UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, 20549
Form 10-QSB
(Mark One)
|x| QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from ___________to____________
Commission file number 0-22904
PARKERVISION, INC.
(Name of small business issuer as specified in its charter)
Florida 59-2971472
(State or other jurisdiction of I.R.S. Employer ID No.
incorporation or organization)
8493 Baymeadows Way
Jacksonville, Florida 32256
(904) 737-1367
(Address of principal executive offices)
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 |_|.
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes |_| No |_|.
APPLICABLE ONLY TO CORPORATE ISSUERS
As of April 30, 1997, 10,068,854 shares of the Issuer's Common Stock, $.01 par
value, were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The accompanying unaudited financial statements of ParkerVision, Inc. (the
"Company") have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB and Rule 10-01 of Regulation S-X. All adjustments which, in the opinion
of management, are necessary for a fair presentation of the financial condition
and results of operations have been included. Operating results for the three
month period ended March 31, 1997 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1997.
These interim consolidated financial statements should be read in conjunction
with the Company's latest Annual Report on Form 10-KSB for the year ended
December 31, 1996.
2
<PAGE>
PARKERVISION, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1997 December 31,
ASSETS (unaudited) 1996
---------------- ------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,237,766 $ 1,554,732
Short-term investments 4,994,267 3,987,149
Accounts receivable, net of allowance for
doubtful accounts of $18,221 and $33,033 at
March 31, 1997 and December 31, 1996, respectively 911,527 1,143,121
Interest and other receivables 87,155 142,374
Inventories, net 2,423,551 1,957,896
Prepaid expenses 445,125 306,511
Deferred income taxes 3,477 3,477
---------------- ------------------
Total current assets 11,102,868 9,095,260
LONG-TERM INVESTMENTS 4,975,169 6,965,995
PROPERTY AND EQUIPMENT, net 1,555,409 1,516,685
OTHER ASSETS, net 565,279 583,972
---------------- ------------------
Total assets $18,198,725 $18,161,912
================ ==================
</TABLE>
The accompanying notes are an integral part of these balance sheets.
3
<PAGE>
PARKERVISION, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1997 December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited) 1996
------------------ ------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 1,092,326 $ 555,269
Accrued expenses:
Salaries and wages 115,390 195,864
Professional fees and other 214,583 102,867
Deferred revenue 8,878 27,396
------------------ ------------------
Total current liabilities 1,431,177 881,396
DEFERRED INCOME TAXES 3,477 3,477
COMMITMENTS AND CONTINGENCIES (Notes 4, 5 and 6)
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, 10,068,854 and 10,032,604 shares issued
and outstanding at March 31, 1997 and December
31, 1996, respectively 100,689 100,326
Warrants outstanding 1,152,097 1,152,360
Additional paid-in capital 25,622,621 25,392,608
Accumulated deficit (10,111,336) (9,368,255)
------------------ ------------------
Total shareholders' equity 16,764,071 17,277,039
------------------ ------------------
Total liabilities and shareholders' equity $ 18,198,725 $18,161,912
================== ==================
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
PARKERVISION, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------------
March 31, 1997 March 31, 1996
------------------- -------------------
<S> <C> <C>
Revenues, net $ 2,096,888 $ 1,537,689
Cost of goods sold 1,159,136 1,018,801
------------------- -------------------
Gross margin 937,752 518,888
Marketing and selling expenses 774,875 466,935
Research and development expenses 695,576 341,249
General and administrative expenses 385,284 301,183
Nonrecoverable start-up and excess
capacity costs 0 51,350
Interest expense to related parties 0 66,913
Interest income (174,902) (82,066)
Other expense, net 0 10,810
------------------- -------------------
Net loss $ (743,081) $ (637,486)
=================== ===================
Net loss per common and common
equivalent share $ (0.07) $ (0.07)
=================== ===================
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
PARKERVISION, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------------------
1997 1996
------------------- --------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (743,081) $ (637,486)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization 136,196 100,881
Provision for obsolete inventories 50,000 70,451
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net 231,594 (539,055)
Decrease in interest and other receivables 55,219 345,401
Increase in inventories, net (515,655) (120,103)
Increase in prepaid expenses (138,614) (28,081)
Increase in other assets (22,762) (9,245)
Increase (decrease) in accounts payable and accrued expenses 568,299 (77,173)
Decrease in deferred revenue (18,518) (53,389)
------------------- --------------------
Total adjustments 345,759 (310,313)
------------------- --------------------
Net cash used for operating activities (397,322) (947,799)
------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments 0 0
Proceeds from maturity of investments 1,000,000 0
Purchase of property and equipment (149,757) (22,576)
------------------- -- --------------------
Net cash provided by (used for) investing activities 850,243 (22,576)
------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 230,113 15,296
------------------- --------------------
Net cash provided by financing activities 230,113 15,296
------------------- --------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 683,034 (955,079)
CASH AND CASH EQUIVALENTS, beginning of period 1,554,732 1,291,527
------------------- --------------------
CASH AND CASH EQUIVALENTS, end of period $2,237,766 $ 336,448
=================== ====================
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
PARKERVISION, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ACCOUNTING POLICIES
There have been no changes in accounting policies from those stated in the
Annual Report on Form 10-KSB for the year ended December 31, 1996.
Cash and Cash Equivalents. Cash and cash equivalents include overnight
repurchase agreements totaling $1,769,000 and $1,108,000 at March 31, 1997
and December 31, 1996, respectively.
2. LOSS PER SHARE
Loss per share is determined based on the weighted average number of common
shares assumed to be outstanding during each period. Common share
equivalents are excluded from the calculation as their effect is
anti-dilutive. The weighted average number of common shares assumed to be
outstanding for the three month periods ended March 31, 1997 and 1996 is
10,041,746 and 8,803,119, respectively.
3. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------------- -------------------
<S> <C> <C>
Purchased materials $1,639,528 $1,353,499
Work in process 378,208 329,983
Finished goods 833,006 684,282
--------------- ---------------
2,850,742 2,367,764
Less allowance for inventory obsolescence (427,191) (409,868)
--------------- ---------------
$2,423,551 $1,957,896
=============== ===============
</TABLE>
7
<PAGE>
4. SIGNIFICANT CUSTOMERS
For the quarter ended March 31, 1997, Vtel Corporation ("VTEL") accounted
for approximately 50% of total revenues. For the quarter ended March 31,
1996, VTEL and one other customer accounted for approximately 48% and 15%
of total revenues, respectively.
5. RELATED PARTY TRANSACTIONS
Building lease
During March 1992, the Company entered into an operating lease arrangement
with certain related parties for the office and manufacturing facility the
Company currently occupies. The initial lease term expired in February
1997, and the Company exercised its first of three five-year renewal
options. The renewal option, as amended in February 1997, provides for a
base monthly lease payment of $8,333 through August 31, 1997, increasing to
a base monthly lease payment of no less than $23,376 thereafter.
6. STOCK OPTIONS
On January 9, 1997, nonqualified stock options were granted to Messrs.
Sammons, Jeffrey Parker, Todd Parker and Arthur Yeager and Ms. Wilf to
purchase an aggregate of 75,000 shares of common stock at an exercise price
of $11.875 per share. These options vest immediately and expire ten years
from the date of grant. In addition, a nonqualified stock option was
granted to Mr. Jeffrey Parker on January 9, 1997 to purchase 100,000 shares
of common stock at an exercise price of $11.875 per share. This option
vests ratably over a five-year period and expires ten years from the date
of grant. The Company also granted an incentive stock option to purchase
33,500 shares of common stock to Mr. David Sorrells, director and chief
technical officer of the Company. This option vests ratably over five years
and expires five years from the date it first becomes exercisable.
In addition, on January 9, 1997, the Company granted incentive stock
options to several employees to purchase an aggregate of 82,000 shares of
common stock at an exercise price of $11.875 per share. Of the 82,000
shares granted, options for 26,000 shares vest immediately and the
remaining 56,000 options vest ratably over four years. The options expire
five years from the date they first become exercisable.
8
<PAGE>
7. CHANGE IN ACCOUNTING STANDARD
In February, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 128, "Earnings per Share" which, when
adopted, will replace the current methodology for calculating and presenting
earnings per share. Under SFAS No. 128, primary earnings per share will be
replaced with a presentation of basic earnings per share and fully diluted
earnings per share will be replaced with diluted earnings per share. Basic
earnings per share excludes dilution and is computed by dividing income
available to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share is computed similarly to
fully diluted earnings per share. The statement will be effective beginning in
the Company's financial statements for the year ended December 31, 1997,
including restatement of historical earnings per share presented in such
financial statements. Management does not expect the impact of SFAS No. 128 to
materially differ from the current presentation of earnings per share.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations for Each of the Three Month Periods Ended March 31, 1997
and 1996
Revenues
Revenues for the three months ended March 31,1997 were $2,096,888, as compared
to $1,537,689 for the three months ended March 31, 1996. This increase of
$559,199 is a result of an increase in the number of systems sold, as well as an
increase in the average selling price per system.
The Company sold 342 systems during the three month period ended March 31, 1997,
as compared to 269 systems for the three month period ended March 31, 1996. This
increase in system sales is attributable to continued market acceptance of the
CameraMan(R) systems.
The average selling price per system for the three months ended March 31, 1997
and 1996, was approximately $6,100 and $5,700, respectively. This increase of
approximately $400 per system is due to a change in the mix of products sold.
Gross Margin
For the three month periods ended March 31, 1997 and 1996, gross margins as a
percentage of sales were 44.7% and 33.7%, respectively. This increase is
primarily due to price increases implemented on certain CameraMan(R) products
during 1997 as well as reduced manufacturing overhead during the first quarter
of 1997.
9
<PAGE>
Marketing and Selling Expenses
Marketing and selling expenses were $774,875 for the three month period ended
March 31, 1997, as compared to $466,935 for the same period in 1996. This
increase of $307,940 is primarily due to an increase in advertising and
personnel costs in order to promote the Company's studio product line and to
expand distribution into international markets.
Research and Development Expenses
The Company's research and development expenses were $695,576 and $341,249 for
the three month periods ended March 31, 1997 and 1996, respectively. This
increase of $354,327 is primarily a result of increased personnel and related
costs incurred in order to develop the Company's studio product line and
continue development of the Company's wireless technology.
General and Administrative Expenses
For the three month periods ended March 31, 1997 and 1996, general and
administrative expenses were $385,284 and $301,183, respectively. This increase
of $84,101 is primarily a result of increased personnel costs and amortization
of prepaid consulting fees.
Nonrecoverable Start-up and Excess Capacity Costs
For the three month periods ended March 31, 1997 and 1996, nonrecoverable
start-up and excess capacity costs were $0 and $51,350, respectively. These
costs represent labor and overhead cost incurred by the Company in excess of
those directly or indirectly attributable to system production. By the third
quarter of 1996, the Company began fully absorbing these costs into cost of
goods sold and does not anticipate recognizing any excess capacity costs in 1997
or future periods.
Interest Expense
Interest expense represents interest on subordinated debentures payable to
related parties. Interest expense was $0 and $66,913, for the three month
periods ended March 31, 1997 and 1996, respectively. The decrease in interest
expense is a result of the conversion of the subordinated debentures to common
stock during the second quarter of 1996.
10
<PAGE>
Interest Income
Interest income was $174,902 and $82,066 for the three month periods ended March
31, 1997 and 1996, respectively. Interest income primarily represents interest
earned on the investment in U.S. government securities of a substantial portion
of the proceeds from the Company's initial public offering and its subsequent
non-registered offerings in 1996. The increase in interest income is due to the
investment of the proceeds from the Company's 1996 offerings, offset somewhat by
the Company's use of proceeds from maturing investments to fund operations
during 1996 and 1997.
Backlog
As of March 31, 1997, the Company had a backlog of approximately $704,000, as
compared to a backlog as of March 31, 1996 of approximately $1,900,000. Backlog
consists of orders received which generally have a specified delivery schedule
within three months of receipt. The substantial backlog at March 31, 1996 was a
result of orders for the Company's newly released System II products which began
shipping late in the first quarter of 1996.
Liquidity and Capital Resources
At March 31, 1997, the Company had working capital of $9,671,691, an increase of
$1,457,827 from $8,213,864 at December 31, 1996. This increase in working
capital is primarily due to the maturity of long-term investments during the
first quarter of 1997.
The Company's principal source of liquidity at March 31, 1997 consisted of
$7,232,033 in cash and short-term investments. Until the Company generates
sufficient revenues from system sales, it will be required to continue to
utilize this source of liquidity to cover the continuing expense of product
development, marketing and sales, and general administration. The Company
believes this source of liquidity will provide sufficient resources to meet its
cash requirements for the next twelve months as well as on a longer-term basis.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings. Not Applicable.
ITEM 2. Changes in Securities.
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
- ----------- --------------------- ---------- ---------------------------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
1/9/97 Options to purchase 290,500 Options granted - no 4(2) Exercisable for
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 grant at an
plan exercise price
of $11.875 per
share
1/97 - Common stock 10,000 Received proceeds of $13,550 4(2) Options granted
3/97 2/1/93,
exercisable
through 2/1/98
at an exercise
price of $1.355
per share
</TABLE>
ITEM 3. Defaults Upon Senior Securities. Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders. Not Applicable.
ITEM 5. Other Information. Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K.
Exhibit 27.1 Financial Data Schedule
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ParkerVision, Inc.
Registrant
May 13, 1997 By: /s/ Jeffrey Parker
-------------------
Jeffrey Parker
Chairman, President and Chief Executive Officer
May 13, 1997 By: /s/ Cynthia Poehlman
---------------------
Cynthia Poehlman
Chief Accounting Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,237,766
<SECURITIES> 4,994,267
<RECEIVABLES> 911,527
<ALLOWANCES> 18,221
<INVENTORY> 2,423,551
<CURRENT-ASSETS> 11,102,868
<PP&E> 3,639,993
<DEPRECIATION> 2,084,584
<TOTAL-ASSETS> 18,198,725
<CURRENT-LIABILITIES> 1,431,177
<BONDS> 0
0
0
<COMMON> 100,689
<OTHER-SE> 16,663,382
<TOTAL-LIABILITY-AND-EQUITY> 18,198,725
<SALES> 2,096,888
<TOTAL-REVENUES> 2,096,888
<CGS> 1,159,136
<TOTAL-COSTS> 1,159,136
<OTHER-EXPENSES> 1,855,735
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (743,081)
<INCOME-TAX> 0
<INCOME-CONTINUING> (743,081)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (743,081)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
