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, 1999
( ) 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, 1999, 11,760,458 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, 1999 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1999.
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, 1998.
PARKERVISION, INC.
BALANCE SHEETS
March 31,
1999 December 31,
ASSETS (unaudited) 1998
------ ----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $10,314,479 $10,569,435
Short-term investments 10,050,000 11,077,394
Accounts receivable, net of allowance for
doubtful accounts of $37,308 at
March 31, 1999 and December 31, 1998 758,513 805,880
Interest and other receivables 115,262 183,823
Inventories, net 3,763,534 3,237,567
Prepaid expenses and other 1,338,102 1,023,011
----------- -----------
Total current assets 26,339,890 26,897,110
LONG-TERM INVESTMENTS 8,000,000 8,000,000
PROPERTY AND EQUIPMENT, net 2,850,241 2,760,335
OTHER ASSETS, net 2,857,197 2,592,565
----------- -----------
Total assets $40,047,328 $40,250,010
=========== ===========
The accompanying notes are an integral part of these balance sheets.
2
PARKERVISION, INC.
BALANCE SHEETS
March 31,
1999 December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited) 1998
------------------------------------ ------------ ------------
CURRENT LIABILITIES:
Accounts payable $ 802,373 $ 609,523
Accrued expenses:
Salaries and wages 422,194 178,006
Rebates payable 96,891 108,185
Warranty reserve 97,245 99,656
Other accrued expenses 452,769 221,175
Deferred revenue 126,253 33,404
------------ ------------
Total current liabilities 1,997,725 1,249,949
DEFERRED INCOME TAXES 18,091 18,091
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, 11,760,458 and 11,718,678 shares issued
and outstanding at March 31, 1999 and December
31, 1998, respectively 117,604 117,187
Warrants outstanding 3,257,625 3,257,625
Additional paid-in capital 53,111,396 52,543,817
Accumulated other comprehensive income 44,141 72,241
Accumulated deficit (18,499,254) (17,008,900)
------------ ------------
Total shareholders' equity 38,031,512 38,981,970
------------ ------------
Total liabilities and shareholders' equity $ 40,047,328 $ 40,250,010
============ ============
The accompanying notes are an integral part of these statements.
3
PARKERVISION, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
--------------------------------
March 31, 1999 March 31, 1998
-------------- --------------
Revenues, net $ 2,469,751 $ 1,964,994
Cost of goods sold 1,632,803 1,332,590
----------- -----------
Gross margin 836,948 632,404
Research and development expenses 1,136,010 997,568
Marketing and selling expenses 783,690 962,991
General and administrative expenses 806,502 519,647
Interest income (398,900) (403,295)
----------- -----------
Net loss $(1,490,354) $(1,444,507)
=========== ===========
Basic loss per common share $ (0.13) $ (0.13)
=========== ===========
The accompanying notes are an integral part of these statements.
4
PARKERVISION, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
-----------------------------
1999 1998
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,490,354) $ (1,444,507)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization 328,601 153,476
Provision for obsolete inventories 60,000 30,000
Changes in operating assets and liabilities:
Decrease in accounts receivable, net 47,367 56,413
Decrease in interest and other receivables 68,561 218,090
Increase in inventories, net (585,967) (1,123,777)
Increase in prepaid expenses (315,091) (348,799)
Increase in other assets (383,610) (27,349)
Increase in accounts payable and accrued expenses 654,927 761,158
Increase in deferred revenue 92,849 2,834
------------ ------------
Total adjustments (32,363) (277,954)
------------ ------------
Net cash used for operating activities (1,522,717) (1,722,461)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturity of investments 1,000,000 5,500,000
Purchase of property and equipment (300,235) (287,448)
------------ ------------
Net cash provided by investing activities 699,765 5,212,552
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 567,996 149,440
------------ ------------
Net cash provided by financing activities 567,996 149,440
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (254,956) 3,639,531
CASH AND CASH EQUIVALENTS, beginning of period 10,569,435 2,133,193
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 10,314,479 $ 5,772,724
============ ============
The accompanying notes are an integral part of these balance sheets.
5
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-K for the year ended December 31, 1998.
CASH AND CASH EQUIVALENTS. Cash and cash equivalents include overnight
repurchase agreements and U.S. Treasury money market investments totaling
approximately $10,598,000 and $10,032,000 at March 31, 1999 and December
31, 1998, 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, 1999 and 1998 is
11,728,143 and 11,346,869, respectively.
3. INVENTORIES:
------------
Inventories consist of the following:
March 31, December 31,
1999 1998
----------- -----------
Purchased materials $ 2,230,341 $ 1,996,573
Work in process 158,472 241,676
Finished goods 1,798,133 1,406,664
----------- -----------
4,186,946 3,644,913
Less allowance for inventory obsolescence (423,412) (407,346)
----------- -----------
$ 3,763,534 $ 3,237,567
=========== ===========
4. SIGNIFICANT CUSTOMERS
---------------------
For the quarters ended March 31, 1999 and 1998, Vtel Corporation ("VTEL")
accounted for approximately 23% and 21% of total revenues, respectively.
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5. STOCK OPTIONS
-------------
On March 5, 1999, the Company granted nonqualified stock options to
purchase an aggregate of 100,000 shares of its common stock for $23.125 per
share pursuant to an employment agreement. These options were not issued
under a plan, vest ratably over five years and expire five years from the
date they become vested.
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, 1999
- --------------------------------------------------------------------------------
and 1998
- --------
Revenues
- --------
Revenues for the three months ended March 31, 1999 increased by $504,757 as
compared to the same period in 1998 due to an increase in the number of cameras
systems sold, offset somewhat by a decrease in the average selling price per
system. The Company sold 331 camera systems at an average selling price of
$6,900 per system during the three months ended March 31, 1999, as compared to
228 systems at an average selling price of $7,600 for the three months ended
March 31, 1998.
For the three month period ending March 31, 1999, revenues included
approximately $187,000 of third party videoconferencing equipment which was sold
at the Company's cost. Revenues for the three month period ended March 31, 1998,
included approximately $230,000 for the sale of two studio systems to beta
customers.
Gross Margin
- ------------
For the three month periods ended March 31, 1999 and 1998, gross margins as a
percentage of sales were 33.9% and 32.2%, respectively. The slight increase in
margin is due to lower production costs. Production costs were high during the
first quarter of 1998 due to initial production of studio products. This
increase in margin was somewhat offset by the pass through of third party
videoconferencing equipment at no margin during the first quarter of 1999.
7
Research and Development Expenses
- ---------------------------------
The Company's research and development expenses for the three month period ended
March 31, 1999 increased $138,442 as compared to the same period in 1998. This
increase is primarily due to the outsourcing of certain application engineering
functions, offset somewhat by decreases in personnel and prototype costs related
to studio development.
Marketing and Selling Expenses
- ------------------------------
Marketing and selling expenses for the three month period ended March 31, 1999
decreased $179,301 as compared to the same period in 1998. This decrease is due
to decreases in personnel and advertising costs. During the first quarter of
1998, the Company incurred significant advertising and production costs
associated with the launch of the studio product.
General and Administrative Expenses
- -----------------------------------
For the three month period ended March 31, 1999, general and administrative
expenses increased $286,855 over the same period in 1998. This increase is
primarily a result of increased personnel costs, increased usage of outside
professional services and the amortization of prepaid consulting fees. The
Company added an executive officer in June 1998 and has increased the use of
legal and other consulting firms in connection with the wireless technology.
Interest Income
- ---------------
Interest income for the three month period ended March 31, 1999 decreased $4,395
from the same period in 1998. This decrease is due to the use of proceeds from
maturing investments to fund operations during 1998 and 1999, offset by the sale
of equity securities and exercise of options and warrants in 1998.
Backlog
- -------
As of March 31, 1999, the Company had camera backlog of approximately $250,000,
as compared to a backlog as of December 31, 1998 of approximately $390,000.
Backlog consists of orders received, which generally have a specified delivery
schedule within three to five weeks of receipt.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At March 31, 1999, the Company had working capital of $24,342,165, a decrease of
$1,304,996 from $25,647,161 at December 31, 1998. This decrease is primarily due
to the use of cash to fund operations during the first quarter of 1999. The
Company's principal source of liquidity at March 31, 1998 consisted of
$20,364,479 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.
8
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
- ------- -------------- ------- ------------------------------- ------------ ------------------------
3/5/99 Option to 100,000 Option granted - no 4(2) Exercisable for five
purchase consideration received by years from the date
common stock Company until exercise options first become
granted to an vested, options vest
employee ratably over five years
at an exercise price of
$23.125 per share
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.
EXHIBITS
Exhibit 27.1 Financial Data Schedule
REPORTS ON FORM 8-K
None
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, 1999 By: /s/ Jeffrey L. Parker
----------------------
Jeffrey L. Parker
Chairman and Chief Executive Officer
May 14, 1999 By: /s/ Cynthia Poehlman
---------------------
Cynthia Poehlman
Controller and Chief Accounting Officer