,928,939 89,804,504
Accumulated other comprehensive income (loss) (82,350) 151,359
Accumulated deficit (60,037,453) (56,382,532)
------------ ------------
Total shareholders' equity 46,769,686 50,547,330
------------ ------------
Total liabilities and shareholders' equity $ 50,621,236 $ 54,173,804
============ ============
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,
2002 2001
------------ ------------
Product revenue $ 2,722,422 $ 1,743,367
Support and other services revenue 303,585 243,222
------------ ------------
Net revenues 3,026,007 1,986,589
------------ ------------
Cost of goods sold - products 1,443,035 918,048
Cost of goods sold - support and other services 309,498 240,195
------------ ------------
Total cost of goods sold 1,752,533 1,158,243
------------ ------------
------------ ------------
Gross margin 1,273,474 828,346
------------ ------------
Research and development expenses 3,449,456 3,158,672
Marketing and selling expenses 712,296 903,154
General and administrative expenses 1,041,673 977,260
Other expense 7,270 0
------------ ------------
Total operating expenses, net 5,210,695 5,039,086
------------ ------------
Loss from operations $ (3,937,221) (4,210,740)
Interest and other income 282,300 490,341
------------ ------------
Net loss $ (3,654,921) $ (3,720,399)
============ ============
Basic and diluted net loss per common share $ (0.26) $ (0.27)
============ ============
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,
-----------------------------
2002 2001
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,654,921) $ (3,720,399)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and patent amortization 710,441 664,260
Amortization of premium on investments 69,999 0
Provision for obsolete inventories 75,000 30,000
Stock compensation 402,943 455,445
Gain on sale of investments (12,788) 0
Loss on sale of equipment 7,275 0
Changes in certain operating assets and liabilities:
Accounts receivable, net (930,324) 1,154,208
Inventories (723,268) (918,075)
Prepaid, interest receivable and other assets (269,279) 44,066
Accounts payable and accrued expenses 571,660 (567,220)
Deferred revenue (346,584) (306,481)
------------ ------------
Total adjustments (444,925) 556,203
------------ ------------
Net cash used in operating activities (4,099,846) (3,164,196)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments available for sale (1,335,163) 0
Proceeds from sale of investments 3,766,774 0
Purchase of property and equipment (128,711) (231,142)
Proceeds from sale of equipment 7,200 0
Payment for patent costs and other assets (306,407) (416,438)
------------ ------------
Net cash provided by (used in) investing activities 2,003,693 (647,580)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 0 2,500,000
Proceeds from exercise of options and warrants 0 1,813,313
------------ ------------
Net cash provided by financing activities 0 4,313,313
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(2,096,153) 501,537
CASH AND CASH EQUIVALENTS, beginning of period 4,563,535 31,371,904
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 2,467,382 $ 31,873,441
============ ============
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, 2002 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2002.
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, 2001. 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, 2001.
COMPREHENSIVE INCOME. The Company's other comprehensive income is comprised
of net unrealized gains (losses) 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
(loss) for the three-month periods ended March 31, 2002 and 2001 was
$(233,709) and $82,880, respectively. The Company's total comprehensive
loss for the three-month periods ended March 31, 2002 and 2001 was
$(3,888,630) and $(3,637,519), respectively.
STATEMENTS OF CASH FLOWS. The Company paid no cash for income taxes or
interest for the three-month periods ended March 31, 2002 and 2001.
NEW ACCOUNTING PRONOUNCEMENTS. The Company has adopted Financial Accounting
Standards Board Standard (SFAS) No. 142, "Goodwill and Other Intangible
Assets". Under SFAS 142, goodwill and intangible assets with indefinite
lives are no longer amortized but are reviewed at least annually for
impairment. The Company has evaluated its intangible assets and their
estimated useful lives and determined that it has no goodwill or intangible
assets with indefinite lives at this time for which this SFAS would apply.
RECLASSIFICATIONS. Certain reclassifications have been made to the 2001
financial statements in order to conform to the 2002 presentation.
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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, 2002 and 2001 is 13,917,620 and 13,544,745,
respectively. The total number of options and warrants to purchase
5,988,799 and 6,234,601 shares of common stock that were outstanding at
March 31, 2002 and 2001, respectively, were excluded from the computation
of diluted earnings per share as the effect of these options and warrants
would have been anti-dilutive.
3. INVENTORIES:
------------
Inventories consist of the following:
March 31, December 31,
2002 2001
------------ ------------
Purchased materials $ 2,759,671 $ 2,726,813
Work in process 220,209 169,248
Finished goods 1,528,106 887,081
Spare parts and demonstration inventory 1,504,858 1,515,967
------------ ------------
6,012,844 5,299,109
Less allowance for inventory obsolescence (1,045,037) (979,570)
------------ ------------
$ 4,967,807 $ 4,319,539
============ ============
4. OTHER ASSETS:
------------
Other assets consist of the following:
March 31, December 31,
2002 2001
------------ ------------
Patents and copyrights $ 8,362,058 $ 8,055,651
Prepaid compensation 0 2,327,677
Noncompete 0 300,000
Prepaid licensing fees 400,000 0
Other intangible assets 364,830 364,830
Deposits and other 242,156 208,128
------------ ------------
9,369,044 11,256,286
Less accumulated amortization (1,706,354) (3,873,117)
------------ ------------
$ 7,662,690 $ 7,383,169
============ ============
Prepaid compensation and Noncompete in the aggregate amount of $2,627,677
have been fully amortized and removed from other assets and accumulated
amortization at March 31, 2002.
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5. CONCENTRATIONS OF CREDIT RISK
-----------------------------
For the quarter ended March 31, 2002, two broadcast customers, McGraw-Hill
Broadcasting Company, Inc. and LIN Television Corporation accounted for an
aggregate of approximately 65% of the Company's total revenues. 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. Two broadcast customers, McGraw-Hill Broadcasting
Company, Inc. and LIN Television Corporation accounted for approximately
82% of accounts receivable at March 31, 2002. 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.
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,
2002 2001
------------ ------------
NET SALES:
Video Division $ 3,026 $ 1,987
Wireless Division 0 0
------------ ------------
Total net sales $ 3,026 $ 1,987
============ ============
LOSS FROM OPERATIONS:
Video Division $ (175) $ (442)
Wireless Division (3,762) (3,769)
------------ ------------
Total loss from operations $ (3,937) $ (4,211)
============ ============
DEPRECIATION:
Video Division $ 136 $ 136
Wireless Division 357 339
------------ ------------
Total depreciation $ 493 $ 475
============ ============
AMORTIZATION OF INTANGIBLES
AND OTHER ASSETS:
Video Division $ 29 $ 19
Wireless Division 188 170
------------ ------------
Total amortization $ 217 $ 189
============ ============
CAPITAL EXPENDITURES:
Video Division $ 53 $ 75
Wireless Division 70 156
Corporate 6 0
------------ ------------
Total capital expenditures $ 129 $ 231
============ ============
8
March 31, December 31,
2002 2001
------------ ------------
ASSETS:
Video Division $ 8,473 $ 6,843
Wireless Division 13,979 14,229
Corporate 28,169 33,102
------------ ------------
Total assets $ 50,621 $ 54,174
============ ============
Corporate assets consist of the following:
March 31, December 31,
2002 2001
------------ ------------
Cash and investments 26,653 $ 31,466
Interest and other receivables 325 366
Prepaid expenses 516 599
Property and equipment, net 515 544
Other assets 160 127
------------ ------------
Total assets $ 28,169 $ 33,102
============ ============
7. STOCK OPTIONS AND WARRANTS
--------------------------
For the three month period ended March 31, 2002 the Company granted stock
options under the 1993 Stock Plan (the "1993 Plan) to purchase an aggregate
of 41,200 shares of its common stock at exercise prices ranging from $19.99
to $21.15 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 Performance Equity
Plan (the "2000 Plan") to its non-employee directors for the purchase of an
aggregate of 187,500 shares of its common stock at exercise prices ranging
from $19.50 to $20.00 per share. These options are fully vested and expire
ten years from the grant date. In addition, the Company granted stock
options to its Chief Executive Officer to purchase 15,000 shares of its
common stock at an exercise price of $19.99 as part of his compensation
package. These options are fully vested and expire five years from the date
of grant.
As of March 31, 2002 options to purchase 3,327,440 and 466,487 shares of
common stock were available for future grants under the 2000 and 1993
Plans, respectively.
8. STOCK AUTHORIZATION AND ISSUANCE
--------------------------------
In March 2000, the Company issued an aggregate of 114,019 shares of Series
A, B, C and D Preferred Stock, $1.00 par value, $25 stated value, for the
acquisition of substantially all of the assets of Signal Technologies,
Inc., ("STI") as well as signing bonuses and compensation under employment
contracts for certain former employees of STI.
In March 2001, the Series A and D preferred shares were converted into
approximately 86,000 shares of common stock. In March 2002, the Series B
shares were converted into approximately 16,600 shares of common stock. The
Series C Preferred Stock is automatically converted to common stock on
March 10, 2003.
9
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, 2002
- --------------------------------------------------------------------------------
and 2001
- --------
Revenues
- --------
Revenues for the three months ended March 31, 2002 increased by $1,039,418 as
compared to the same period in 2001. This increase in revenues is primarily due
to an increase in PVTV(TM) revenue offset somewhat by a decrease in camera
revenue. The number of camera and PVTV(TM) systems sold and the average selling
price per system for the three-month periods are as follows:
Number of Systems Sold Average Selling Price per System
---------------------------- ----------------------------
March 31, March 31, March 31, March 31,
2002 2001 2002 2001
------------ ------------ ------------ ------------
PVTV(TM)Systems 5 2 $ 442,000 $ 212,000
Camera Systems 79 167 $ 7,000 $ 8,000
The increase in PVTV(TM) revenue is due to an increased number of systems sold
as well as an increase in the average selling price of the system. The increase
in the average selling price per PVTV(TM) is largely due to the sale of dual
systems to customers in larger broadcast markets.
The decrease in camera revenue is due to declining unit sales as well as a
decline in the average selling price per system due to product mix. The Company
plans to cease production of its single chip camera product line in 2002 due to
supply issues, declining demand and the Company's product development and
marketing focus on its PVTV(TM) broadcast systems. The Company expects to sell
the majority of its remaining inventory of single chip camera systems by the end
of the second quarter of 2002.
Support revenue for the three-month period ended March 31, 2002 increased
$60,363 from the same period in 2001. This increase is due to an increase in
training and support for PVTV(TM) systems sold as well as additional recurring
support contracts.
10
Gross Margin
- ------------
For the three-month periods ended March 31, 2002 and 2001, gross margins based
on aggregate revenues, as a percentage of sales were 42.1% and 41.7%,
respectively. Although the Company generally recognizes higher margins on
PVTV(TM) sales as compared to camera sales, these increases are somewhat offset
by increased inventory reserves for obsolescence during the first quarter of
2002.
Research and Development Expenses
- ---------------------------------
The Company's research and development expenses for the three-month period ended
March 31, 2002 increased $290,784 as compared to the same period in 2001. This
increase is the result of increased wireless prototype chip development
expenses, as well as an increase in overhead due to the expansion of the Orlando
wireless facility. These increases are offset somewhat by a reduction of
personnel costs as a result of the transfer of engineering activities to the
Orlando facility from the California facility in 2001.
Marketing and Selling Expenses
- ------------------------------
Marketing and selling expenses for the three-month period ended March 31, 2002
decreased $190,858 as compared to the same period in 2001. This decrease is
primarily due to staffing reductions in the Wireless Division's sales and
marketing group.
General and Administrative Expenses
- -----------------------------------
For the three month period ended March 31, 2002, general and administrative
expenses increased $64,413 over the same period in 2001. This increase is
largely due to personnel additions and an increase in insurance premiums.
Interest and Other Income
- -------------------------
Interest and other income consist of interest earned on the Company's
investments, as well as gains on the sale of investments. Interest and other
income for the three-month period ended March 31, 2002 decreased $208,041 from
the same period in 2001. This decrease is the result of declining interest rates
and continued use of cash investments to fund operations.
Loss and Loss per Share
- -----------------------
The Company's net loss decreased by $65,478 or $0.01 per common share from the
three-month period ended March 31, 2002 to the same period in 2001. This
decrease is due to decreased losses for the video division offset somewhat by
the decrease in interest income.
Backlog
- -------
The Company had camera backlog of approximately $384,000 at March 31, 2002.
Camera backlog consists of orders received, which generally have a specified
delivery schedule within six weeks of receipt. In addition, the Company
currently has a backlog of PVTV(TM) system sales and services of approximately
$3,470,000, representing PVTV(TM) customer purchase commitments with delivery
dates through the third quarter of 2002.
Liquidity and Capital Resources
- -------------------------------
At March 31, 2002, the Company had working capital of $32.5 million, a decrease
of $3.7 million from $36.2 million at December 31, 2001. This decrease is
primarily due to the use of cash to fund operations. The Company's principal
source of liquidity at March 31, 2002 consisted of $26.7 million in cash and
11
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.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. Although occasional adverse decisions or
settlements may occur, the Company believes that the final disposition of such
matters will not have a material adverse effect on its financial position,
results of operations or liquidity.
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 Title of Number other discounts to market price registration terms of exercise or
sale security sold afforded to purchasers claimed conversion
- -------------------------------------------------------------------------------------------------------------------
1/15/02 - Options to 187,500 Option granted - no 4(2) Options are fully vested
2/8/02 purchase consideration received by at an exercise price of
common stock Company until exercise $19.50 - $20.00 per
granted to share and expire ten
directors years from the date of
grant
2/26/02 Options to 15,000 Option granted - no 4(2) Options are fully vested
purchase consideration received by at an exercise price of
common stock Company until exercise $19.99 per share and
granted to expire five years from
an officer the date of grant
1/15/02 Options to 41,200 Option granted - no 4(2) Expire five years from
- -3/18/02 purchase consideration received by date vested, options
common stock Company until exercise vest ratably over five
granted to years at exercise prices
employees ranging from $19.99 to
$21.15 per share
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.
13
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 13, 2002 By: /s/ Jeffrey L. Parker
----------------------
Jeffrey L. Parker
Chairman and Chief Executive Officer
May 13, 2002 By: /s/ Cynthia L. Poehlman
------------------------
Cynthia L. Poehlman
Chief Accounting Officer
14