<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 SEPTEMBER 30, 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 October 31, 1997, 11,280,828 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
and nine month periods ended September 30, 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.
<PAGE>
PARKERVISION, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
1997 December 31,
ASSETS (unaudited) 1996
------ ------------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 8,853,693 $ 1,554,732
Short-term investments 10,242,246 3,987,149
Accounts receivable, net of allowance for
doubtful accounts of $40,954 and $33,033 at
September 30, 1997 and December 31, 1996,
respectively 1,081,093 1,143,121
Interest and other receivables 57,693 142,374
Inventories, net 2,949,422 1,957,896
Prepaid expenses 545,246 306,511
Deferred income taxes 3,477 3,477
----------- ----------
Total current assets 23,732,870 9,095,260
----------- ----------
LONG-TERM INVESTMENTS 13,001,289 6,965,995
----------- ----------
PROPERTY AND EQUIPMENT, net 2,399,543 1,516,685
----------- ----------
OTHER ASSETS, net 796,933 583,972
----------- ----------
Total assets $39,930,635 $18,161,912
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
3
<PAGE>
PARKERVISION, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
1997 December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited) 1996
------------------------------------ ------------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 853,289 $ 555,269
Accrued expenses:
Salaries and wages 184,526 195,864
Professional fees and other 383,437 102,867
Deferred revenue 5,475 27,396
------------ -----------
Total current liabilities 1,426,727 881,396
------------ -----------
DEFERRED INCOME TAXES 3,477 3,477
------------ -----------
COMMITMENTS AND CONTINGENCIES
(Notes 4 and 5)
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, 1,000,000 shares
authorized, none issued or outstanding 0 0
Common stock, $.01 par value, 20,000,000 shares
authorized, 11,268,828 and 10,032,604 shares
issued and outstanding at September 30, 1997
and December 31, 1996, respectively 112,688 100,326
Warrants outstanding 3,795,636 1,152,360
Additional paid-in capital 45,533,696 25,392,608
Accumulated deficit (10,941,589) (9,368,255)
------------ -----------
Total shareholders' equity 38,500,431 17,277,039
------------ -----------
Total liabilities and shareholders' equity $ 39,930,635 $18,161,912
============ ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
4
<PAGE>
PARKERVISION, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------------- --------------------------
1997 1996 1997 1996
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues, net $2,887,216 $2,416,798 $ 8,974,645 $7,179,059
Cost of goods sold 1,598,302 1,489,727 4,930,412 4,579,306
---------- ---------- ----------- ----------
Gross margin 1,288,914 927,071 4,044,233 2,599,753
Marketing and selling expenses 841,455 528,549 2,665,108 1,623,181
Research and development expenses 723,461 369,463 2,171,534 1,035,033
General and administrative expenses 519,566 366,721 1,357,012 1,022,355
Nonrecoverable start-up and
excess capacity costs 0 0 0 91,350
Interest expense to related parties 0 0 0 75,547
Interest income (233,047) (185,554) (576,087) (427,994)
Other expense, net 0 0 0 10,810
---------- ---------- ----------- ----------
Net loss $ (562,521) $ (152,108) $(1,573,334) $ (830,529)
========== ========== =========== ==========
Net loss per common and
common equivalent share $ (0.05) $ (0.02) $ (0.15) $ (0.09)
========== ========== =========== ==========
</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 Nine months ended
September 30, September 30,
--------------------------- ---------------------------
1997 1996 1997 1996
------------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (562,521) $ (152,108) $ (1,573,334) $ (830,529)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization 169,775 130,419 503,909 395,508
Amortization of discounts on investments (24,204) (37,069) (46,867) (107,193)
Provision for obsolete inventories 30,000 60,000 110,000 230,451
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net 676,142 754,861 62,028 (1,013,344)
Decrease in interest and other receivables 92,537 31,070 84,681 250,991
(Increase) decrease in inventories, net (614,157) (256,937) (1,101,526) 15,971
Increase in prepaid expenses (97,185) (8,122) (156,763) (38,046)
Increase in other assets 0 (4,003) (22,758) (27,852)
(Decrease) increase in accounts payable
and accrued expenses (285,652) 362,191 567,252 830,151
Decrease in interest payable 0 0 0 (8,110)
(Decrease) increase in deferred revenue (9,089) 6,605 (21,921) (78,841)
------------ ---------- ------------ -----------
Total adjustments (61,833) 1,039,015 (21,965) 449,686
------------ ---------- ------------ -----------
Net cash (used for) provided by operating
activities (624,354) 886,907 (1,595,299) (380,843)
------------ ---------- ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments (16,243,524) 0 (16,243,524) (6,925,123)
Proceeds from maturity of investments 0 2,137,958 4,000,000 2,137,958
Purchase of property and equipment (498,020) (534,828) (1,249,082) (694,209)
------------ ---------- ------------ -----------
Net cash (used for) provided by investing
activities (16,741,544) 1,603,130 (13,492,606) (5,481,374)
------------ ---------- ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 21,805,865 476 22,386,866 8,226,816
------------ ---------- ------------ -----------
Net cash provided by financing activities 21,805,865 476 22,386,866 8,226,816
------------ ---------- ------------ -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 4,439,967 2,490,513 7,298,961 2,364,599
CASH AND CASH EQUIVALENTS, beginning of period 4,413,726 1,165,613 1,554,732 1,291,527
------------ ---------- ------------ -----------
CASH AND CASH EQUIVALENTS, end of period $ 8,853,693 $3,656,126 $ 8,853,693 $ 3,656,126
============ ========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
PARKERVISION, INC.
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 and U.S. Treasury money market investments totaling
$8,440,598 and $1,108,000 at September 30, 1997 and December 31, 1996,
respectively.
RECLASSIFICATIONS. Certain reclassifications have been made to the 1996
statements to conform to the 1997 presentation.
2. LOSS PER SHARE
Loss per share is determined based on the weighted average number of common
shares and common share equivalents outstanding during each period. Common
share equivalents are excluded from the determination of the weighted
average number of shares outstanding to the extent they are anti-dilutive.
The weighted average number of common shares and common share equivalents
outstanding for the three month periods ended September 30, 1997 and 1996
is 10,500,720 and 10,022,967, respectively. The weighted average number of
common shares and common share equivalents outstanding for the nine month
periods ended September 30, 1997 and 1996 is 10,215,099 and 9,679,633,
respectively.
3. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Purchased materials $1,814,888 $1,353,499
Work in process 496,208 329,983
Finished goods 1,075,009 684,282
---------- ----------
3,386,105 2,367,764
Less allowance for inventory obsolescence (436,683) (409,868)
---------- ----------
$2,949,422 $1,957,896
========== ==========
</TABLE>
7
<PAGE>
4. SIGNIFICANT CUSTOMERS
For the three months ended September 30, 1997, Vtel Corporation accounted
for approximately 16% of total revenues. For the three months ended
September 30, 1996, two customers accounted for approximately 18% and 19%
of total revenues, respectively.
For the nine months ended September 30, 1997, Vtel Corporation accounted
for approximately 38% of total revenues, respectively. For the nine month
period ended September 30, 1996, Vtel Corporation and one other customer
accounted for approximately 37% and 19% of total revenues, respectively.
5. STOCK AND WARRANT ISSUANCE
On September 5, 1997, the Company completed an offering of 900,000 shares
of its common stock to overseas investors in a transaction pursuant to
Regulation S of the Securities Act of 1933, as amended. The shares, which
constituted approximately 8% of the Company's outstanding common stock on
an after-issued basis, were sold at a price of $22.50 per share. After
deducting discounts and offering costs of $1,257,500, the Company received
net proceeds of $18,992,500.
The Company engaged an outside financial consultant in connection with the
Regulation S transaction, and as compensation for his services, on
September 5, 1997, the Company granted the consultant warrants to purchase
an aggregate of 180,000 shares of common stock of the Company at an
exercise price of $22.50 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 value using the Black-Scholes model of
approximately $12.41 per share, or $2,233,620.
On September 5, 1997, the Company sold 90,000 shares to three United States
investors in a private 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 also sold at a price of $22.50 per share and the
Company received net proceeds therefrom of $2,025,000.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
When used in this Form 10-QSB and in other filings by the Company with the
Securities and Exchange Commission, the words or phrases "will likely result",
"management expects" or "Company expects", "will continue", "is anticipated",
"estimated" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Readers are cautioned not to place undue reliance on such
forward-looking statements, each of which speak only as of the date made. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected, including the timely development and acceptance of new
products, sources of supply and concentration of customers. The Company has no
obligation to publicly release the results of any revisions which may be made to
any forward-looking statements to reflect anticipated events or circumstances
occurring after the date of such statements.
RESULTS OF OPERATIONS FOR EACH OF THE THREE AND NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1997 AND 1996
REVENUES
Revenues for the three months ended September 30, 1997 were $2,887,216, as
compared to $2,416,798 for the three months ended September 30, 1996. The
increase of $470,418 is primarily a result of an increase in the number of
systems sold, offset somewhat by a decrease in the average selling price per
system.
The Company sold 448 systems during the three month period ended September 30,
1997, as compared to 351 systems for the three month period ended September 30,
1996. The average selling price per system for the three months ended September
30, 1997 and 1996, was approximately $6,400 and $6,900, respectively. The
increase in system sales is primarily attributable to increased sales in
international markets as well as an increase in the number of units sold to Vtel
Corporation when compared with the same quarter in 1996. The decrease in
average selling price per system is due to differences in the mix of products
sold. During the three month period ended September 30, 1997, approximately 8%
of the systems sold were higher priced three-chip camera systems, compared to
17% for the comparable quarter in 1996.
Revenues for the nine months ended September 30, 1997 were $8,974,645, as
compared to $7,179,059 for the nine months ended September 30, 1996. The
increase of $1,795,586 is a result of a 182 unit increase in the number of
systems sold and a $500 increase in the average selling price per system from
the nine month period ended September 30, 1996 to the corresponding period in
1997.
9
<PAGE>
GROSS MARGIN
For the three month periods ended September 30, 1997 and 1996, gross margins as
a percentage of sales were 44.6% and 38.4%, respectively. For the nine month
periods ended September 30, 1997 and 1996, gross margins as a percentage of
sales were 45.1% and 36.2%, respectively. These increases are primarily due to
price increases implemented on certain products during 1997, changes in the mix
of products sold, and reductions in manufacturing overhead during 1997.
MARKETING AND SELLING EXPENSES
Marketing and selling expenses were $841,455 for the three month period ended
September 30, 1997, as compared to $528,549 for the same period in 1996. The
increase of $312,906 is primarily due to an increase in personnel, travel and
trade show costs in order to promote the Company's future studio product line
and to expand distribution into international markets.
For the nine month periods ended September 30, 1997 and 1996, marketing and
selling expenses were $2,665,108 and $1,623,181, respectively. The increase of
$1,041,927 is due to increases in personnel, travel, trade show and advertising
costs related to the studio product line, international distribution, and
promotion of the Company's Shot Director product which was introduced early in
1997.
RESEARCH AND DEVELOPMENT EXPENSES
The Company's research and development expenses were $723,461 and $369,463 for
the three month periods ended September 30, 1997 and 1996, respectively. The
increase of $353,998 is primarily a result of increased personnel and related
costs for the development of the Company's CameraMan Studio product line and
wireless technologies, as well as increases in depreciation expense as a result
of capital expenditures for design and test equipment.
For the nine month periods ended September 30, 1997 and 1996, research and
development expenses were $2,171,534 and $1,035,033, respectively. This
increase of $1,136,501 is primarily due to an increase in personnel, product
prototype expense, and depreciation expense required for development of the
studio product line and the wireless technology.
10
<PAGE>
GENERAL AND ADMINISTRATIVE EXPENSES
For the three month periods ended September 30, 1997 and 1996, general and
administrative expenses were $519,566 and $366,721, respectively. This increase
of $152,845 is primarily due to increases in the use of outside professional
services, increases in administrative personnel and related costs, and the
amortization of prepaid consulting fees.
For the nine month periods ended September 30, 1997 and 1996, general and
administrative expenses were $1,357,012 and $1,022,355, respectively. This
increase of $334,657 is also due to increases in professional services,
administrative personnel and amortization of prepaid consulting fees.
NONRECOVERABLE START-UP AND EXCESS CAPACITY COSTS
For the nine month periods ended September 30, 1997 and 1996, nonrecoverable
start-up and excess capacity costs were $0 and $91,350, respectively. No excess
capacity costs were incurred for the three month periods ended September 30,
1997 and 1996. These costs represent labor and overhead costs incurred by the
Company in excess of those directly or indirectly attributable to system
production. The Company began fully absorbing such costs into cost of goods
sold in the third quarter of 1996 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. These subordinated debentures were converted to common stock
during the second quarter of 1996.
INTEREST INCOME
Interest income was $233,047 and $185,554 for the three month periods ended
September 30, 1997 and 1996, respectively, and $576,087 and $427,994 for the
nine month periods ended September 30, 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
securities offerings in 1996 and 1997. The increases in interest income for the
periods are due to the investment of the proceeds from the Company's Regulation
S and private placement transactions during the third quarter of 1997.
11
<PAGE>
BACKLOG
The Company had a backlog of approximately $382,000 at September 30, 1996 and
1997. Backlog consists of orders received which generally have a specified
delivery schedule within three months of receipt.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had working capital of $22,306,143, an
increase of $14,092,279 from $8,213,864 at December 31, 1996. This increase in
working capital is primarily due to the increase in cash and short term
investments resulting from the Company's Regulation S and private placements
during the third quarter of 1997.
The Company's principal source of liquidity at September 30, 1997 consisted of
approximately $19.1 million in cash, cash equivalents and short-term investments
and approximately $13 .0 million in long-term investments from its Regulation S
and private placements in 1996 and 1997. 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 source of
liquidity will provide sufficient resources to meet its cash requirements for
the next twelve months as well as on a longer-term basis.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
12
<PAGE>
<TABLE>
<CAPTION>
ITEM 2. CHANGES IN SECURITIES
Sales of Unregistered Securities
--------------------------------
If option, warrant
Consideration received and Exemption or convertible
description of underwriting or from security, terms of
Date of Number other discounts to market price registration exercise or
sale Title of security sold afforded to purchasers claimed conversion
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
9/5/97 Common stock 900,000 Received proceeds of Regulation S n/a
$18,992,500, net of purchasers'
discount of $1,215,000 and
offering costs of $42,500
9/5/97 Warrants to 180,000 Warrants granted - no 4(2) Exercisable for a
purchase common consideration received by period lasting five
stock granted to an Company until exercise years from the
outside financial date of grant at an
consultant in exercise price of
connection with $22.50 per share
Regulation S
offering
9/5/97 Common stock 90,000 Received proceeds of 4(2) n/a
$2,025,000 with no discount to
purchasers
7/97 - Common stock 103,530 Received proceeds of $614,575 4(2) Underwriters
9/97 warrants granted
11/30/93
exercisable
through 11/30/98
at an exercise
price of $8.25 per
share
7/97 - Common stock 9,808 Received proceeds of $13,290 4(2) Options granted
9/97 2/1/93,
exercisable
through 2/1/98 at
an exercise price
of $1.355 per
share
</TABLE>
13
<PAGE>
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
(a) Exhibits
Exhibit
Number Description
-----------------------------------------------------------------
27.1 Financial data schedule
(b) A report on Form 8-K was filed on September 22, 1997 related to
the Company's September 5, 1997 Regulation S and private placements as disclosed
in Note 5 to the Financial Statement contained in Item 1.
14
<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
November 13, 1997 By: /s/ Jeffrey Parker
---------------------------------
Jeffrey Parker
Chairman, President and Chief
Executive Officer
November 13, 1997 By: /s/ Cynthia Poehlman
---------------------------------
Cynthia Poehlman
Chief Accounting Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 8,853,693
<SECURITIES> 10,242,246
<RECEIVABLES> 1,122,047
<ALLOWANCES> 40,954
<INVENTORY> 2,949,422
<CURRENT-ASSETS> 23,732,870
<PP&E> 4,739,318
<DEPRECIATION> 2,339,775
<TOTAL-ASSETS> 39,930,635
<CURRENT-LIABILITIES> 1,426,727
<BONDS> 0
112,688
0
<COMMON> 0
<OTHER-SE> 38,387,743
<TOTAL-LIABILITY-AND-EQUITY> 39,930,635
<SALES> 8,974,645
<TOTAL-REVENUES> 8,974,645
<CGS> 4,930,412
<TOTAL-COSTS> 4,930,412
<OTHER-EXPENSES> 6,193,654
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,573,334)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,573,334)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,573,334)
<EPS-PRIMARY> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
