UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
(Mark One) (X) ANNUAL REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1996
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934 [No Fee Required]
For the transition period from ________to____________
Commission file number 0-22904
PARKERVISION, INC.
(Name of small business issuer in its charter)
Florida 59-2971472
(State of Incorporation) (I.R.S. Employer ID No.)
8493 Baymeadows Way
Jacksonville, Florida 32256
(904) 737-1367
(Address of principal executive offices)
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $.01 PAR VALUE
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 |_|.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB (X).
The Issuer's revenues for the fiscal year ended December 31, 1996, were
$9,252,052.
As of March 7, 1997, the aggregate market value of the Issuer's $.01 par value
Common Stock held by non-affiliates of the Issuer was approximately $80,706,112
(based upon $15.375 per share closing price on that date, as reported by the
NASDAQ National Market).
As of March 7, 1997, 10,045,604 shares of the Issuer's Common Stock, $.01 par
value, were outstanding.
Documents incorporated by reference: None.
<PAGE>
PART I
Item 1. Description of Business
ParkerVision, Inc. (the "Company"), was incorporated under the laws of the state
of Florida on August 22, 1989. The Company is engaged in the design, development
and marketing of the CameraMan(R) automated video camera control systems. The
Company is also researching certain wireless technologies which the Company
believes may have potential applications in various commercial and consumer
markets.
CameraMan(R) Systems
In recent years, the emergence of increasingly sophisticated, relatively low
cost personal computers, audiovisual products and telecommunication services has
significantly expanded the commercial markets for video solutions. Audiovisual
systems have become increasingly popular with a broad range of small businesses,
large corporations, educational institutions, corporate professionals and others
who perceive video as a viable addition to their communications, training,
presentation, instructional and educational needs.
For this emerging commercial market, the Company developed the CameraMan(R)
system which allows a non-professional video user to create consistently
effective video communication at a reasonable cost. Additionally, the Company's
CameraMan(R) system is designed to permit the video user to appear in the video
while at the same time controlling the camera action.
Since the initial product introduction in 1992, the Company has developed
several CameraMan(R) models for different targeted commercial markets and a
variety of compatible systems to meet the needs of its customers. Although the
Company believes there are many markets for its CameraMan(R) systems, the
Company has initially focused on video solutions for the educational and
videoconferencing segments of the commercial markets in which the Company
believes CameraMan(R) has wide application.
In 1995, the Company launched a second generation product, CameraMan(R) System
II, ("System II"), and by the end of the third quarter of 1995, a complete
System II product line was available for sale. The primary difference between
System II and the previous CameraMan(R) systems is the integration of a
professional quality single-chip imaging camera into the base unit. In 1995,
System II products comprised approximately 86% of the Company's unit sales, and
early in 1996, the Company discontinued the sale of its initial CameraMan(R)
product line. Also during 1996, the Company expanded its System II product line
by integrating a three-chip camera into the base unit. The three-chip camera
systems provide higher resolution, better color reproduction, improved optics,
and more control over basic camera functions than the Company's single-chip
systems.
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In March 1995, the Company entered into a joint product development agreement
with VTEL Corporation ("VTEL"), located in Austin, Texas. VTEL designs,
manufactures and markets applications-oriented videoconferencing equipment and
claims to hold a greater than fifty percent share of the education and
healthcare markets. The agreement provided a framework within which the two
companies could integrate various CameraMan(R) systems into the VTEL MediaMax,
and other VTEL products to create fully integrated videoconferencing systems.
This initial system integration was completed and shipments of integrated
CameraMan(R) systems to VTEL began during the third quarter of 1995. Sales of
System II products to VTEL accounted for approximately 12% and 41% of the
Company's unit sales during 1995 and 1996, respectively.
Wireless Technology
In connection with the refinement of CameraMan(R) systems, the Company has been
researching certain wireless technologies. In 1995, the Company developed a
specific engineering team to continue this research and, in 1996, the Company
filed for a patent related to its research efforts. The Company believes it has
developed a new, highly reliable and cost effective wireless capability that is
compatible with standard wireless narrow-band frequencies currently approved
worldwide. The Company believes this technology, while beneficial to current and
future CameraMan(R) systems, also has potential applications in other commercial
and consumer markets.
During 1996, the Company continued its development of the wireless technology
and conducted market research into various applications for this technology. The
Company may determine to (1)license the technology to third parties, (2)sell the
technology in the form of circuits which third parties could then integrated
into their own products, or (3)develop and sell finished products integrating
the technology. The Company has not yet determined which, if any, of these
methods will be utilized in marketing its wireless technology.
If the Company successfully completes development and testing of applications
for the wireless technology, the Company anticipates that it will focus its
efforts initially on formalizing manufacturing and marketing arrangements. The
implementation of large-scale manufacturing and marketing programs and the
commercial rollout of a wireless product will require capital resources
substantially greater than those currently available to the Company.
Accordingly, the Company may seek to enter into strategic alliances with one or
more large, financially capable companies or seek additional capital to
undertake these activities itself. The Company has not finalized any
manufacturing and commercialization strategies for the proposed wireless
products at this time.
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Products
CameraMan(R) System II
The Company's second generation CameraMan(R) product, System II, uses the
CameraMan(R) base unit, a portable, computerized base which pans and tilts
simultaneously to achieve fluid motion, into which is integrated a professional
quality single-chip or three-chip imaging camera that provides the system camera
control functions, such as auto-focus and auto-image control. The System II base
unit is available with or without automatic tracking capability. Other
components of the System II product line include a main docking station and
tracking ring package which are devices used to control the automatic tracking
functions, as well as various keypads or locators which are designed to remotely
control base unit and camera functions. System II products are offered in a
variety of application-specific packages designed for the Distance Education and
Videoconferencing markets including the following:
o Distance Education Systems
- CameraMan(R) System II Presenter Camera System
The System II Presenter Camera System is a robotic camera system with
automatic tracking capabilities. The Presenter Camera System consists of
a CameraMan(R) autoTRACK Camera with input/output Main Docking Station,
a Tracking Ring Package with built-in microphone, and a wireless, or
hard-wired, Presenter Keypad. When instructed to do so, the autoTRACK
Camera will locate the Tracking Ring worn by the presenter. The
autoTRACK Camera will then automatically pan and tilt to follow the
presenter while he or she moves throughout the room. The Presenter
Keypad is a hand-held keypad which allows the presenter to manually
control camera functions and autoTRACK views, as well as recall preset
locations, such as a white board or other educational aids.
- CameraMan(R) System II Student Camera System
The System II Student Camera System is a robotic camera system which
consists of a non-autoTRACK Student Response Camera with a Programmable
Response Module and a Classroom Controller Keypad. The Student Camera
System allows students to "raise their hands" electronically by pressing
a locator button on a microphone. The Student Response Camera then
automatically recalls a location preset for the individual student. This
provides educators and students with a better level of communication
than a more traditional wide-angle camera view. The Classroom Controller
Keypad stores the location presets for each student microphone. The
Programmable Response Module provides 30 inputs where either
"press-to-talk" or "voice-activated" microphones are wired. When a
student activates a microphone, the Programmable Response Module will
send a command to the Student Response Camera to pan, tilt and zoom to
the student location.
4
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o Videoconferencing Systems
- CameraMan(R) System II Personal Locator System
The System II Personal Locator System is a robotic camera system which
is offered with both autoTRACKing and non-autoTRACKing capabilities.
Both systems include a CameraMan(R) Camera, three Personal Locator
Keypads and a Chairperson Keypad. This system allows each
videoconferencing participant to program his or her personal location
preset and then recall that preset at the touch of a "MY TURN" button on
that individual's Personal Locator Keypad. The Chairperson Locator
Keypad has an additional "system lockout" functionality for meeting
control.
The autoTRACKing Personal Locator System (also referred to as the Deluxe
Camera System) also includes an input/output Main Docking Station and a
Tracking Ring Package for automatically tracking a presenter. With the
use of the Tracking Ring, a videoconference participant can get up from
the conference room table to give a presentation while the autoTRACK
Camera automatically follows his or her movement.
The Company also offers SHAREview, a software upgrade feature to the
Personal Locator System. The SHAREview technology enables the Personal
Locator System to automatically calculate and adjust the camera for
multiple individuals who wish to share the camera view simultaneously.
o Other Camera Systems
- CameraMan(R) System II General Pan/Tilt System
The System II General Pan/Tilt System is a non-autoTRACKing camera
system for use in general purpose commercial applications where a
high-quality, full-featured pan/tilt system is desired but tracking
capability is not needed. The system is upgradable to a Student Camera
System or Personal Locator System and, as a result, is easily adaptable
to distance education and videoconferencing applications.
o VTEL Camera Systems
In connection with the volume purchase agreement with VTEL, the Company
has developed a complete product line that integrates with certain VTEL
products. This product line includes the same application-specific systems
for both distance education and videoconferencing applications including
Presenter Camera Systems, Student Camera Systems, Personal Locator Systems
and General Pan/Tilt Systems. The basic difference between the VTEL
specific product line and the Company's other product lines is the ability
for the VTEL specific products to be integrated at the factory with select
VTEL products.
5
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Subsequent to December 31, 1996, the Company revised its System II product
offering such that all CameraMan(R) products are manufactured with an
autoTRACKing base unit and thus can be upgraded to any other
application-specific CameraMan(R) system in the field. As a result, the previous
non-tracking systems, the Student Camera System, the Personal Locator System and
the General Pan/Tilt Systems will now be field upgradable to tracking systems.
New Products
o Shot Director
During the fourth quarter of 1996, the Company completed the development
of a new product, the Shot Director. The Shot Director is a joystick
controller which is compatible with both the single-chip and three-chip
camera systems. The Shot Director integrates real-time camera control and
setup functionality with an LCD display and menu driven keys for
three-chip camera control unit ("CCU") capability and allows an operator
to control up to sixteen CameraMan(R) cameras. This product is the first
product offering in the Company's future CameraManSTUDIO product line.
o CameraManSTUDIO
During 1996, the Company introduced a new product concept which represents
a CameraMan(R) system specifically designed for industrial studio
production environments including corporate, education, government,
healthcare and religious studios. This system will incorporate two or more
CameraMan(R) single-chip or three-chip camera systems with additional
studio-related hardware and a Windows(R) compatible software package to
provide a low-cost, fully-integrated PC-based studio system with certain
unique functionality. The Company believes its CameraManSTUDIO product
will reduce the number of operators required in a typical studio
environment. The Company plans to introduce a working prototype of this
system early in 1997 and anticipates shipments of the product to begin
during the second half of 1997.
o Wireless Technology Products
The Company has conducted market and technology research for the
application of its wireless technology and has developed prototypes of
user input devices which integrate this wireless technology as proofs of
concept. These prototypes do not necessarily represent initial products of
the Company. The technology is still in the development stage, and the
Company cannot presently determine when, or if, development will be
completed or how the technology will be marketed.
6
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Marketing and Sales
CameraMan(R) Systems
The Company's principal marketing strategy is to sell CameraMan(R) systems in
targeted commercial markets in which the Company believes the systems have wide
application. The current CameraMan(R) systems are generally marketed to
educators and corporate professionals who make use of audiovisual and
telecommunications systems in distance education and videoconferencing.
System sales are directed by an internal sales staff and a network of authorized
audiovisual products dealers, telecommunication dealers and systems integrators
who design and specify audiovisual equipment of various manufacturers. The
majority of the Company's authorized dealers are located throughout the United
States and Canada. Late in 1996, the Company began expanding its audiovisual
dealer network to the international markets, including Latin America, Asia and
Europe. At the same time, the Company seeks national account sales arrangements,
such as the program with VTEL for specific applications and targeted commercial
markets.
During the fourth quarter of 1996, the Company entered into a reseller agreement
with PictureTel Corporation ("PTEL"), whereby PTEL will sell the complete
CameraMan(R) product line through its direct and indirect sales channels. PTEL,
located in Andover, Massachusetts, is a world leader in developing,
manufacturing and marketing videoconferencing solutions. In addition, early in
1997, the Company entered into a similar reseller agreement with Compression
Labs, Inc., ("CLI") located in San Jose, California. CLI is another of the
industry's leading manufacturers of videoconferencing equipment.
The Company currently supports its distribution channels with marketing programs
to promote its products. These include targeted trade advertising, lead
generation/fulfillment, tradeshow attendance and live demonstration facilities.
In addition, the Company provides training of its dealers' sales, support and
installation personnel. The Company also has dedicated specific sales and
marketing personnel to provide comprehensive support to the sales staff and
resellers of VTEL, PTEL and CLI.
Approximately 64% and 88% of the Company's revenues were generated from its
dealer network in 1996 and 1995, respectively. In 1996, VTEL and an audiovisual
reseller, TeleMeasurements, Inc., accounted for approximately 35% and 11% of the
Company's revenues, respectively, In 1995, VTEL and Video Images, another of the
Company's resellers, accounted for approximately 12% and 10%, respectively, of
the Company's revenues. Video Images also accounted for approximately 12% of the
Company's revenues in 1994.
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Target Markets for CameraMan(R) Products
o Distance Education
In the education market, the Company targets universities, colleges,
primary schools, hospitals/clinics, and corporate/government training
facilities. The Company believes telecommunications technologies are a
major movement in education resulting in teaching programs which are more
accessible, more cost-effective per student and more timely. The Company
believes that compared to other widely used educational tools, the
CameraMan(R) system permits a more effective presentation of teaching
materials and a higher level of interaction between student and teacher.
Moreover, the Company believes the CameraMan(R) system is easier to use
than other available camera systems.
o Videoconferencing
The videoconferencing market has seen significant growth in recent years.
Until recently, videoconferencing generally was limited to large
corporations, state and federal agencies and universities that used
special-purpose, on-site videoconferencing rooms or public conference
centers for long-distance communication among corporate personnel,
customers, clients and suppliers. As a result of the technological
advances being made in the communications industry, videoconferencing
solutions are being sought by smaller entities for the same purposes.
o Studio Production
The studio production industry includes broadcast and cable
networks/stations, independent studios and corporate, education,
healthcare, government and religious studio environments. The Company's
CameraManSTUDIO product, which is expected to be released during 1997,
targets the industrial sector of the studio production industry which
includes the corporate, education, government, healthcare and religious
studios. The Company believes its product will also be utilized in other
sectors of the studio production industry for FlashCam and Public Access
applications, Business T.V. and small ancillary broadcast and video
production studios.
Competition
The markets for videoconferencing and distance education systems are continually
evolving due to customer demand to achieve "just like being there" effective
communications. The Company is aware of certain other companies which have
commercialized or developed technologies and products which are competitive with
certain functions of the CameraMan(R) system.
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In both the distance education and videoconferencing markets, manufacturers of
manual pan/tilt heads, such as Panasonic, Sony Corporation, Vicon, Inc.,
Vinton/TSM, Inc., Telemetrics, Inc., and Fujinon, compete with the Company's
products. Some of these pan/tilt heads have limited preset location
capabilities, but they offer no tracking capabilities and must be operated
either by a camera operator or by a monitor or control pad. While the technology
exists to replace the cable connections with devices that transmit and receive
wireless signals, these devices still require manual operation. Some of the
above mentioned products sell for substantially more than the CameraMan(R)
system while others sell at prices similar to, or less than, that of the
CameraMan(R) system, but offer limited functions.
During 1995, Canon introduced a general pan/tilt camera which, when integrated
with third party software from Teleos Research and a personal computer with
specific video hardware, is able to perform certain tracking functions. The
Company believes that the Canon tracking solution has a significantly lower
level of performance than the CameraMan(R) system in terms of function, features
and reliability. In addition, although the pricing of the Canon offering is
similar to CameraMan(R), the Canon offering is not available as an integrated,
packaged system.
In the distance education market, approximately 50% of the market utilizes
telephone lines to transmit video. This method requires the use of a CODEC to
compress and decompress the data prior and subsequent to transmission.
PictureTel, VTEL and CLI are the three largest CODEC manufacturers in North
America. While the Company does have reseller agreements with each of these
three manufacturers to offer CameraMan(R) as a main camera with their CODEC, or
as an auxiliary camera for presentation purposes, each of these manufacturers
also offer lower priced systems utilizing their own or other manufacturers'
non-tracking cameras. The Company competes with these cameras based on features
and functionality.
Many of the Company's competitors are well-established, have substantially
greater financial and other resources than the Company, have established
reputations for success in the development, sale and service of audiovisual
products, and have significant advertising budgets to permit them to implement
extensive advertising and promotional campaigns in response to competitors.
Certain of these competitors dominate the audiovisual industry and have the
financial resources necessary to enable them to withstand substantial price
competition, which is expected to increase, and downturns in the markets for
audiovisual products.
The Company believes that it competes principally on the basis of the
capabilities of the CameraMan(R) system, ease of system application, price and
system flexibility.
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Production and Supply
The Company engages in assembly operations for its CameraMan(R) products at its
facility in Jacksonville, Florida. The Company's operations involve the
inspection of each component, assembly of the system's electronic circuitry and
other components, a series of quality specification measurements, and various
other computer, visual and physical tests, including product field testing, to
certify final performance specifications. The Company believes that it has
sufficient production capacity to satisfy increased demand for CameraMan(R)
systems for the foreseeable future.
The Company obtains all of its component parts, including standard electronic
components and specially designed components for the CameraMan(R) system, from
third-party manufacturers. The Company currently purchases all of its
requirements of specially designed component parts from single-source suppliers.
The Company owns the design and dies for such components and believes that
alternative sources of supply for such components are available.
For the years ended December 31, 1996, 1995 and 1994, one supplier accounted for
approximately 21%, 23% and 20%, respectively of the Company's component
purchases. This supplier is a single-source supplier of the Company's camera
modules for System II. The Company maintains a three to six month inventory of
this component and has identified an alternative source of supply for this
component, although its use would require minor modifications to the existing
system. No other supplier accounted for more than 15% of the Company's component
purchases in 1996, 1995 or 1994.
At December 31, 1996, the Company has a commitment to purchase camera modules
from its single-source supplier. This purchase commitment is currently estimated
to aggregate approximately $780,000 through 1997. In addition, the Company has a
commitment totaling approximately $145,000 thorough 1997 to purchase motors used
in its camera systems from a non sole-source supplier.
The Company is substantially dependent on the ability of its suppliers, among
other things, to satisfy performance and quality specifications and dedicate
sufficient production capacity for components within scheduled delivery times.
The Company does not maintain contracts with any of its suppliers and purchases
system components pursuant to purchase orders placed from time to time in the
ordinary course of business. Failure or delay by the Company's suppliers in
supplying necessary components to the Company would adversely affect the
Company's ability to obtain and deliver CameraMan(R) systems on a timely and
competitive basis. The Company endeavors to mitigate the potential adverse
effect of supply interruptions by carefully qualifying vendors on the basis of
quality and dependability, and by maintaining an inventory of certain
components, but there can be no assurances that such components will be readily
available when needed.
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The Company's sales cycle generally is from one to eighteen months while the
period from execution of a customer's purchase order to delivery of a
CameraMan(R) system is typically three to five weeks. The Company attempts to
forecast orders and to purchase long lead-time components in advance of receipt
of purchase orders to permit it to provide deliveries of completed systems
within its standard three to five week delivery period. At December 31, 1996,
the Company maintained an inventory of standard electronic and other system
components of $1,353,499. Substantially all of the Company's systems are
delivered to customers by common carrier.
The Company offers a one-year limited warranty covering defects in workmanship
and materials. During the warranty period the Company will replace parts and
make repairs to system components at its expense. The Company records a reserve
for future warranty costs at the time of sale. To date, the Company has not
incurred any significant warranty expense.
Patents and Trademarks
The Company holds eleven United States patents and one foreign patent covering
certain tracking functions and methods for controlling the field of view in an
automatic tracking camera system. The Company has applied for several additional
United States and foreign patents relating to the CameraMan(R) system and the
wireless technology.
The Company promotes the ParkerVision and CameraMan trademarks in connection
with its marketing activities and holds United States trademark registrations
for such marks. In addition, the Company has applied to register other
trademarks.
Government Regulation
The Company utilizes wireless communications both in its CameraMan(R) systems
and in its new wireless technology. These wireless communications utilize
infrared and radio frequency technology which is subject to regulation by the
Federal Communications Commission ("FCC"). The Company has obtained all licenses
and approvals necessary for the operation of its products. There can be no
assurance that, in the future, the Company will be able to obtain required
licenses or that the FCC will not require the Company to comply with more
stringent licensing requirements. Failure or delay in obtaining required
licenses would have a material adverse effect on the Company. In addition,
expansion of the Company's operations into consumer or certain foreign markets
may require the Company to obtain additional licenses for its products.
Amendments to existing statutes and regulations, adoption of new statutes and
regulations and the Company's expansion into foreign jurisdictions, could
require the Company to alter methods of operations at costs that could be
substantial, which could have an adverse effect on the Company. There can be no
assurance that the Company will be able, for financial or other reasons, to
comply with applicable laws and regulations and licensing requirements.
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Research and Development
The Company's principal efforts to date have been devoted to the design,
development and support of the CameraMan(R) systems, the integration of the
CameraMan(R) systems into a product line for use with VTEL products, the
development of CameraManSTUDIO, and research in emerging wireless technologies.
The Company has contemplated the development of a consumer version of the
CameraMan(R) system and has conducted market and technology research for such a
system. A consumer CameraMan(R) would require reduced system size and cost, as
well as additional features and functionality in order to make it attractive for
the mass consumer market. The consumer product is still in its early research
stages and the Company cannot presently determine when, or if, development of a
consumer version of the CameraMan(R) system will be completed.
For the fiscal years ended December 31, 1996 and 1995, the Company expended
approximately $1,483,000 and $1,179,000, respectively, on research and
development.
Employees
As of December 31, 1996, the Company had one part-time and seventy-eight
full-time employees, of which thirty-one are employed in manufacturing, eighteen
in engineering research and development, twenty-one in sales, support and
marketing, and eight in finance and administration. None of the Company's
employees are represented by a labor union. The Company considers its employee
relations satisfactory.
Item 2. Description of Property
The Company's executive offices and assembly operations are located in
approximately 33,000 square feet of leased space on three acres of land in
Jacksonville, Florida, pursuant to a lease agreement with Jeffrey Parker,
Chairman of the Board, Chief Executive Officer and President of the Company, and
Barbara Parker, Mr. Parker's mother. The initial lease term expired in February
1997, and the Company exercised its first of three five-year renewal options.
The lease is on a triple net basis and prior to amendment, minimum annual rental
payments were $242,880. In 1996, the Company renegotiated its base annual rental
payment and amended its lease agreement to provide for a base annual rental
payment of $100,000. The five year renewal option exercised by the Company
provides for a base annual rental payment of $100,000 through August 31, 1997,
increasing to a base annual rental payment of no less than $279,306 thereafter.
The Company believes that its facility is adequate for its current and
reasonably foreseeable future needs. The Company believes that additional
physical capacity at its current facility will accommodate expansion, if
required.
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Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual meeting on October 29, 1996. The stockholders
elected Messrs. Jeffrey Parker, Todd Parker, Arthur Yeager and William Sammons
and Ms. Stacie Wilf as directors. The following is a tabulation of votes cast
for and against and abstentions for each director:
Votes Cast
-------------------------
Name For Against Abstentions
-----------------------------------------------------------------
Jeffrey Parker 8,383,655 2,750 0
Todd Parker 8,383,655 2,750 0
William Sammons 8,383,655 2,750 0
Arthur Yeager 8,383,655 2,750 0
Stacie Wilf 8,383,655 2,750 0
At this meeting, the stockholders also approved a proposal to amend the 1993
Stock Plan to increase from 500,000 to 1,500,000 the number of shares of common
stock reserved for the Plan. On the matter of approving the amendment, 6,018,273
votes were cast in favor, 168,879 votes were cast against and 9,249 votes
abstained. There were 2,190,004 broker non-votes.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Market Information
The Company's common stock is traded under the symbol "PRKR" on the Nasdaq
National Market ("Nasdaq"), which is the principal market for the common stock.
Listed below is the range of the high and low bid prices of the common stock for
the last two fiscal years, as reported by Nasdaq. The amounts represent
inter-dealer quotations without adjustment for retail markups, markdowns or
commissions and do not necessarily represent the prices of actual transactions.
High Low
-------- --------
Fiscal year ending December 31,
1995:
First quarter $ 5.000 $ 2.500
Second quarter 7.125 3.000
Third quarter 11.125 6.375
Fourth quarter 10.000 5.875
Fiscal year ending December 31,
1996:
First quarter 10.750 6.750
Second quarter 17.125 10.500
Third quarter 13.500 9.750
Fourth quarter 15.250 10.500
Holders
As of March 7, 1997, there were 67 holders of record. The Company believes there
to be approximately 1,350 beneficial holders of the Company's common stock.
Dividends
To date, the Company has not paid any dividends on its common stock. The payment
of dividends, if any, in the future is within the discretion of the board of
directors and will depend upon the Company's ability to generate earnings, its
capital requirements and financial condition, and other relevant factors. The
Company does not intend to declare any dividends in the foreseeable future, but
instead intends to retain all earnings, if any, for use in the Company's
business.
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Sales of Unregistered Securities
<TABLE>
<CAPTION>
If option,
warrant or
Consideration received and Exemption convertible
description of underwriting or from security, terms
Date of Number other discounts to market price registration of exercise or
sale Title of security sold afforded to purchasers claimed conversion
- ----------- --------------------- ---------- ---------------------------------- --------------- -----------------
<C> <C> <C> <C> <C> <C>
4/12/96 Common stock 800,000 Received proceeds of $7,397,500, Regulation S n/a
net of purchasers' discount of
$560,000 and offering costs of
$42,500
4/12/96 Warrants to 250,000 Warrants granted - no 4(2) Exercisable for
purchase common consideration received by a period
stock granted to Company until exercise lasting five
outside financial years from the
consultants in date of grant
connection with at an exercise
Regulation S price of $10
offering per share
4/22/96 Common stock 80,000 Received proceeds of $800,000 4(2) n/a
with no discount to purchasers
7/16/96 Warrants to 200,000 Financial services valued at 4(2) Exercisable for
purchase common $512,000 to be received over a a period
stock granted to five year term commencing July lasting five
financial consultant 16, 1996 years from the
date of grant
at an exercise
price of $10
per share
1/96 - Options to purchase 134,275 Options granted - no 4(2) Exercisable for
12/96 common stock consideration received by periods lasting
granted to Company until exercise from five to
directors and ten years from
employees pursuant the date of
to stock option plan grant at
exercise prices
ranging from
$10.50 to
$13.875 per
share
</TABLE>
15
<PAGE>
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward-Looking Statements
When used in the Form 10-KSB and in future filings by the Company with the
Securities and Exchange Commission, the words or phrases "expects" or "the
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 any 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. These risks include, but are not limited to, the continuing losses of
the Company which may result in the need for additional capital in the future or
a change in current operations, the need for substantial capital and use of
current working capital amounts to develop new products and for research and
development, uncertainty of product development, technological obsolescence,
market acceptance of its products and dependence on third party suppliers and
distributors. The Company may also have to expend substantial employee time and
financial resources to meet governmental regulation requirements and for the
protection of its intellectual property rights. The Company has no obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect anticipated or unanticipated events or
circumstances occurring after the date of such statements.
General
The Company had not generated revenues sufficient to offset its operating
expenses from inception in August 1989 to the present. The Company anticipates
operating at a cash flow from operations deficit in 1997. The Company, however,
has experienced increases of revenues in 1995 and 1996 and anticipates further
increases in revenues in 1997. These increases are subject to the Company
continuing to expand its marketing and sales efforts, attracting additional
means of distribution and customers and maintaining current margins, among other
things. The Company intends to continue to use its working capital to build its
infrastructure to support future system marketing and sales activities and
research and development for new system products and configurations and wireless
technology development and deployment. No assurance can be given that such
expenditures will result in increased sales, new products, or technological
advances.
16
<PAGE>
Results of Operations for Each of the Three Years Ended December 31, 1996, 1995
and 1994
Revenues
The Company's revenues consist of sales of CameraMan(R) systems and various
accessories which complement those systems. Revenues for the years ended
December 31, 1996, 1995 and 1994 were $9,252,052, $3,941,194 and $1,227,799,
respectively. The increase in revenues is a result of an increase in the number
of systems sold, as well as an increase in the average selling price per system.
From 1995 to 1996, the number of systems sold increased from 862 systems in 1995
to 1,611 systems in 1996. The increase in units sold is primarily attributable
to the Company's relationship with VTEL as well as continued increasing market
acceptance of the Company's System II products. Approximately 41% of the systems
sold in 1996 represent sales to VTEL, as compared to approximately 12% in 1995.
The $5,310,858 increase in revenues from 1995 to 1996 is also attributable, in
part, to an increase in the average selling price per system from approximately
$4,600 in 1995 to approximately $5,700 in 1996. This increase is due primarily
to the introduction of the Company's three-chip product line in 1996. The
three-chip product, which accounted for approximately 9% of unit sales in 1996,
generates approximately $8,500 more revenues per system than the single-chip
product.
From 1994 to 1995, the number of systems sold increased from 372 systems in 1994
to 862 in 1995. Of the 862 systems sold in 1995, 14% represented sales of the
initial CameraMan(R) models and the remaining 86% represented System II sales.
This increase in units sold is primarily attributable to market acceptance of
the Company's System II product line, the success of the Company's continued
efforts to increase market penetration of its products by establishing a new
dealer network, the success of the Company's 1994 marketing efforts targeting
the distance education market, and the establishment of a co-development and
co-marketing agreement with VTEL in 1995. The $2,713,395 increase in revenues
from 1994 to 1995 is also attributable, in part, to an increase in the average
selling price per system from approximately $3,300 in 1994 to approximately
$4,600 in 1995. This increase of approximately $1,300 per system is due to a
change in the mix of systems sold. During 1994, approximately 25% of systems
sold represented lower priced CameraMan(R) models which were discontinued in the
fourth quarter of 1994. In addition, in 1994, approximately 85% of the systems
sold did not include a camera, whereas the System II product line, which
accounted for the majority of 1995 system sales, incorporates the camera into
the base unit.
The Company's sales are primarily generated from the distance education market
which has a 12 to 18 month sales cycle. As a result, the Company expects the
results of the 1995 and 1996 sales and marketing activities generally to be
reflected in 1997 and 1998 revenues. In addition, the Company anticipates a
continued increase in its average selling price per system in 1997 as a result
of continued market acceptance of the three-chip camera system and a price
increase effective January 1, 1997 on the majority of the Company's products.
Any
17
<PAGE>
increase in the average selling price of Company products will depend, in part,
upon the mix of single-chip versus three-chip camera systems sold in 1997 and
future years, and market acceptance of price increases.
Gross Margin
For the years ended December 31, 1996, 1995 and 1994, gross margins as a
percentage of sales were 35%, 38% and 48%, respectively. The decrease in margin
from 1995 to 1996 is primarily due to the mix of products sold to VTEL. In 1996,
the Company implemented a program with VTEL whereby VTEL could purchase a
general pan/tilt base unit at very low margins and then separately purchase
various upgrade packages, at significantly higher margins, to convert the
general pan/tilt unit into an application specific package such as a Presenter
or Student Camera System. Approximately 25% of the base units purchased by VTEL
in 1996 were general pan/tilt units with no application specific upgrade
package. The Company revised its pricing structure with VTEL in 1997 whereby the
margin is shared more equally between the base unit and the application-specific
packages.
The decrease in margin from 1994 to 1995 is primarily due to the mix of products
sold, the incorporation of a camera into the CameraMan(R) base unit, and the
production inefficiencies experienced as a result of introducing several new
products during 1995. During 1995, the Company required each of its dealers in
its new national dealer network to purchase a System II demonstration unit and
offered these dealers an additional 10% discount on the price of these units.
Approximately 10% of the systems sold during 1995 represented such dealer
demonstration units. Also, during 1995, the Company introduced a System II
general pan/tilt system which was designed and priced to compete directly with
manufacturers of low-end pan/tilt cameras. These systems were sold at a
significantly lower margin than other System II products and represented
approximately 10% of the total systems sold during 1995. In addition, 86% of the
Company's sales in 1995 were attributable to the System II product line which
incorporates a single-chip camera into the base unit. The Company's margins on
the single-chip camera, which is sourced from a third-party, are lower than
margins earned on the system components manufactured by the Company. The camera
comprised approximately 30% of the total system cost. In addition to the changes
in product mix, the Company experienced inefficiencies in production due to the
manufacturing of several new products during 1995, including the full System II
product line.
The Company is working to improve its gross margin through product pricing,
labor efficiencies, reduction of overhead, and product design; however, there
can be no assurance that gross margins will improve significantly over, or
remain stable with, the gross margins attained in 1996 due to the highly
competitive nature of the industry, the introduction of new products, and
fluctuations in the cost of component parts.
18
<PAGE>
Marketing and Selling Expenses
Marketing and selling expenses increased by $390,569, or 20%, from $1,995,727 in
1995 to $2,386,296 in 1996, and increased $474,998, or 31%, from $1,520,729 in
1994 to $1,995,727 in 1995. Marketing and selling expenses as a percentage of
revenues were 26%, 51% and 124% for the years ended December 31, 1996, 1995 and
1994, respectively.
The increase in marketing and selling expenses from 1995 to 1996 was primarily
due to the addition of sales and marketing personnel and related costs in order
to support expansion into international markets, to provide specific sales
support to VTEL, PTEL and CLI, and to expand the internal sales staff in
preparation for the release of CameraManSTUDIO. This increase was somewhat
offset by a decrease in advertising costs as the Company's level of advertising
was higher in 1995 due to the release of System II.
Due to the length of the sales cycle in the Company's primary market, distance
education, the Company believes the results of its 1996 investment in marketing
and selling efforts will be further realized through continued revenue increases
in 1997 and 1998.
The increase in marketing and selling expenses from 1994 to 1995 was primarily
due to higher levels of staffing to support marketing and selling efforts and
increased advertising costs to improve market recognition and penetration. The
Company believes the increase in the number of sales and marketing personnel and
the increased marketing promotion expenses resulted in improved market
acceptance and increased revenues during 1996.
As a percentage of revenues, marketing and selling expenses decreased from 124%
to 51% to 26% from 1994 to 1996. The Company is committed to continuing its
investment in marketing and selling efforts in order to continue to increase
market awareness and penetration of its products; however, the Company expects
that the growth of such expenses will continue at a slower rate than revenues.
General and Administrative Expenses
The Company's general and administrative expenses increased by $60,914 from
$1,446,026 in 1995 to $1,506,940 in 1996, and decreased by $16,796 from
$1,462,822 in 1994 to $1,446,026 in 1995. General and administrative expenses
consist primarily of executive and administrative personnel compensation,
insurance costs and costs incurred for outside professional services.
The increase in general and administrative expenses from 1995 to 1996 is
primarily the result of an increase in professional fees due to increased use of
outside professional services during 1996, offset somewhat by a decrease in
personnel costs. The decrease in personnel costs is largely due to the voluntary
reduction of salaries by two officers during 1996.
The decrease in general and administrative expenses from 1994 to 1995 is the
result of increases in personnel, offset by decreases in officers' compensation
and professional fees
19
<PAGE>
during 1995. Additions in the number of administrative personnel were made in
order to support the Company's increased production and sale of CameraMan(R)
systems during 1995. The increase in personnel costs, however, was more than
offset by a decrease in the cost of outside professional services as the Company
was able to reduce its outside professional fees by performing a significant
portion of the services with Company personnel. In addition, general and
administrative expenses were further decreased by a voluntary reduction in
salaries by executive officers of the Company during 1995.
As a percentage of revenues, general and administrative expenses were 16%, 37%
and 119% in 1996, 1995 and 1994, respectively. Although the Company expects some
increases in general and administrative expenses to occur in order to continue
to support increased revenues, the Company expects that the growth of such
expenses will continue at a slower rate than revenues.
Research and Development Expenses
The Company's research and development expenses increased by $303,999, or 26%
from $1,178,772 in 1995 to $1,482,771 in 1996 and increased by $475,273, or 68%,
from $703,499 in 1994 to $1,178,772 in 1995. Research and development expenses
as a percentage of revenues were 16%, 30% and 57% in 1996, 1995 and 1994,
respectively. The increase in research and development expenses reflects the
Company's increased investment in the development of new products and
technologies.
From 1995 to 1996, the increase in research and development expenses was
primarily due to costs incurred by the research team developed during the latter
half of 1995 to explore new wireless technologies, as well as an increase in
prototype materials used for the development of the Company's three-chip camera
systems and studio prototype during 1996.
From 1994 to 1995, the increase in research and development expenses was
primarily due to the increased number of engineering personnel and expenses for
the development of the System II product line and the integration of the
ParkerVision product line with VTEL's products. In addition, the Company created
a research group during the latter half of 1995 for the purposes of exploring
new technologies for future products.
Although the percentage of revenue invested by the Company in research and
development may vary from period to period, the Company is committed to
investing in its research and development programs due to the rapid
technological advances in the industry.
Nonrecoverable Start-up and Excess Capacity Costs
The Company incurred nonrecoverable start-up and excess capacity costs of
$91,350, $556,675 and $575,161 for the years ended December 31, 1996, 1995 and
1994, respectively. These costs represent materials, labor and overhead costs
incurred by the Company in excess of those directly or indirectly attributable
to system sales.
20
<PAGE>
The decrease in nonrecoverable start-up and excess capacity costs from 1995 to
1996 is due to expanded usage of excess capacity as production volumes
increased. By the third quarter of 1996, the Company began fully absorbing its
excess plant capacity into cost of goods sold. The Company does not anticipate
recognizing any excess capacity costs in 1997 or future periods.
During 1994 and 1995, nonrecoverable start-up and excess capacity costs were
primarily composed of the cost of idle facilities, principally rental costs to a
related party for excess space and excess depreciation on manufacturing
equipment which was used at a less than normal level of capacity. In addition,
these costs included an immaterial amount of material, labor and overhead costs
associated with the production of new product prototypes which were not held for
sale. Nonrecoverable start-up and excess capacity costs decreased by $18,486
from 1994 to 1995. This decrease is due to expanded usage of excess capacity as
production volumes increased, offset somewhat by the increased cost of new
product prototypes with the introduction of the System II product line.
Interest Expense
Interest expense decreased by $202,239 from $277,786 in 1995 to $75,547 in 1996
and decreased by $46,894 from $324,680 in 1994 to $277,786 in 1995. Interest
expense represents interest on the subordinated debentures payable to related
parties. The decrease in interest expense from 1995 to 1996 is a result of the
conversion of related party subordinated debentures to equity in April 1996. The
decrease in interest expense from 1994 to 1995 is attributable to an amendment
of the subordinated debt agreements with related parties reducing the interest
rate by 2.5% during 1995.
Interest Income
Interest income increased by $215,641 from $398,648 in 1995 to $614,289 in 1996
and decreased by $80,549 from $479,197 in 1994 to $398,648 in 1995. Interest
income primarily represents interest earned on the Company's investment of the
proceeds from its initial public offering in 1993 and its subsequent Regulation
S and private placement transactions during 1996. The increase in interest
income from 1995 to 1996 is due to the investment of a substantial portion of
the proceeds from the Company's Regulation S offering and private placement
transactions during April 1996. The decrease in interest income from 1994 to
1995 is attributable to the Company's use of proceeds from maturing investments
to fund operations during 1995.
Other Expense, net
Other expense decreased by $241,902 from $252,712 in 1995 to $10,810 in 1996 and
increased $93,429 from $159,283 in 1994 to $252,712 in 1995. Other expense in
1995 included losses recognized on obsolete inventories due to the
discontinuation of the initial
21
<PAGE>
CameraMan(R) system product line. No similar losses were incurred in 1996.
Inventory obsolescence due to product refinement in the normal course of
business is continually monitored and is recognized as a charge to cost of
sales.
Backlog
As of December 31, 1996, 1995 and 1994, the Company had backlog of approximately
$260,000, $170,000 and $260,000, respectively. Backlog consists of orders
received from customers which generally have a specified delivery schedule
within three to five weeks of receipt.
Liquidity and Capital Resources
At December 31, 1996 and 1995, the Company had working capital of $8,213,864 and
$8,680,475, respectively. This $466,611 decrease in working capital from 1995 to
1996 is primarily due to the use of proceeds from maturing investments to fund
operations. During 1995 and 1996, the Company financed its operations from the
proceeds of its initial public offering, the private placement of securities to
two United States investors and an offering pursuant to Regulation S, and
interest earned on maturing investments of such proceeds.
The Company used cash for operating activities of $1,280,403, $4,436,612 and
$3,649,983 for the years ended December 31, 1996, 1995 and 1994, respectively.
The $3,156,209 decrease in cash used for operating activities from 1995 to 1996
is primarily attributable to increases in margins from increased sales volumes.
The $786,629 increase in cash used for operating activities from 1994 to 1995 is
primarily attributable to increases in accounts receivable and inventories.
Accounts receivable increased due to the increased volume of sales during 1995.
The increase in inventories is primarily attributable to increases in inventory
of components from single-source suppliers, as well as increased purchases based
on production forecasts and a lengthening of lead times from several of the
Company's suppliers during the second half of 1995.
The Company used cash in investing activities of $6,700,317 for the year ended
December 31, 1996, and generated cash from investing activities of $1,065,284
and $8,101,552 for the years ended December 31, 1995 and 1994, respectively. The
cash used in investing activities in 1996 is primarily due to the investment of
the proceeds from the Regulation S offering and private placement transactions
during April 1996, as well as the reinvestment of maturing investments from the
Company's initial public offering. The cash generated from investing activities
in 1995 and 1994 is due to the maturity of investments, somewhat offset by
capital expenditures.
The Company incurred $948,183, $596,133 and $428,931 for capital expenditures in
1996, 1995 and 1994, respectively. These capital expenditures primarily
represent the purchase of certain research and development test equipment as
well as the purchase of computer and office equipment to support additional
sales, marketing, product development and
22
<PAGE>
administrative personnel. At December 31, 1996, the Company was not subject to
any significant commitments to make additional capital expenditures.
The Company generated cash from financing activities of $8,243,925 and $113,870
for the years ended December 31, 1996 and 1995, respectively. The cash generated
from financing activities in 1996 represents proceeds from the issuance of
common stock primarily as a result of a Regulation S offering and private
placement transactions. The cash generated from financing activities in 1995
represents proceeds from the issuance of common stock upon exercise of employee
stock options. The Company did not sell any securities during the year ended
December 31, 1994.
The Company's principal source of liquidity at December 31, 1996 consisted of
$5,541,881 in cash and short-term investments resulting from its initial public
offering and subsequent offerings. 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 general administration. The Company believes its cash and
investment balances will provide sufficient resources to meet its cash
requirements for at least the next twelve months. In addition, at December 31,
1996, the Company has $6,965,995 in long-term investments which the Company
believes is sufficient to sustain its operations on a longer term basis, if
necessary.
If the Company develops a consumer product utilizing its wireless technology,
the large scale manufacturing, marketing and commercial rollout of the products
will require substantially greater capital resources than are currently
available to the Company. The Company may seek to enter into strategic alliances
with one or more large, financially capable companies or may seek additional
capital to undertake these activities. No assurance can be given that the
Company will form such alliances or obtain financing, if needed.
23
<PAGE>
Item 7. Financial Statements
Index to Financial Statements
Page
----
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 25
BALANCE SHEETS -- DECEMBER 31, 1996 AND 1995 26-27
STATEMENTS OF OPERATIONS -- FOR THE YEARS ENDED
DECEMBER 31, 1996, 1995 AND 1994 28
STATEMENTS OF SHAREHOLDERS' EQUITY -- FOR THE YEARS
ENDED DECEMBER 31, 1996, 1995 AND 1994 29
STATEMENTS OF CASH FLOWS -- FOR THE YEARS ENDED DECEMBER 31, 1996, 1995
AND 1994 30
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 1996, 1995 AND 1994
31-42
24
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of
ParkerVision, Inc.:
We have audited the accompanying balance sheets of PARKERVISION, INC. (a Florida
corporation) as of December 31, 1996 and 1995, and the related statements of
operations, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ParkerVision, Inc. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Jacksonville, Florida,
February 14, 1997
25
<PAGE>
PARKERVISION, INC.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,554,732 $ 1,291,527
Short-term investments 3,987,149 5,080,308
Accounts receivable, net of allowance for doubtful
accounts of $33,033 and $17,350 at December 31,
1996 and 1995, respectively 1,143,121 451,274
Interest receivable 135,662 84,375
Insurance and other receivables 6,712 310,514
Inventories, net 1,957,896 2,274,764
Prepaid expenses 306,511 131,044
Deferred income taxes 3,477 6,662
----------- -----------
Total current assets 9,095,260 9,630,468
LONG-TERM INVESTMENTS 6,965,995 0
PROPERTY AND EQUIPMENT, net 1,516,685 1,093,269
OTHER ASSETS, net 583,972 231,239
----------- -----------
Total assets $18,161,912 $10,954,976
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
26
<PAGE>
PARKERVISION, INC.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 555,269 $ 462,466
Accrued expenses:
Salaries and wages 195,864 113,112
Professional fees and other 102,867 62,333
Interest payable to related parties 0 8,110
Deferred revenue 27,396 87,954
Current portion of subordinated debentures 0 216,018
------------ ------------
Total current liabilities 881,396 949,993
SUBORDINATED DEBENTURES, net of current portion 0 3,028,237
DEFERRED INCOME TAXES 3,477 6,662
COMMITMENTS AND CONTINGENCIES (Notes 7, 8 and 9)
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, 10,032,604 and 8,800,541 shares issued
and outstanding at December 31, 1996 and 1995,
respectively 100,326 88,005
Warrants outstanding 1,152,360 360
Additional paid-in capital 25,392,608 14,556,754
Accumulated deficit (9,368,255) (7,675,035)
------------ ------------
Total shareholders' equity 17,277,039 6,970,084
------------ ------------
Total liabilities and shareholders' equity $ 18,161,912 $ 10,954,976
============ ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
27
<PAGE>
PARKERVISION, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Revenues, net $ 9,252,052 $ 3,941,194 $ 1,227,799
Cost of goods sold 5,987,097 2,440,656 642,551
----------- ----------- -----------
Gross margin 3,264,955 1,500,538 585,248
Marketing and selling expenses 2,386,296 1,995,727 1,520,729
General and administrative expenses 1,506,940 1,446,026 1,462,822
Research and development expenses 1,482,771 1,178,772 703,499
Nonrecoverable start-up and excess
capacity costs 91,350 556,675 575,161
Interest expense to related parties 75,547 277,786 324,680
Interest income (614,289) (398,648) (479,197)
Other expense, net 10,810 252,712 159,283
----------- ----------- -----------
Net loss $(1,674,470) $(3,808,512) $(3,681,729)
=========== =========== ===========
Net loss per common and common
equivalent share $ (0.17) $ (0.43) $ (0.42)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
28
<PAGE>
PARKERVISION, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
Common Stock
---------------------------
Warrants Additional Total
Par out- Paid-In Accumulated Shareholders'
Shares Value standing Capital Deficit Equity
----------- ----------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31,
1993, as reclassified 8,720,000 $ 87,200 $ 360 $14,443,689 $ (203,544) $ 14,327,705
Net loss for the year
ended December 31,
1994 0 0 0 0 (3,681,729) (3,681,729)
----------- ----------- ---------- ----------- ----------- ------------
BALANCE, December 31,
1994 8,720,000 87,200 360 14,443,689 (3,885,273) 10,645,976
Issuance of common
stock upon employee
stock option exercise 80,541 805 0 113,065 0 113,870
Unrealized gain on
investments available
for sale 0 0 0 0 18,750 18,750
Net loss for the year
ended December 31,
1995 0 0 0 0 (3,808,512) (3,808,512)
----------- ----------- ---------- ----------- ----------- ------------
BALANCE, December 31,
1995 8,800,541 88,005 360 14,556,754 (7,675,035) 6,970,084
Issuance of common
stock upon employee
stock option exercise 27,638 277 0 46,148 0 46,425
Issuance of common
stock on April 12,
1996, net of cash
offering costs of
$ 602,500 800,000 8,000 640,000 6,749,500 0 7,397,500
Issuance of common
stock for conversion
of subordinated
debentures payable 324,425 3,244 0 3,241,006 0 3,244,250
Issuance of common
stock for cash on
April 22, 1996 80,000 800 0 799,200 0 800,000
Issuance of warrants
for financial
consulting services 0 0 512,000 0 0 512,000
Change in unrealized
gain on investments
available for sale 0 0 0 0 (18,750) (18,750)
Net loss for the
period ended December
31, 1996 0 0 0 0 (1,674,470) (1,674,470)
----------- ----------- ---------- ----------- ----------- ------------
BALANCE, December 31,
1996 10,032,604 $ 100,326 $1,152,360 $25,392,608 $(9,368,255) $ 17,277,039
=========== =========== ========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
29
<PAGE>
PARKERVISION, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,674,470) $ (3,808,512) $(3,681,729)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization 609,485 499,605 359,751
Amortization of discounts on investments (139,452) (142,605) (41,423)
Provision for obsolete inventories 330,000 309,311 137,368
Loss on disposal of property 0 4,877 13,987
Loss on sale of investments 0 0 11,966
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable, net (691,847) (310,540) 27,776
Decrease (increase) in interest and other receivables 252,515 (221,813) (149,985)
Increase in inventories (13,132) (907,148) (518,625)
(Increase) decrease in prepaid expenses (73,071) (24,012) 97,181
Increase in other assets (27,852) (122,691) (30,122)
Increase in accounts payable and accrued expenses 207,979 198,962 142,894
(Decrease) increase in deferred revenue (60,558) 87,954 (19,022)
------------ ------------ -----------
Total adjustments 394,067 (628,100) 31,746
------------ ------------ -----------
Net cash used for operating activities (1,280,403) (4,436,612) (3,649,983)
------------ ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments (11,890,092) (8,811,583) (127,551)
Proceeds from maturity of investments 6,137,958 10,473,000 7,670,000
Proceeds from sale of investments 0 0 988,034
Purchase of property and equipment (948,183) (596,133) (428,931)
------------ ------------ -----------
Net cash (used for) provided by investing activities (6,700,317) 1,065,284 8,101,552
------------ ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 8,243,925 113,870 0
------------ ------------ -----------
Net cash provided by financing activities 8,243,925 113,870 0
------------ ------------ -----------
NET CHANGE IN CASH 263,205 (3,257,458) 4,451,569
CASH, beginning of year 1,291,527 4,548,985 97,416
------------ ------------ -----------
CASH, end of year $ 1,554,732 $ 1,291,527 $ 4,548,985
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
30
<PAGE>
PARKERVISION, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
1. THE COMPANY AND NATURE OF BUSINESS:
ParkerVision, Inc. (the "Company"), was incorporated under the laws of the state
of Florida on August 22, 1989. The Company is engaged in the design, manufacture
and marketing of automated video equipment and is researching certain wireless
technologies. The Company sells its products through audiovisual dealers and
other equipment manufacturers throughout the United States, as well as in
Canada, Latin America and Asia. Approximately 99% of the Company's sales are
generated through dealers and other equipment manufacturers in the United
States. The Company is in a highly competitive industry with rapidly changing
and evolving technologies and an increasing number of market entrants who have
introduced or are developing an array of new audiovisual and telecommunications
products and services. The Company's potential competitors in this industry have
substantially greater financial, technical and other resources than those of the
Company.
The Company has made significant investments in developing the technology and
manufacturing capability for its products, the return on which are dependent
upon the generation of future revenues for realization. The Company has not yet
generated sufficient revenues to offset its expenses, and thus has utilized
proceeds from its initial public offering and subsequent offerings to fund its
operations. In the opinion of management, the Company has adequate funds to meet
its liquidity needs for 1997 as well as on a longer term basis.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.
31
<PAGE>
Investments
Investments consist of funds invested in U.S. Treasury notes, U.S. Treasury
bills, Federal Mortgage Backed Securities and certificates of deposit. The
Company accounts for investments in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." SFAS No. 115 requires investment securities to be
classified as held-to-maturity, trading, or available-for-sale based on the
characteristics of the securities and the activity in the investment portfolio.
At December 31, 1996, all of the Company's investments were classified as
held-to-maturity. At December 31, 1995, short-term investments included
investments classified as available-for-sale reported at their fair value of
$3,009,473 and investments classified as held-to-maturity reported at their
amortized cost of $2,070,835. For the year ended December 31, 1996, an
unrealized loss of $18,750 was recorded as a component of shareholders' equity.
Short-term investments which mature within three months from the date of
acquisition are classified as cash equivalents.
Inventories
Inventories are stated at the lower of average cost (which approximates the
first-in, first-out method) or market (net realizable value).
Purchased materials inventory consists principally of components and
subassemblies. The Company's substantial investment in inventory is due to
anticipated future demand for its product and the buildup of safety stock on
single-source or long lead-time components. Management believes the Company will
realize its investment in net inventory through future product sales and that
the Company's purchased materials inventories could, if necessary, be resold "as
is" without incurring substantial loss.
Property and equipment
Property and equipment are stated at cost less accumulated depreciation. The
cost and accumulated depreciation of assets sold or retired are removed from
their respective accounts, and any resulting gain or loss is recognized in the
accompanying statements of operations. Depreciation is determined using the
straight-line method using the following estimated useful lives:
Leasehold improvements Lesser of five years or
remaining term of the lease
Tools and dies Five to seven years
Manufacturing and office equipment Five to seven years
Furniture and fixtures Seven years
Additions below an established threshold are expensed as acquired. The effect of
this policy is not material to the Company's financial statements.
32
<PAGE>
Other assets
Included in other assets are patent costs which represent costs incurred to
obtain patents for product concepts and methodologies developed by the Company.
The Company has submitted additional patent applications which are currently
pending. Capitalized patent costs are being amortized over the estimated life of
the related patents. Other assets also include prepaid consulting fees carried
at the estimated fair market value of the warrants issued as consideration for
such consulting services (see Note 10). These fees are being amortized over the
term of the consulting agreement.
Nonrecoverable start-up and excess capacity costs
Nonrecoverable start-up and excess capacity costs include material, labor and
overhead costs incurred by the Company in excess of those directly or indirectly
attributable to system sales. Such costs are primarily composed of the cost of
excess facilities, and are expensed as incurred.
Warranty costs
The Company generally warrants its products against defects in workmanship and
material for one year from the date of shipment. Estimated costs related to
warranty are accrued at the time of revenue recognition. To date, the Company
has not incurred any significant warranty costs.
Loss per share
Loss per share is determined based on the weighted-average number of common
shares assumed to be outstanding during each year. 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 years
ended December 31, 1996, 1995 and 1994, is 9,681,182, 8,757,802, and 8,720,000,
respectively.
Statements of Cash Flows
The Company paid interest of $83,658, $269,676, and $328,413 during 1996, 1995
and 1994, respectively.
The Company issued 324,425 shares of common stock in 1996 for conversion of
subordinated debentures totaling $3,244,250.
The Company issued 200,000 warrants in 1996 for professional services to be
provided over a five year period valued at $512,000.
33
<PAGE>
Fair value of financial instruments
During 1995, the Company adopted SFAS No. 107, "Disclosures About Fair Value of
Financial Instruments." SFAS No. 107 requires, among other things, disclosures
regarding the fair value of financial instruments and the assumptions made in
determining their fair values, where practicable. The carrying amounts of the
Company's financial instruments, including cash, short-term investments,
short-term trade receivables and payables, and subordinated debentures,
approximate their fair values.
3. INCOME TAXES AND TAX STATUS
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes."
A reconciliation between the provision for income taxes and the expected tax
benefit using the federal statutory rate of 34% for the years ended December 31,
1996 and 1995, and 1994, is as follows:
1996 1995 1994
--------- ----------- -----------
Tax benefit at statutory rate $(569,320) $(1,294,894) $(1,251,788)
State tax benefit (83,724) (190,426) (184,086)
Increase in valuation allowance 613,711 1,583,926 1,514,042
Other 39,333 (98,606) (78,168)
--------- ----------- -----------
$ 0 $ 0 $ 0
========= =========== ===========
The Company's deferred tax assets and liabilities relate to the following
sources and differences between financial accounting and the tax bases of the
Company's assets and liabilities at December 31, 1996 and 1995:
1996 1995
----------- -----------
Current deferred taxes:
Current deferred tax assets:
Inventory obsolescence reserve $ 170,095 $ 137,780
Warranty reserve 15,440 0
Allowance for doubtful accounts 13,709 7,200
Deferred revenue 11,369 36,501
Related-party payables and accruals 4,845 4,962
Inventory capitalization 4,231 49,978
----------- -----------
219,689 236,421
Less valuation allowance (216,212) (229,759)
----------- -----------
Total current deferred tax assets $ 3,477 $ 6,662
=========== ===========
34
<PAGE>
1996 1995
----------- -----------
Noncurrent deferred taxes:
Noncurrent deferred tax assets:
Net operating loss carryforward $ 3,856,108 $ 2,944,922
Patent amortization and other 16,783 11,321
----------- -----------
3,872,891 2,956,243
Less valuation allowance (3,811,601) (2,868,209)
----------- -----------
Total noncurrent deferred tax assets 61,290 88,034
Noncurrent deferred tax liabilities:
Depreciation (64,767) (94,696)
----------- -----------
Net noncurrent deferred income tax liability $ (3,477) $ (6,662)
=========== ===========
The Company has recorded a valuation allowance to state its deferred tax assets
at estimated net realizable value due to the uncertainty related to realization
of these assets through future taxable income. The valuation allowance for
deferred tax assets as of December 31, 1996 and 1995 was $4,027,813 and
$3,097,968, respectively.
At December 31,1996, the Company had net operating loss carryforwards for income
tax purposes of approximately $9,300,000 which expire from 2008 to 2011. The
Company's ability to benefit from the net operating loss carryforwards could be
limited under Section 382 of the Internal Revenue Code if ownership of the
Company changes by more than 50%, as defined.
4. INVENTORIES:
Inventories consist of the following at December 31, 1996 and 1995:
1996 1995
----------- -----------
Purchased materials $ 1,353,499 $ 1,751,527
Work in process 329,983 484,873
Finished goods 684,282 370,364
----------- -----------
2,367,764 2,606,764
Less allowance for inventory
obsolescence (409,868) (332,000)
----------- -----------
$ 1,957,896 $ 2,274,764
=========== ===========
35
<PAGE>
5. PROPERTY AND EQUIPMENT, NET:
Property and equipment, at cost, consist of the following at December 31, 1996
and 1995:
1996 1995
----------- -----------
Manufacturing and office equipment $ 2,582,790 $ 1,761,565
Tools and dies 789,865 733,936
Leasehold improvements 101,303 30,279
Furniture and fixtures 28,079 28,079
----------- -----------
3,502,037 2,553,859
Less accumulated depreciation (1,985,352) (1,460,590)
----------- -----------
$ 1,516,685 $ 1,093,269
=========== ===========
Depreciation expense related to property and equipment was $524,762, $477,907,
and $353,427, in 1996, 1995, and 1994, respectively.
6. OTHER ASSETS
Other assets consist of the following at December 31, 1996 and 1995:
1996 1995
--------- ---------
Prepaid consulting fees $ 366,939 $ 0
Patents and copyrights 289,033 261,181
Other assets 4,450 4,450
--------- ---------
660,442 265,631
Less accumulated amortization (76,450) (34,392)
--------- ---------
$ 583,972 $ 231,239
========= =========
Amortization of patents and copyrights was $42,058, $21,698, and $6,324, in
1996, 1995 and 1994, respectively.
7. RELATED-PARTY TRANSACTIONS:
Subordinated debentures
The components of the Company's long-term debt payable to related parties at
December 31, 1996 and 1995, are as follows:
36
<PAGE>
1996 1995
---------- ----------
Subordinated debenture payable to a related
party, variable interest at prime (8.5 percent at
December 31, 1995) $ 0 $2,772,111
Subordinated debenture payable to a related
party, variable interest at prime (8.5 percent at
December 31, 1995) 0 252,144
Subordinated debenture payable to a related
party, variable interest at prime (8.5 percent at
December 31, 1995) 0 220,000
---------- ----------
0 3,244,255
Less current portion 0 216,018
========== ==========
$ 0 $3,028,237
========== ==========
On April 12, 1996, the Company converted its long-term debt payable to related
parties to 324,425 shares of common stock of the Company (See Note 11).
Building Lease
During March 1992, the Company entered into an operating lease arrangement with
certain officers and shareholders of the Company for the office and
manufacturing facility the Company currently occupies. The lease provided for a
base monthly lease payment of approximately $20,240 through February 28, 1997,
with a provision to extend at the option of the Company. In addition, the
Company is required to pay all insurance, taxes, repairs and maintenance on the
property. On December 29, 1995, the Company amended its lease agreement to
provide for a base monthly lease payment of $16,867 retroactive to January 1,
1995. Effective January 1, 1996, the Company further negotiated its base monthly
lease payment and amended its lease agreement to provide for a base monthly
lease payment of $8,333.
Future minimum payments as of December 31, 1996 are as follows:
1997 $16,667
Rent expense related to the above lease was $106,500, $215,551, and $258,662,
for the years ended December 31, 1996, 1995 and 1994, respectively.
37
<PAGE>
8. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK
In 1996, VTEL and one other reseller accounted for approximately 35% and 11% of
total revenues, respectively. In 1995, VTEL and one other reseller accounted for
approximately 12% and 10% of total revenues, respectively. In 1994, one reseller
accounted for approximately 12% of total revenues.
Financial instruments which potentially subject the Company to concentrations of
credit risk consist primarily of trade receivables. VTEL and one other reseller
accounted for approximately 43% of accounts receivable at December 31, 1996. The
Company closely monitors extensions of credit and has never experienced
significant credit losses.
9. COMMITMENTS
At December 31, 1996, the Company has commitments to purchase materials
aggregating approximately $925,000 through 1997 from two suppliers. One of these
suppliers is a single-source supplier of the Company's camera modules and
accounted for approximately 21%, 23% and 20% of the Company's component
purchases for the years ended December 31, 1996, 1995 and 1994, respectively. No
other supplier accounted for more than 15% of the Company's component purchases
in 1996, 1995, or 1994.
10. STOCK OPTIONS AND STOCK-BASED COMPENSATION PLANS
Nonplan Options
On February 1, 1993, the Company issued nonqualified options to purchase 189,746
shares of its common stock for $1.355 per share to certain key employees and a
former director. These options were granted at an exercise price equal to the
fair market value of the common stock at the date of grant, are immediately
exercisable, and expire five years from the date of grant. On October 11, 1993,
the Company issued nonqualified options to purchase 50,000 shares of its common
stock for $5 per share to an officer. These options are immediately exercisable
and expire ten years from the date of grant.
The following table summarizes activity related to these options for each of the
three years ended December 31, 1996:
38
<PAGE>
Wtd. Avg.
Exercise
Option Shares Price
------------- --------
Outstanding at December 31, 1993 238,860 $2.12
Forfeited (4,480) 1.36
-------
Outstanding at December 31, 1994 234,380 2.13
Exercised (78,041) 1.36
Forfeited (443) 1.36
-------
Outstanding at December 31, 1995 155,896 2.52
Exercised (22,638) 1.36
Forfeited (43) 1.36
-------
Outstanding at December 31, 1996 133,215 $2.72
=======
1993 Stock Plan
The Company adopted a stock plan in September 1993 (the "1993 Plan"). The 1993
Plan, as amended in 1996, provides for the grant of options and other Company
stock awards, not to exceed 1,500,000 shares of common stock. The plan provides
for benefits in the form of incentive stock options, nonqualified stock options,
stock appreciation rights, restricted share awards, bargain purchases of common
stock, bonuses of common stock and various stock benefits or cash. Under terms
of the plan, incentive stock options may not be granted at less than the fair
market value of the common stock on the date of grant and expire no later than
ten years after the date of grant. Nonqualified options could not be issued at
an exercise price less than the fair value of the common stock through November
30, 1996. Thereafter, nonqualified options may be issued at not less than the
par value of the common stock.
Options granted to employees under the 1993 Plan generally vest over zero to
five years and are exercisable for a period of five years from the date the
options become vested. Options granted to directors under the 1993 Plan are
generally exercisable immediately and expire ten years from the date of grant.
Options to purchase 1,195,225 shares of common stock were available for future
grants under the 1993 Plan at December 31, 1996.
The following table summarizes activity under the 1993 Plan for each of the
years ended December 31:
39
<PAGE>
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- --------------
Wtd. Wtd. Wtd.
Avg. Avg. Avg.
Ex. Ex. Ex.
Shares Price Shares Price Shares Price
----------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of year 168,500 $ 7.07 27,500 $ 4.52 20,000 $5.00
Granted 134,275 13.33 143,500 7.50 7,500 $3.25
Exercised (5,000) 3.25 (2,500) 3.25 0
Forfeited (500) 10.50 0 0
----------------- ---------------- --------------
Outstanding at
end of year 297,275 9.96 168,500 7.07 27,500 4.52
================= ================ ==============
Exercisable at
end of year 256,875 10.05 140,500 7.16 27,500 4.52
================= ================ ==============
Weighted average fair
value of options
granted $5.94 $3.25
========= ========
</TABLE>
The Company's 1993 Stock Plan is accounted for under APB Opinion No. 25, under
which no compensation cost has been recognized. Had compensation cost for this
plan been determined consistent with FASB Statement No. 123, the Company's net
loss and net loss per share would have been increased to the following pro forma
amounts:
1996 1995
------------- --------------
Net Loss: As Reported $ (1,674,470) $ (3,808,512)
Pro Forma (2,412,705) (4,193,457)
Net Loss per Share: As Reported $ (0.17) $ (0.43)
Pro Forma (0.25) (0.48)
The options outstanding at December 31, 1996 have exercise prices between $5.00
and $13.875 and a weighted average remaining contractual life of approximately 8
years. The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions used for grants in 1995 and 1996, respectively: risk free interest
rates of 5.38% to 5.52% in 1995 and 6.04% to 6.78% in 1996, no expected dividend
yields, expected lives of five years, and expected volatility of 40%.
40
<PAGE>
In connection with its Regulation S offering (see Note 11), on April 12, 1996,
the Company granted warrants to outside financial consultants to purchase an
aggregate of 250,000 shares of common stock of the Company at an exercise price
of $10.00 per share. The warrants are exercisable for a period of five years
from the date of consummation of the offering. The warrants have an estimated
fair market value of $2.56 per share, or $640,000 which is estimated on the date
of grant using the Black-Scholes option pricing model with the following
weighted average assumptions: risk free interest rate of 6.34%, no expected
dividend yield, an expected life of two years, and expected volatility of 40%.
In July 1996, the Company retained Whale Securities Co., L.P. ("Whale") to serve
as a financial consultant and advisor for a period of five years. As
compensation for these services, the Company issued warrants to Whale and its
designee for the purchase of 200,000 shares of the Company's common stock at an
exercise price of $10.00 per share. The warrants are exercisable for a period of
five years from the date of issuance and their estimated fair value of $2.56 per
share or $512,000 is being amortized to expense over the term of the consulting
agreement.
11. STOCK AUTHORIZATION AND ISSUANCE:
Preferred Stock
The Certificate of Incorporation of the Company authorizes the Board of
Directors to issue up to 1,000,000 shares of preferred stock, $1.00 par value.
No preferred shares have been issued or are outstanding.
Common Stock
On April 12, 1996, the Company completed an offering of 800,000 shares of its
common stock to overseas investors in a transaction pursuant to Regulation S of
the Securities Act of 1933, as amended (the "Offering"). The shares, which
constituted approximately 8.3% of the Company's outstanding common stock on an
after-issued basis, were sold at a price of $10.00 per share. After deducting
issuance and offering costs of $602,500, the Company received net proceeds
therefrom of $7,397,500.
The Company engaged outside financial consultants in connection with the
Offering, and as compensation for their services, on April 12, 1996, the Company
granted the consultants warrants to purchase an aggregate of 250,000 shares of
common stock of the Company (see Note 10).
Also in connection with the Offering, certain related parties agreed to convert
subordinated debentures of the Company at a value of $10.00 per share for an
aggregate of 324,425 shares of common stock.
41
<PAGE>
On April 22, 1996, the Company completed an offering of an aggregate of 80,000
shares of its common stock to two investors in a private placement transaction
pursuant to Section 4(2) of the Securities Act of 1933, as amended. These
shares, which constituted approximately 0.8% of the Company's outstanding common
stock on an after-issued basis, were sold at a price of $10.00 per share and the
Company received net proceeds therefrom of $800,000.
On July 16, 1996, the Company engaged a financial consultant for a period of
five years, and as compensation for services, the Company granted the financial
consultant warrants to purchase an aggregate of 200,000 shares of common stock
of the Company (see Note 10).
12. QUARTERLY RESULTS OF OPERATIONS (Unaudited):
<TABLE>
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Year ended December 31,
1996:
Revenues, net $ 1,537,689 $ 3,243,972 $ 2,433,652 $ 2,036,739
Gross margin 518,888 1,173,194 943,925 628,948
Operating expenses 1,160,717 1,365,869 1,281,587 1,659,184
Interest expense 66,913 8,634 0 0
Net loss (637,486) (40,935) (152,108) (843,941)
Loss per share (0.07) 0.00 (0.02) (0.08)
Year ended December 31,
1995:
Revenues, net 319,606 1,003,398 1,616,328 1,002,326
Gross margin 103,640 382,507 662,256 352,599
Operating expenses 1,298,572 1,275,238 1,243,120 1,360,270
Interest expense 89,217 89,217 89,217 10,135
Net loss (1,122,251) (913,041) (660,286) (1,112,934)
Loss per share (0.13) (0.10) (0.08) (0.12)
Year ended December 31,
1994:
Revenues, net 210,535 248,116 468,672 300,476
Gross margin 117,050 121,147 221,737 125,314
Operating expenses 935,407 1,033,074 1,017,971 1,275,759
Interest expense 69,196 68,944 95,300 91,240
Net loss (761,859) (859,503) (818,343) (1,242,024)
Loss per share (0.09) (0.10) (0.09) (0.14)
</TABLE>
42
<PAGE>
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act
The directors and executive officers of the Company and their positions are
listed below, followed by a brief description of their business experience
during the past five years:
Name Age Position
- ------------------- ------- ------------------------------------------
Jeffrey Parker 40 Chairman of the Board, Chief Executive
Officer and President
Todd Parker 32 Vice President and Director
Stacie Parker Wilf 38 Secretary, Treasurer and Director
David F. Sorrells 38 Chief Technical Officer and Director
Cynthia Poehlman 30 Chief Accounting Officer
William L. Sammons 76 Director
Arthur G. Yeager 63 Director
Jeffrey Parker has been chairman of the board and chief executive officer of the
Company since its inception and president of the Company since April 1993. From
March 1983 to August 1989, Mr. Parker served as Executive Vice President and
Sales Manager for Parker Electronics, Inc. ("Parker Electronics"), a joint
venture partner with Carrier Corporation performing research development and
marketing for the heating, ventilation and air conditioning industry.
Todd Parker has been vice president and a director of the Company since its
inception. From January 1985 to August 1989, Mr. Parker served as General
Manager of Manufacturing for Parker Electronics.
Stacie Parker Wilf has been the secretary and treasurer and a director of the
Company since its inception. From January 1981 to August 1989, Ms. Wilf served
as the Controller and Chief Financial Officer of Parker Electronics.
43
<PAGE>
David F. Sorrells has been the chief technical officer of the Company since
September 1996 and has been a director of the Company since January 1997. From
June 1990 to September 1996, Mr. Sorrells served as Engineering Manager for the
Company.
Cynthia Poehlman has been the chief accounting officer of the Company since
January 1996, and controller of the Company since March 1994. From October 1991
until she joined the Company, Ms. Poehlman served as Audit Manager with Arthur
Andersen, LLP, a public accounting firm.
William L. Sammons has been a director of the Company since October 1993. From
1981 to 1985, Mr. Sammons was President of the North American Operations of
Carrier Corporation until he retired.
Arthur G. Yeager has been a director of the Company since December 1995. Mr.
Yeager has been a sole practitioner of law specializing in patent, trademark and
copyright laws since 1960. He has an office located in Jacksonville, Florida.
Mr. Yeager provides legal services to the Company as its patent and trademark
attorney.
Messrs. Jeffrey and Todd Parker and Ms. Stacie Parker Wilf are brothers and
sister.
All directors hold office until the next annual meeting of shareholders and the
election and qualification of their successors. Officers of the Company are
elected annually by the board of directors and serve at the discretion of the
board.
The Company enters into indemnification agreements with each of the directors
and officers whereby the Company agrees to indemnify, and advance certain
expenses to, each indemnitee to the fullest extent permitted by applicable law.
The indemnification agreements will continue until and terminate upon the later
of (i) the expiration of the statute of limitations applicable to any possible
claim, or (ii) the final termination of all pending proceedings in respect of
which the indemnitee is granted rights of indemnification or advancement of
expenses or any proceeding commenced by the indemnitee. The Company also
maintains director and officer liability insurance.
Messrs. Todd Parker, Arthur G. Yeager and William L. Sammons are members of the
compensation committee of the board of directors and Messrs. Arthur G. Yeager
and William L. Sammons are members of the audit committee of the board of
directors.
The Company maintains keyman life insurance on the lives of Jeffrey Parker, Todd
Parker, and David Sorrells in the amounts of $1,000,000, $1,000,000 and
$1,500,000, respectively.
The Company has agreed that, until November 30, 1999, if so requested by Whale
Securities Co., L.P. ("Whale"), it will nominate and use its best efforts to
elect a designee of Whale as a director of the Company or, at Whale's option, as
a non-voting advisor to the Company's board of directors. The Company's
principal officers and directors have agreed to vote their
44
<PAGE>
shares of common stock in favor of such designee. Whale has not yet exercised
its right to designate such a person and has indicated that it has no current
intention to do so.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's executive officers, directors and persons who beneficially own more
than ten percent of a registered class of the Company's equity securities ("ten
percent stockholders") to file initial reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC") and the National
Association of Securities Dealers, Inc. ("NASD"). Executive officers, directors
and ten percent stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely upon its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the fiscal year
ended December 31, 1996, all filing requirements applicable to its executive
officers, directors, and ten percent stockholders were fulfilled.
Item 10. Executive Compensation
The following tables summarize the cash compensation paid by the Company to each
of the executive officers (including the Chief Executive Officer) who were
serving as executive officers at the end of the fiscal year ended December 31,
1996, for services rendered in all capacities to the Company and its
subsidiaries during the fiscal years ended December 31, 1996, 1995 and 1994,
options granted to such executive officers during the fiscal year ended December
31, 1996, and the value of all options granted to such executive officers at the
end of the fiscal year ended December 31, 1996.
Summary Compensation Table
========================================================================
Long Term
Compensation
-----------------
Annual Awards
Compensation -----------------
Fiscal Year -------------- Securities
Name and Principal Ended Underlying
Position December 31 Salary Options/SARs (#)
- --------------------- ------------- -------------- -----------------
Jeffrey Parker, 1996 $100,000 100,000
chief executive 1995 148,000 20,000
officer and 1994 135,500 0
president (a)
Todd Parker, vice 1996 75,000 0
president (b) 1995 145,000 20,000
1994 145,000 0
========================================================================
45
<PAGE>
(a) For the years ended December 31, 1996, 1995 and 1994, Jeffrey Parker
voluntarily reduced his salary from $175,000 annually to $100,000, $148,000 and
$135,500, respectively.
(b) For the year ended December 31, 1996, Todd Parker voluntarily reduced his
salary from $145,000 annually to $75,000.
Option/SAR Grants in Last Fiscal Year
==============================================================================
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Name Options/SARs Employees in Price Expiration
Granted Fiscal Year ($/share) Date
- -------------- ------------------- -------------- ---------- -----------
Jeffrey Parker 100,000 74.0% $13.875 6/19/06
==============================================================================
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values
==============================================================================
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money Options/SARs at
Year-End Fiscal Year-End
--------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---------------- ----------- -------------- ------------- --------------
Jeffrey Parker 170,000 0 $537,500 $0
Todd Parker 20,000 0 $112,500 $0
==============================================================================
Compensation of Directors
Directors who are also employees of the Company receive no compensation for
serving on the board of directors other than reimbursement of reasonable
expenses incurred in attending meetings. Non-employee directors receive a fee of
$1,000 for each board meeting attended as well as reimbursement of reasonable
expenses incurred in attending meetings.
46
<PAGE>
1993 Stock Option Plan
In September 1993, the board of directors approved the Company's stock plan (the
"Stock Plan") pursuant to which an aggregate of 500,000 shares of common stock
have been reserved for issuance in connection with the benefits ("Benefits")
available for grant. The Benefits may be granted in any one or in combination of
the following: (i) incentive stock options, (ii) non-qualified stock options,
(iii) stock appreciation rights, (iv) restricted stock awards, (v) stock
bonuses, (vi) other forms of stock benefit, or (vii) cash. Incentive stock
options may only be granted to employees of the Company. Other Benefits may be
granted to consultants, directors (whether or not any such director is an
employee), employees and officers of the Company. In October 1996, the 1993
Stock Plan was amended to provide that a total of 1,500,000 shares of common
stock may be issued in connection with the Benefits available for grant.
The Stock Plan is administered by the board of directors or, at their
discretion, by a committee which is appointed by the board to perform such
function. The board or such committee, as the case may be, within the
limitations of the Stock Plan, determines, among other things, when to grant
Benefits, the persons to whom Benefits will be granted, the number of shares for
each Benefit, whether stock options granted are intended to be incentive stock
options or non-qualified stock options, the duration and rate of exercise of
each Benefit, the share purchase price and the manner of exercise, and whether
restrictions such as repurchase rights by the Company are to be imposed on
shares subject to Benefits.
In connection with incentive stock options, the exercise price of each incentive
stock option may not be less than 100% of the fair market value of the common
stock on the date of grant (or 110% of fair market value in the case of an
employee holding 10% or more of the outstanding stock of the Company). The
aggregate fair market value of shares for which incentive stock options granted
to any employee are exercisable for the first time by such employee during any
calendar year (pursuant to all stock option plans of the Company and any related
corporation) may not exceed $100,000. Non-qualified stock options may be granted
at a price determined by the board or committee, but not less than the par value
of the common stock. Stock options granted pursuant to the Stock Plan will
expire not more than ten years from the date of grant (five years in the case of
incentive stock options granted to persons holding 10% or more of the voting
stock of the Company).
To date, 395,000 non-qualified stock options and 50,000 incentive stock options
have been granted under the Stock Plan to directors of the Company.
Non-qualified stock options were granted on November 18, 1993 to Mr. Sammons,
director of the Company, and Mr. Bloch, former director of the Company, each to
purchase 10,000 shares of common stock at an exercise price of $5.00 per share.
In addition, stock options were granted on December 29, 1995 to Messrs. Sammons,
Bloch, Jeffrey Parker and Todd Parker and Ms. Wilf to purchase an aggregate of
100,000 shares of common stock at an exercise price of $7.875 per share. On June
19, 1996, non-qualified options were granted to Mr. Jeffrey Parker to purchase
100,000 shares of common stock at an exercise price of $13.875 per share. On
January 9, 1997, non-
47
<PAGE>
qualified stock options were granted to Messrs. Sammons, Yeager, Jeffrey Parker
and Todd Parker and Ms. Wilf to purchase an aggregate of 175,000 shares of
common stock at an exercise price of $11.875 per share. All non-qualified stock
options granted to date expire ten years from the date of grant. Incentive stock
options were granted on December 20, 1995 to Mr. Sorrells to purchase 16,500
shares of common stock at an exercise price of $6.625 per share. In addition, on
January 9, 1997, incentive stock options were granted to Mr. Sorrells to
purchase 33,500 shares of common stock at an exercise price of $11.875 per
share. All incentive stock options granted to date vest over a five year period
and expire five years from the date they first become exercisable.
In addition to the shares granted to directors of the Company, the Company has
granted an aggregate of 150,775 incentive stock options under the Stock Plan to
employees of the Company. These options are exercisable at prices ranging from
$3.25 to $13.875 per share and expire five years from the date they first become
exercisable. Of the 150,775 options granted, options for 63,775 shares were
exercisable immediately and options for the remaining 87,000 vest over a four to
five year period. To date, three holders of incentive stock options have
exercised them and purchased an aggregate of 7,500 shares of common stock and
options to purchase an aggregate of 500 shares of common stock have been
forfeited.
Non-Plan Options
In February 1993, the Company granted options to purchase an aggregate of
189,746 shares of common stock to 22 employees, including options to purchase
31,323 shares to Steven Bloch, a former director of the Company. The options are
fully vested and may be exercised at a price of $1.36 per share until February
1998. In addition, in October 1993, the Company granted options to purchase an
aggregate of 50,000 shares of common stock to Jeffrey Parker. The options are
fully vested and may be exercised until October 2003 at a price of $5.00 per
share. None of these options were issued under a plan. To date, fourteen holders
of these options have exercised all or a portion of them and purchased an
aggregate of 100,329 shares of common stock.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the Company's
common stock owned as of March 7, 1997 by (i) each person (including any
"group") who is known by the Company to be the beneficial owner of more than
five percent of the common stock, (ii) each of the Company's directors and
executive officers, and (iii) all directors and executive officers of the
Company as a group.
48
<PAGE>
Percent of
Amount and Nature of Class
Name and Address of Beneficial Owner Beneficial Owner (a)
- ------------------------------------ -------------------- ----------
Jeffrey Parker, 8493 Baymeadows Way,
Jacksonville, FL 32256 2,908,888 (b)(c) 28.4%
J-Parker Family Limited Partnership,
409 S. 17th Street, Omaha, NE 68102 2,659,174 (c) 26.5%
Todd Parker, 8493 Baymeadows Way,
Jacksonville, FL 32256 1,072,755 (d)(e) 10.6%
T-Parker Family Limited Partnership,
409 S. 17th Street, Omaha, NE 68102 1,040,255 (e) 10.4%
Stacie Parker Wilf, 8493 Baymeadows
Way, Jacksonville, FL 32256 1,080,083 (f)(g) 10.7%
S-Parker-Wilf Family Limited
Partnership, 409 S. 17th Street,
Omaha, NE 68102 1,047,583 (g) 10.4%
William Sammons, 8493 Baymeadows
Way, Jacksonville, FL 32256 57,000 (h) *
Arthur G. Yeager, 112 W. Adams Street,
Suite 1305, Jacksonville, FL 32202 12,700 (i) *
David F. Sorrells, 8493 Baymeadows
Way, Jacksonville, FL 32256 17,308 (j) *
Cynthia Poehlman, 8493 Baymeadows
Way, Jacksonville, FL 32256 8,000 (k) *
Walter Scheuer and certain other persons
and entities, c/o 635 Madison
Avenue, New York, NY 10022 657,100 (l) 6.6%
All officers and directors as a group
(seven persons) 5,156,734 (m) 49.6%
* Less than 1%
a) Percentage includes all outstanding shares plus, for each person or group,
any shares that person or group has the right to acquire within 60 days
pursuant to options, warrants, conversion privileges or other rights.
b) Includes 202,500 shares issuable upon immediately exercisable options.
c) J-Parker Family Limited Partnership is the record owner of 2,659,174
shares of common stock. Mr. Jeffrey Parker has sole voting and disposition
power over the shares of common stock owned by the J-Parker Family Limited
Partnership, as a result of which Mr. Jeffrey Parker is deemed to be the
beneficial owner of such shares.
49
<PAGE>
d) Includes 32,500 shares issuable upon immediately exercisable options.
e) T-Parker Family Limited Partnership is the record owner of 1,040,255
shares of common stock. Mr. Todd Parker has sole voting and disposition
power over the shares of common stock owned by the T-Parker Family Limited
Partnership, as a result of which Mr. Todd Parker is deemed to be the
beneficial owner of such shares.
f) Includes 32,500 shares issuable upon immediately exercisable options.
g) S-Parker-Wilf Family Limited Partnership is the record owner of 1,047,583
shares of common stock. Ms. Parker Wilf has sole voting and disposition
power over the shares of common stock owned by the S-Parker-Wilf Family
Limited Partnership, as a result of which Ms. Parker Wilf is deemed to be
the beneficial owner of such shares.
h) Includes 55,000 shares issuable upon immediately exercisable options.
i) Includes 12,500 shares issuable upon immediately exercisable options.
j) Includes 17,308 shares issuable upon immediately exercisable options.
k) Includes 8,000 shares issuable upon immediately exercisable options.
l) Mr. Scheuer and thirty-two other persons and entities have reported on
Amendment #3 to Schedule 13D dated July 26, 1996, the beneficial ownership
as a group of 657,100 shares of common stock. Of these shares, Mr. Walter
Scheuer has sole voting and dispositive power over 90,000 shares of common
stock and shares voting and dispositive power with other members of the
group over 567,100 shares of common stock, representing 6.6% of the
outstanding common stock. The other members of the group have reported
sole or shared voting and dispositive power over varying amounts of the
shares of common stock indicated in the table, but none claims beneficial
ownership of 5% or more of the common stock on an individual basis.
m) Includes 352,308 shares of common stock issuable upon immediately
exercisable options (see notes b, d, f, h, i, j and k above).
Item 12. Certain Relationships and Related Transactions
The Company leases its executive offices pursuant to a lease agreement dated
March 1, 1992 with Jeffrey Parker and Barbara Parker. For the fiscal years ended
December 31, 1996 and 1995, the Company incurred $106,500 and $215,551,
respectively, in rental expense under the lease. In December 1995, the Company
amended its lease agreement to provide for a base monthly lease payment of
$16,867, reduced from $20,240 retroactive to January 1, 1995. On January 2,
1996, the Company again amended its lease agreement to provide for a base
monthly lease payment of $8,333, reduced from $16,867. The Company believes that
the
50
<PAGE>
terms of the lease are currently below market and are more favorable than could
have been obtained from an unaffiliated third party.
The Company had a ten-year variable rate subordinated debenture for $2,772,111,
payable to Barbara Parker with interest payments due quarterly through June 30,
1996, followed by quarterly payments of principal and interest through June 30,
2003. In December 1995, the Company amended the subordinated debenture to reduce
the interest rate from prime plus 2.5% to prime, retroactive to January 1, 1995.
For the year ended December 31, 1995, the Company paid interest totaling
$228,699 to Barbara Parker. On April 12, 1996, Barbara Parker converted the
entire principal amount due under the subordinated debenture into 277,211 shares
of common stock at the then current market value and the subordinated debenture
was canceled. Interest of $71,483 was paid by the Company to Barbara Parker
during the period from January 1, 1996 to April 12, 1996.
The Company had a ten-year variable rate subordinated debenture for $252,144,
payable to Jeffrey Parker with interest payments due quarterly through June
30,1996, followed by quarterly payments of principal and interest through June
30, 2003. The Company had a second ten-year variable rate subordinated debenture
for $220,000, payable to Jeffrey Parker with interest payments due quarterly
through December 31, 1996, followed by quarterly payments of principal and
interest through December 31, 2003. In December 1995, the Company amended the
subordinated debentures to reduce the interest rate from prime plus 2.5% to
prime, retroactive to January 1, 1995. For the year ended December 31, 1995, the
Company paid interest totaling $38,952 to Jeffrey Parker. On April 12, 1996,
Jeffrey Parker converted the entire principal amount due under the two
subordinated debentures into 47,214 shares of common stock at the then current
market value and the subordinated debentures were canceled. Interest of $12,179
was paid by the Company to Jeffrey Parker during the period from January 1, 1996
to April 12, 1996.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
------------- ---------------------------------------------------
3.1 Articles of Incorporation, as amended (incorporated
by reference from Exhibit 3.1 of Registration
Statement No. 33-70588-A).
3.2 Bylaws (incorporated by reference from Exhibit 3.2
of Registration Statement No. 33-70588-A).
4.1 Form of common stock certificate (incorporated by
reference from Exhibit 4.1 of Registration Statement
No. 33-70588-A).
51
<PAGE>
4.2 Form of underwriters' warrant agreement and warrant
certificate attached as an exhibit thereto
(incorporated by reference from Exhibit 4.2 of
Registration Statement No. 33-70588-A).
4.3 Warrant agreement between Whale Securities Co., L.P.
and the Company dated July 16, 1996 (incorporated by
reference from Exhibit 4.1 of Quarterly Report of
Form 10-QSB for the quarterly period ended September 30,
1996).
4.4 Warrant agreement between Frog Hollow Partners and
the Company dated July 16, 1996 (incorporated by
reference from Exhibit 4.2 of Quarterly Report of
Form 10-QSB for the quarterly period ended September 30,
1996).
10.1 Lease dated March 1, 1992 between the Registrant and
Jeffrey Parker and Barbara Parker for 8493
Baymeadows Way, Jacksonville, Florida (incorporated
by reference from Exhibit 10.1 of Registration
Statement No. 33-70588-A).
10.2 1993 Stock Plan, as amended (incorporated by
reference from the Company's Proxy Statement dated
October 1 ,1996).
10.3 Stock option agreement dated February 1, 1993
between the Registrant and Steven Bloch
(incorporated by reference from Exhibit 10.8 of
Registration Statement No. 33-70588-A).
10.4 Employment agreement between the Registrant and
Jeffrey Parker dated July 1, 1993 (incorporated by
reference from Exhibit 10.11 of Registration
Statement No. 33-70588-A).
10.5 Employment agreement between the Registrant and Todd
Parker dated July 1, 1993 (incorporated by reference from
Exhibit 10.12 of Registration Statement No.
33-70588-A).
10.6 Stock option agreement dated October 11, 1993
between the Registrant and Jeffrey Parker
(incorporated by reference from Exhibit 10.13 of
Registration Statement No. 33-70588-A).
10.7 Form of indemnification agreement between the
Registrant and each of the directors and officers of
the Registrant (incorporated by reference from
Exhibit 10.15 of Registration Statement No.
33-70588-A).
52
<PAGE>
10.8 First amendment to lease dated March 1, 1992 between the
Registrant and Jeffrey Parker and Barbara Parker for 8493
Baymeadows Way, Jacksonville, Florida (incorporated by
reference from Exhibit 10.21 of Annual Report on Form
10-KSB for the year ended
December 31, 1995)
10.9 Second amendment to lease dated March 1, 1992 between the
Registrant and Jeffrey Parker and Barbara Parker for 8493
Baymeadows Way, Jacksonville, Florida (incorporated by
reference from Exhibit 10.1 of Quarterly Report of Form
10-QSB for the quarterly period ended March 31, 1996).
10.10 Offshore securities subscription agreement dated April
10, 1996 between the Registrant and Banca del Gottardo
(incorporated by reference from Exhibit 10.2 of Quarterly
Report of Form 10-QSB for the quarterly period ended
March 31, 1996).
10.11 Purchase option agreement dated April 12, 1996
between the Registrant and Jack Ferraro
(incorporated by reference from Exhibit 10.3 of
Quarterly Report of Form 10-QSB for the quarterly
period ended March 31, 1996).
10.12 Purchase option agreement dated April 12, 1996
between the Registrant and Jack Erlanger
(incorporated by reference from Exhibit 10.4 of
Quarterly Report of Form 10-QSB for the quarterly
period ended March 31, 1996).
10.13 Securities subscription agreement dated April 22, 1996
between the Registrant and Hopewell Partners
(incorporated by reference from Exhibit 10.9 of Quarterly
Report of Form 10-QSB for the quarterly period ended
March 31, 1996).
10.14 Securities subscription agreement dated April 22,
1996 between the Registrant and Gaymark Associates
(incorporated by reference from Exhibit 10.10 of
Quarterly Report of Form 10-QSB for the quarterly
period ended March 31, 1996).
10.15 Consulting agreement between Whale Securities Co., L.P.
and the Company dated July 16, 1996, as amended
(incorporated by reference from Exhibit 10.1 of Quarterly
Report of Form 10-QSB for the quarterly period ended
September 30, 1996).
10.16 Third amendment to lease dated March 1, 1992 between the
Registrant and Jeffrey Parker and Barbara Parker for 8493
Baymeadows Way, Jacksonville, Florida.
53
<PAGE>
23.1 Consent of Arthur Andersen, L.L.P.
27.1 Financial data schedule
(b) Reports on Form 8-K
None
54
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ParkerVision, Inc.
Date: March 28, 1997 By : /s/ Jeffrey Parker
-------------------
Jeffrey Parker
President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Jeffrey Parker Date: March 28, 1997
------------------
Jeffrey Parker
Chairman of the Board, Chief Executive
Officer and President
By: /s/ Todd Parker Date: March 28, 1997
---------------
Todd Parker
Vice President and Director
By: /s/ Stacie Parker Wilf Date: March 28, 1997
----------------------
Stacie Parker Wilf
Secretary, Treasurer and Director
By: /s/ Cynthia Poehlman Date: March 28, 1997
--------------------
Cynthia Poehlman
Controller and Chief Accounting Officer
By: /s/ William L. Sammons Date: March 28, 1997
----------------------
William L. Sammons
Director
By: /s/ Arthur G. Yeager Date: March 28, 1997
--------------------
Arthur G. Yeager
Director
55
<PAGE>
Exhibit Index
10.19 Third amendment to lease dated March 1, 1992 between the
Registrant and Jeffrey Parker and Barbara Parker for
8493 Baymeadows Way, Jacksonville, Florida.
23.1 Consent of Arthur Andersen, L.L.P.
27.1 Financial data schedule
56
Exhibit 10.19
THIRD AMENDMENT
TO
LEASE AGREEMENT
THIS THIRD AMENDMENT TO LEASE AGREEMENT ("Amendment") dated effective this
28th day of February, 1997, by and between PARKERVISION, INC., a Florida
corporation ("Tenant") and JEFFREY PARKER and BARBARA PARKER (collectively
"Landlord"), amends that certain Lease Agreement dated March 1, 1992, by and
between Landlord and Tenant (the "Lease"). Capitalized terms used herein and not
otherwise defined shall have the same meanings ascribed to them in the Lease.
Landlord and Tenant hereby agree as follows:
1. The minimum Basic Rent during the first Option Period as set forth in
Paragraph 5 of the Lease is hereby amended to read as follows:
Option Period Basic Rent
------------- ----------
first Option Period
(3/1/97 - 8/31/97) $50,000.00
(9/1/97 - 2/28/98) $139,653.00
(3/1/98 - 2/28/02) $279,306.00 per year
2. Except as modified by this Amendment, the Lease and any prior
amendments thereto shall remain unchanged and in full force and effect.
3. This Amendment shall be binding upon the heirs, administrators,
successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the Landlord and Tenant have executed this Amendment
as of the date first above written.
PARKERVISION, INC., a Florida corporation
By: /s/ Todd Parker /s/ Jeffrey Parker
- --------------------------- -------------------------
Name: Todd Parker JEFFREY PARKER
Title: Vice President
/s/ Barbara Parker
-------------------------
BARBARA PARKER
57
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference of our report included in this Form 10-KSB, into
ParkerVision Inc.'s previously filed registration statement on Form S-8 File No.
33-93658 and registration statement on Form S-3 File No. 333-17683.
Arthur Andersen LLP
Jacksonville, Florida
March 24, 1997
58
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,554,732
<SECURITIES> 3,987,149
<RECEIVABLES> 1,143,121
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<INVENTORY> 1,957,896
<CURRENT-ASSETS> 9,095,260
<PP&E> 3,502,037
<DEPRECIATION> 1,985,352
<TOTAL-ASSETS> 18,161,912
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100,326
0
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<TOTAL-LIABILITY-AND-EQUITY> 18,161,912
<SALES> 9,252,052
<TOTAL-REVENUES> 9,252,052
<CGS> 5,987,097
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<INTEREST-EXPENSE> 75,547
<INCOME-PRETAX> (1,674,470)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,674,470)
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