UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, 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, 1998
( ) 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, 1998, 11,376,320 shares of the Issuer's Common Stock, $.01 par
value, were outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The accompanying unaudited financial statements of ParkerVision, Inc. (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, 1998 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1998.
These interim consolidated financial statements should be read in conjunction
with the Company's latest Annual Report on Form 10-KSB for the year ended
December 31, 1997.
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PARKERVISION, INC.
BALANCE SHEETS
March 31,
1998 December 31,
ASSETS (unaudited) 1997
------ ----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 5,772,724 $ 2,133,193
Short-term investments 15,008,355 18,815,957
Accounts receivable, net of allowance for
doubtful accounts of $38,853 and $38,405 at
March 31, 1998 and December 31, 1997, respectively 604,534 660,947
Interest and other receivables 168,544 386,634
Inventories, net 4,063,864 2,970,087
Prepaid expenses and other 959,714 610,915
----------- -----------
Total current assets 26,577,735 25,577,733
LONG-TERM INVESTMENTS 7,869,582 9,494,404
PROPERTY AND EQUIPMENT, net 2,664,559 2,541,123
OTHER ASSETS, net 1,042,081 1,071,772
----------- -----------
Total assets $38,153,957 $38,685,032
=========== ===========
The accompanying notes are an integral part of these balance sheets.
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PARKERVISION, INC.
BALANCE SHEETS
March 31,
1998 December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited) 1997
------------------------------------ ----------- -----------
CURRENT LIABILITIES:
Accounts payable $ 1,402,512 $ 560,106
Accrued expenses:
Salaries and wages 185,342 313,267
Professional fees and other 305,773 259,096
Deferred revenue 23,807 20,973
----------- -----------
Total current liabilities 1,917,434 1,153,442
DEFERRED INCOME TAXES 4,678 4,678
COMMITMENTS AND CONTINGENCIES (Notes 4 and 5)
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, 1,000,000 shares
authorized, none issued or outstanding 0 0
Common stock, $.01 par value, 20,000,000 shares
authorized, 11,355,777 and 11,337,707 shares issued
and outstanding at March 31, 1998 and December
31, 1997, respectively 113,558 113,377
Warrants outstanding 3,795,600 3,795,618
Additional paid-in capital 46,069,696 45,920,419
Accumulated deficit (13,747,009) (12,302,502)
----------- -----------
Total shareholders' equity 36,231,845 37,526,912
----------- -----------
Total liabilities and shareholders' equity $38,153,957 $38,685,032
=========== ===========
The accompanying notes are an integral part of these balance sheets.
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PARKERVISION, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
-----------------------------
March 31, March 31,
1998 1997
----------- -----------
Revenues, net $ 1,964,994 $ 2,079,958
Cost of goods sold 1,332,590 1,159,136
----------- -----------
Gross margin 632,404 920,822
Research and development expenses 997,568 695,576
Marketing and selling expenses 962,991 774,875
General and administrative expenses 519,647 368,354
Interest income (403,295) (174,902)
----------- -----------
Net loss $(1,444,507) $ (743,081)
=========== ===========
Basic loss per common share $ (0.13) $ (0.07)
=========== ===========
The accompanying notes are an integral part of these statements.
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PARKERVISION, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
---------------------------
1998 1997
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,444,507) $ (743,081)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization 153,476 136,196
Provision for obsolete inventories 30,000 50,000
Changes in operating assets and liabilities:
Decrease in accounts receivable, net 56,413 231,594
Decrease in interest and other receivables 218,090 55,219
Increase in inventories, net (1,123,777) (515,655)
Increase in prepaid expenses (348,799) (138,614)
Increase in other assets (27,349) (22,762)
Increase in accounts payable and accrued expenses 761,158 568,299
Increase (decrease) in deferred revenue 2,834 (18,518)
----------- -----------
Total adjustments (277,954) 345,759
----------- -----------
Net cash used for operating activities (1,722,461) (397,322)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturity of investments 5,500,000 1,000,000
Purchase of property and equipment (287,448) (149,757)
----------- -----------
Net cash provided by investing activities 5,212,552 850,243
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 149,440 230,113
----------- -----------
Net cash provided by financing activities 149,440 230,113
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 3,639,531 683,034
CASH AND CASH EQUIVALENTS, beginning of period 2,133,193 1,554,732
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 5,772,724 $ 2,237,766
=========== ===========
The accompanying notes are an integral part of these statements.
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PARKERVISION, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ACCOUNTING POLICIES
-------------------
There have been no changes in accounting policies from those stated in the
Annual Report on Form 10-KSB for the year ended December 31, 1997.
Cash and Cash Equivalents. Cash and cash equivalents include overnight
repurchase agreements and U.S. Treasury money market investments totaling
approximately $5,697,000 and $1,845,000 at March 31, 1998 and December 31,
1997, respectively.
2. LOSS PER SHARE
--------------
Basic loss per share is determined based on the weighted average number of
common shares assumed to be 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 assumed to be
outstanding for the three month periods ended March 31, 1998 and 1997 is
11,346,869 and 10,041,746, respectively.
3. INVENTORIES:
------------
Inventories consist of the following:
March 31, December 31,
1998 1997
----------- -----------
Purchased materials $ 2,450,623 $ 1,948,581
Work in process 514,389 378,859
Finished goods 1,466,981 1,059,699
----------- -----------
4,431,992 3,387,139
Less allowance for inventory obsolescence (368,128) (417,052)
----------- -----------
$ 4,063,864 $ 2,970,087
=========== ===========
4. SIGNIFICANT CUSTOMERS
--------------------
For the quarters ended March 31, 1998 and 1997, Vtel Corporation ("VTEL")
accounted for approximately 21% and 50% of total revenues, respectively.
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5. STOCK OPTIONS
-------------
On February 2, 1998, the Company granted certain employees incentive stock
options to purchase an aggregate of 8,000 shares of common stock and
nonqualified stock options to purchase an aggregate of 200,000 shares of
common stock at an exercise price of $15.625 per share. Options to purchase
150,000 shares vest ten years from the date of grant. Options for the
remaining 58,000 shares vest ratably over five years. The options expire
five years from the date they become exercisable.
On March 10, 1998, the Company granted certain employees incentive stock
options to purchase an aggregate of 15,000 shares of common stock at an
exercise price of $19.00 per share. These options vest ratably over five
years and expire five years from the date they become exercisable.
In addition, on March 10, 1998, nonqualified stock options were granted to
Messrs. Sammons, Sorrells, Yeager, Jeffrey Parker and Todd Parker and Ms.
Wilf to purchase an aggregate of 87,500 shares of common stock at an
exercise price of $19.00 per share. These options vest immediately and
expire ten years from the date of grant.
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, 1998
- --------------------------------------------------------------------------------
and 1997
- --------
Revenues
- --------
Revenues for the three months ended March 31, 1998 decreased by $114,964 as
compared to the same period in 1997 due to a decrease in the number of cameras
systems sold, offset somewhat by an increase in the average selling price per
system and revenues generated from the Company's first beta site sales of its
new studio production system. The Company sold 228 camera systems at an average
selling price of $7,600 per system during the three months ended March 31, 1998,
as compared to 342 systems at an average selling price of $6,100 for the three
months ended March 31, 1997. The decrease in camera system sales is primarily a
result of a decrease in systems sold to Vtel during the first quarter of 1998
when compared with the same quarter in 1997. The increase in the average selling
price per system is primarily due to a change in the mix of products sold. In
addition, the Company generated revenue from the sale of two studio systems to
beta customers during the first quarter of 1998. The studio system is a
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new product which is expected to generate revenues averaging from $150,000 to
$250,000 per system. The Company's ability to generate revenues from its new
studio system is dependent upon market acceptance of this product.
Gross Margin
- ------------
For the three month periods ended March 31, 1998 and 1997, gross margins as a
percentage of sales were 32.2% and 44.3%, respectively. This $288,418 decrease
in margin is primarily due to the increased cost of placing a new product in
production, pricing discounts offered on the initial beta sales of studio
systems, and an increase in overhead costs as compared to the first quarter of
1997. The increase in overhead is primarily due to the increase in facility
rental cost in September 1997.
Marketing and Selling Expenses
- ------------------------------
Marketing and selling expenses for the three month period ended March 31, 1998
increased $188,116 as compared to the same period in 1997. This increase is due
to the establishment of a sales office in Oregon early in 1998, as well as
increased advertising and production costs associated with launching the studio
product.
Research and Development Expenses
- ---------------------------------
The Company's research and development expenses for the three month period ended
March 31, 1998 increased $301,992 as compared to the same period in 1997. This
increase is a result of increased personnel and related costs in order to
develop the Company's studio product and wireless technology.
General and Administrative Expenses
- -----------------------------------
For the three month period ended March 31, 1998, general and administrative
expenses increased $151,293 over the same period in 1997. This increase is
primarily a result of increased personnel costs, increased usage of outside
professional services and the amortization of prepaid consulting fees.
Interest Income
- ---------------
Interest income for the three month period ended March 31, 1998 increased
$228,393 from the same period in 1997. This increase is due to the investment of
the proceeds from the Company's 1997 offerings, offset somewhat by the Company's
use of proceeds from maturing investments to fund operations during 1997 and
1998.
Backlog
- -------
As of March 31, 1998, the Company had a backlog of approximately $154,000, as
compared to a backlog as of December 31, 1997 of approximately $31,000. Backlog
consists of orders received which generally have a specified delivery schedule
within three to five weeks of receipt. During the last two quarters, the Company
has been able to reduce its delivery schedule for most products to approximately
one week.
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Liquidity and Capital Resources
- -------------------------------
At March 31, 1998, the Company had working capital of $24,660,301, an increase
of $236,010 from $24,424,291 at December 31, 1997. The Company's principal
source of liquidity at March 31, 1998 consisted of $20,781,079 in cash and
short-term investments. Until the Company generates sufficient revenues from
system sales, it will be required to continue to utilize this source of
liquidity to cover the continuing expense of product development, marketing and
sales, and general administration. The Company believes this source of liquidity
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. 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 Title of Number other discounts to market price registration terms of exercise or
sale security sold afforded to purchasers claimed conversion
- ---------------------------------------------------------------------------------------------------------------
1/98 - Common stock 17,970 Received proceeds of $148,253 4(2) Underwriters warrants
3/98 granted 11/30/93
exercisable through
11/30/98 at an exercise
price of $8.25 per share
1/98 - Options to 310,500 Options granted - no 4(2) Exercisable for periods
3/98 purchase consideration received by lasting from five to ten
common stock Company until exercise years from the date the
granted to options first become
directors and vested, options vest
employees from one to ten years
pursuant to from the date of grant
stock option at exercise prices
plan ranging from $15.625 to
$19.00 per share
ITEM 3. Defaults Upon Senior Securities. Not applicable.
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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.
Exhibits
Exhibit 27.1 Financial Data Schedule
Reports on Form 8-K
On January 27, 1998, the Company filed a report on Form 8-K to report that IBM
Corporation terminated its existing product development agreement with the
Company which was entered into in July 1997.
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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.
ParkerVision, Inc.
Registrant
May 14, 1998 By: /s/ Jeffrey Parker
-------------------
Jeffrey Parker
Chairman, President and Chief
Executive Officer
May 14, 1998 By: /s/ Cynthia Poehlman
---------------------
Cynthia Poehlman
Chief Accounting Officer
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