UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 1O-KSB
(Mark One) (X) ANNUAL REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
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, 1997, were
$10,799,067.
As of March 2, 1998, the aggregate market value of the Issuer's Common Stock,
$.01 par value, held by non-affiliates of the Issuer was approximately
$124,034,850 (based upon $18.75 per share closing price on that date, as
reported by the NASDAQ National Market).
As of March 2, 1998, 11,349,618 shares of the Issuer's Common Stock were
outstanding.
Documents incorporated by reference: Portions of the definitive Proxy Statement
in connection with the Annual Meeting of Shareholders to be held June 12, 1998
are incorporated by reference into Part III.
<PAGE>
PART I
Item 1. Description of Business
ParkerVision, Inc. (the "Company) is engaged in the design, development and
marketing of the CameraMan(R) automated video camera control systems and
CameraManSTUDIO(TM) automated production systems. The Company is also engaged in
the research, development and marketing of a wireless radio-frequency ("RF")
technology which the Company believes has potential applications in a wide
variety of commercial and consumer markets. The Company was incorporated under
the laws of the state of Florida on August 22, 1989.
CameraMan(R) Video Camera Control Systems
The Company's CameraMan(R) systems, first introduced in 1992, were developed to
allow the creation of professional-quality video communication by
non-professional video users at a reasonable cost. Certain systems include a
proprietary "tracking" feature which allows a video user to appear in the video
while also controlling the camera. In 1995, the Company introduced its second
generation product, CameraMan(R) System II, ("System II"), which, unlike the
original CameraMan(R) systems, incorporates a fully integrated professional
quality single-chip imaging camera in the base unit. In 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.
The Company markets to certain educational and videoconferencing segments of the
commercial markets where audiovisual solutions have become increasingly popular
for communication, training, presentation, instructional and educational needs.
The Company offers its System II products in a variety of application-specific
packages designed for the distance education and videoconferencing markets.
In 1995, the Company entered into a joint product development agreement with
VTEL Corporation ("VTEL"), whereby the CameraMan(R) products and certain VTEL
products would be combined to create fully integrated videoconferencing systems.
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. Sales of System II products to VTEL accounted for
approximately 12%, 41%, and 40% of the Company's unit sales during 1995, 1996,
and 1997, respectively.
All of the Company's revenues to date have been generated from its CameraMan(R)
video camera control systems.
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CameraManSTUDIO(TM) Automated Production Systems
In 1996, the Company introduced the concept of an automated audio/video
production system designed specifically to meet the needs of studio production
markets. Throughout 1996 and 1997, the Company continued development of this
CameraManSTUDIO(TM) system, adding features and functionality based on customer
feedback and potential target markets. CameraManSTUDIO(TM) is a professional,
broadcast quality video production system that integrates video, audio, machine
control and camera control functions into an intelligent single-operator
station. The system was designed to allow organizations to economize their
resources by maximizing their production capabilities. A single operator can
control, in parallel, the production functions that traditionally require six to
twelve individuals to operate.
The Company introduced certain segments of the studio product line during 1997
and began working with beta customers for testing of the product in late 1997
and early 1998. The Company anticipates a formal launch of its completed
CameraManSTUDIO(TM) system at the National Association of Broadcasters tradeshow
in April 1998.
Wireless RF Technology
In 1994, the Company began conducting research in wireless technologies for the
purposes of enhancing its CameraMan(R) systems, and in 1995, the Company
dedicated a specific engineering team to this effort. In 1996, the Company filed
its first patent related to its research efforts and announced the development
of a new wireless technology which the Company believes to be an improvement to
other wireless technologies commercially available. In December 1997, the
Company announced the invention of a universal direct conversion receiver chip,
code named Eddie(TM), which the Company believes to represent a major
breakthrough in wireless RF receiver technology. The Company believes its
invention dramatically simplifies wireless RF receiver electronics and delivers
a high level of performance at a low cost, relative to other currently available
technology. The Company believes that its technology has the potential to
benefit a wide range of products including home and cellular cordless
telephones, pagers, garage door openers, toys, security systems, user input
devices and peripherals for consumer electronics and personal computers,
walkie/talkies, microphones, speakers, audio monitors, and other wireless
communications devices.
In 1997, the Company entered into an agreement with the IBM Corporation ("IBM")
for the development, manufacture and marketing, under IBM's name, of wireless
personal computer peripheral products utilizing the Company's proprietary
technology. Throughout 1997, the Company continued to work toward integrating
its technology into integrated circuits ("IC"), resulting in the invention of
the Eddie(TM) IC. In January 1998, IBM terminated its agreement with the Company
prior to testing of the new universal direct conversion receiver IC.
In January 1998, the Company contracted with The Boeing Company ("Boeing"), an
independent testing laboratory, to test its wireless technology. Boeing verified
the Company's claims for the technology in a series of tests conducted in
February 1998.
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The Company plans to pursue strategic partnerships and OEM licensing agreements
with third parties for the licensing and sale of this technology. The Company
has not finalized any such arrangements at this time. No assurance can be given
that the Company will be able to successfully commercialize its wireless
technology.
Products
CameraMan(R) Video Camera Control Systems
The Company's CameraMan(R) System II product 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 includes an
automatic tracking capability. Additional peripheral devices are available to
control the automatic tracking functions and to remotely control base unit and
camera functions. System II products are offered in a variety of
application-specific packages.
For the distance education market, the Company offers Presenter and Student
Camera systems. The Presenter system allows a presenter, or instructor, to wear
a tracking device with built-in microphone, so that the camera will
automatically follow the presenter's movements throughout a room. The Student
system includes a student response feature allowing students to "raise their
hands" electronically by pressing a locator button on a microphone. The camera
will then automatically recall the student's location thereby providing
educators and students with an "eye to eye" level of communication.
For the videoconferencing market, the Company offers a Personal Locator system.
This system allows each videoconferencing participant to program his or her
personal location preset and then recall that preset at the touch of a button on
that individual's keypad. The system also includes a chairperson keypad with a
"system lockout" functionality for meeting control.
For general purpose commercial applications where a high-quality, full-featured
pan/tilt system is desired but tracking capability is not needed, the Company
offers a General Pan/Tilt system. This system is field upgradable to all other
application-specific systems and, as a result, is easily adaptable to distance
education and videoconferencing applications.
All of the Company's single-chip application-specific packages are available in
a VTEL-labeled product line. The basic difference between the VTEL-labeled
product line and the Company's other product lines is the ability for the VTEL
products to be integrated at the factory with select VTEL equipment.
CameraManSTUDIO(TM) Automated Production Systems
CameraManSTUDIO(TM) incorporates two or more CameraMan(R) single-chip or
three-chip camera systems with additional audio, video and machine control
functions and a graphical user interface and software based on a Microsoft(R)
operating system to provide a fully-integrated PC-based production system with
certain unique functionality. The system utilizes a proprietary "transition
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macro" technology which allows the system operator to build, revise and preview
a production in storyboard fashion and then start and run the entire live or
live-to-tape production with the click of one button. The system also allows the
operator to manually pause or interrupt the automated production, as needed, for
insertion of changes.
The CameraManSTUDIO(TM) product line includes additional peripheral systems
which can enhance the overall system functionality. These systems include the
CameraMan(R) ScriptViewer and Shot Director systems. The ScriptViewer system is
a robotic, automated teleprompter system for CameraMan(R) cameras which
integrates with, and is controlled by, the studio system. The Shot Director is a
joystick controller which is compatible with both single-chip and three-chip
camera systems and provides real-time camera control and setup functionality.
The Shot Director allows an operator to control up to sixteen CameraMan(R)
cameras.
Wireless RF Technology
The Company's wireless technology is incorporated into a universal direct
conversion receiver IC, code named Eddie(TM). The Company believes Eddie(TM)
provides a long-awaited building block for RF electronics - a single-stage, or
direct RF down converter. Eddie(TM) supports broadly deployed transmitter
communication formats and transmitter frequencies from 1 Megahertz (MHz) to 1
Gigahertz (GHz). The Company currently believes Eddie(TM) can efficiently
receive most broadly deployed types of RF transmissions and process them down to
an optimized baseband signal in a single step with minimal distortion. In
addition, the Company believes Eddie(TM) is capable of signal bandwidths up to 3
MHz, consumes less power, and costs less than the current RF electronics that it
replaces.
The Company expects future enhancements to its RF receiver technology to provide
operational frequencies up to several Ghz and performance characteristics that
exceed commercially available RF electronics that the Company is aware of.
Marketing and Sales
CameraMan(R) Video Camera Control Systems
The CameraMan(R) Systems are currently marketed to educators and corporate
professionals who make use of audiovisual and telecommunications systems in
distance education and videoconferencing. 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 trend in education resulting in teaching
programs which are more accessible, more cost-effective per student and more
timely. In the videoconferencing market, the Company targets corporations who
are utilizing on-site videoconferencing rooms for long-distance training and
communication among corporate personnel, customers, clients and suppliers.
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. In
addition, the Company seeks national account sales
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arrangements, such as the program with VTEL, for specific applications and
targeted commercial markets. The majority of the Company's authorized dealers
are located throughout the United States and Canada. During 1997, the Company
began expanding its audiovisual dealer network to include certain international
markets, primarily Asia.
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' and national
accounts' sales, support and installation personnel.
The Company's reseller network accounted for approximately 64% of the Company's
revenues in 1997 and 1996, and approximately 88% of the Company's revenues in
1995. Vtel accounted for approximately 35%, 35% and 12% of the Company's
revenues in 1997, 1996 and 1995, respectively. In 1996, an audiovisual reseller,
TeleMeasurements, Inc., accounted for approximately 11% of the Company's
revenues, and in 1995, Video Images, another of the Company's resellers,
accounted for approximately 10% of the Company's revenues.
CameraManSTUDIO(TM) Automated Production Systems
The Company plans to target various segments of the studio audio/video
production industry including broadcast and cable networks/stations, independent
studios and corporate, education, healthcare, government and religious studios.
System sales will be largely directed by the Company's own sales staff. In the
broadcast and cable network segments, customers generally have in-house
engineering staff for design and installation of the production environment. In
the industrial sector, which includes independent studios, corporate, education,
healthcare, government and religious studios, the Company plans to partner with
certain of its existing resellers to provide these design and installation
services to the customer. The Company is currently focusing its marketing
efforts on targeted trade advertising, tradeshow attendance and live
demonstration facilities.
Wireless RF Technology
The Company's business strategy with regard to the wireless technology is to
pursue strategic partnership and OEM licensing arrangements. The Company intends
to market its technology to semiconductor companies that wish to make their own
custom and/or standardized ICs, to wireless product companies that wish to
incorporate the technology into their own products, and to companies that create
RF system designs for others. The Company may also consider additional
strategies for marketing its technology including, but not limited to, (i)
contracting with a foundry to manufacture IC's which the Company could then sell
directly to product companies for incorporation into products, (ii) entering
into joint product development arrangements for the development of specific
products utilizing the wireless technology, and (iii) developing and marketing
its own wireless RF products. Currently, the Company has not finalized any
formal arrangements for the sale or licensing of its wireless technology.
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Competition
CameraMan(R) Video Camera Control Systems
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) systems.
Various manufacturers of pan/tilt heads 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 manually. 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.
Both Canon and Sony offer systems with certain automatic tracking capabilities.
The Canon system requires integration of third party software and a personal
computer with specific video hardware in order to perform certain tracking
functions. The Sony system offers a visual/color-tracking technology embodied
within their camera. While the Canon and Sony systems are offered at prices
similar to, or less than, the CameraMan(R) system, the Company believes these
systems have a significantly lower level of performance than the CameraMan(R)
system and do not have the application-specific flexibility that is incorporated
with the Company's products.
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.
CameraManSTUDIO(TM) Automated Production Systems
A traditional audio/video production environment involves the coordination of
multiple operators who independently operate various pieces of equipment in
parallel to achieve audio, video, machine and camera control functions. The
Company is not aware of any competitors who currently offer a system solution
which integrates audio, video, machine control and camera control through a
single interface and also provides the technology to allow these functions to
operate automatically and in parallel. The Company believes the studio
production industry is highly competitive and intends to compete based on the
acquisition of patents on its proprietary "transition macro" technology and
continued enhancements of its system to offer users more automation and
functionality than its competitors.
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Wireless RF Technology
Traditional RF receiver electronics involve complex designs which require a high
degree of precision in order to achieve an acceptable degree of reliability. The
Company believes its technology simplifies the design requirements and decreases
the level of precision necessary, while achieving equal or better results. In
addition, the Company believes it can provide these improvements at a lower cost
than currently available. The Company is able to achieve this improvement over
current RF receiver electronics via its direct receiver technology which can be
integrated into an IC which receives RF transmissions and processes them down to
an optimized baseband signal in a single step with minimal distortion and low
power usage. The Company is not aware of any competitors who are able to provide
this single step conversion process with the performance characteristics of the
Company's technology. The Company believes its RF receiver technology will
compete with the current providers of traditional RF technology based on cost,
reliability, low power usage, enhanced operating performance and increased
design simplicity.
Production and Supply
The Company engages in assembly operations for its CameraMan(R) and
CameraManSTUDIO(TM) systems 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 these systems for the foreseeable future. The
Company obtains all of its component parts, including standard electronic
components and specially designed components, 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, 1997, 1996 and 1995, one supplier accounted for
approximately 40%, 21%, and 23%, 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 six to twelve month inventory of
this component. An alternative source of supply for this component would require
modifications to the existing system. No other supplier accounted for more than
15% of the Company's component purchases in 1997, 1996 or 1995.
At December 31, 1997, the Company had commitments to purchase camera modules
from its single-source supplier and other parts from a non sole-source supplier
totaling approximately $500,000 through 1998. 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
maintain purchase contracts with its major suppliers of studio components. The
Company purchases other 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 products 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
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inventory of certain components, but there can be no assurances that such
components will be readily available when needed.
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, 1997,
the Company maintained an inventory of standard electronic and other system
components of $1,948,581. Substantially all of the Company's systems are
delivered to customers by common carrier.
The Company offers a one-year limited warranty on its camera products 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. The Company
plans to offer a 90-day limited warranty on its studio products covering defects
in workmanship and materials, including software bugs. Additional service
contracts covering hardware repair as well as software support and upgrades will
be offered for sale to the customer.
Patents and Trademarks
The Company holds twelve United States patents and five foreign patents 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 its camera and studio systems and
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, including CameraManSTUDIO(TM) and Eddie(TM).
Government Regulation
The Company utilizes wireless communications both in its CameraMan(R) and
CameraManSTUDIO(TM) 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, or is in the process of obtaining, 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 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
For the past two years, the Company's principal efforts have been devoted to the
development of CameraManSTUDIO(TM) and the research and development of its
wireless RF technology. 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. The Company is no longer dedicating
substantial research and development resources to this project as the Company
believes it has developed other products and technologies which are more
appropriate for the Company to pursue than the consumer CameraMan(R) system.
For the fiscal years ended December 31, 1997 and 1996, the Company expended
approximately $3,296,000 and $1,483,000, respectively, on research and
development.
Employees
As of December 31, 1997, the Company had eighty-eight full-time employees, of
which thirty-one are employed in manufacturing, twenty-five in engineering
research and development, twenty-two in sales, support and marketing, and ten 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 currently provides for a base monthly
rental payment of $24,288 through February 2002.
The Company believes that its manufacturing 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.
Item 3. Legal Proceedings
None.
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Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual meeting on November 7, 1997. The stockholders
elected Messrs. Jeffrey Parker, Todd Parker, David Sorrells, William Sammons and
Arthur Yeager 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 9,063,667 64,600 0
Todd Parker 9,063,667 64,600 0
David Sorrells 9,063,667 64,600 0
William Sammons 9,063,667 64,600 0
Arthur Yeager 9,063,667 64,600 0
Stacie Wilf 9,063,667 64,600 0
At this meeting, the stockholders also approved a proposal to amend the 1993
Stock Plan to increase from 1,500,000 to 2,000,000 the number of shares of
common stock reserved for issuance under the Plan. On the matter of approving
the amendment, 8,713,489 votes were cast in favor, 90,999 votes were cast
against and 4,429 votes abstained. There were 319,350 broker non-votes.
Executive Officers of the Registrant
Jeffrey Parker, age 41, 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.
Stacie Parker Wilf, age 39, 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.
David F. Sorrells, age 39, 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, age 31, 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 in 1994. Ms. Poehlman served as Audit Manager
with Arthur Andersen LLP.
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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, 1996:
First quarter $11.125 $ 6.500
Second quarter 17.500 10.625
Third quarter 13.750 9.125
Fourth quarter 15.375 10.500
Fiscal year ending December 31, 1997:
First quarter 17.375 11.750
Second quarter 21.250 12.625
Third quarter 32.125 18.500
Fourth quarter 31.500 15.125
Holders
As of March 2, 1998, there were 94 holders of record. The Company believes there
to be approximately 2,100 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 convertible security,
description of underwriting or Exemption from terms
other discounts to market registration of exercise or
Date of sale Title of security Number sold price afforded to purchasers claimed conversion
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10/97 - 12/97 Common stock 12,600 Received proceeds of $103,950 4(2) Underwriters warrants
granted 11/30/93
exercisable through
11/30/98 at an exercise
price of $8.25 per share
10/97 - 12/97 Common stock 31,979 Received proceeds of $43,332 Rule 701 Options granted 2/1/93,
exercisable through
2/1/98 at an exercise
price of $1.355 per share
11/17/97 Options to purchase 42,500 Options granted - no consideration 4(2) Exercisable for periods
common stock granted received by Company until exercise lasting five years from
to employees pursuant the date the options
to stock option plans first become vested,
options vest from one to
ten years from the date
of grant at an exercise
price of $21.50 per share
</TABLE>
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
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<PAGE>
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, however, has
experienced increases in revenues in 1995, 1996 and 1997 and anticipates further
increases in revenues in 1998. These increases are subject to the Company
continuing to expand its product lines and attracting additional means of
distribution and customers, among other things. The Company intends to continue
to use its working capital to build its infrastructure to support future
marketing and sales and research and development activities for the studio
product line and the wireless technology. No assurance can be given that such
expenditures will result in increased sales, new products, or technological
advances.
Results of Operations for Each of the Three Years Ended December 31, 1997, 1996
and 1995
Revenues
The Company's revenues to date consist of sales of CameraMan(R) systems and
various accessories which complement those systems. Revenues for the years ended
December 31, 1997, 1996 and 1995 were $10,799,067, $9,195,811, and $3,902,546,
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 1996 to 1997, the number of systems sold increased from 1,611 systems in
1996 to 1,797 systems in 1997. The increase in units sold is primarily
attributable to increased market acceptance of the Company's products as well as
the Company's expansion into international markets during 1997. The increase in
revenues from 1996 to 1997 is also attributable, in part, to an increase in the
average selling price per system from approximately $5,700 in 1996 to
approximately $6,000 in 1997. This increase is primarily due to price increases
on a majority of the CameraMan(R) products during 1997.
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 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.
14
<PAGE>
The Company anticipates a continued increase in revenue in 1998, primarily as a
result of the introduction of its CameraManSTUDIO(TM) product during the first
half of 1998. The studio product has list prices ranging from approximately
$150,000 to over $250,000 per system, as compared to CameraMan(R) systems which
have a current average selling price of approximately $6,000 per system. The
Company also anticipates generating revenue in connection with licensing of its
wireless technology during 1998. Any increase in revenue for 1998 will depend
upon market acceptance of the new studio products, and successful completion of
licensing agreements with third parties related to the wireless technology.
Gross Margin
For the years ended December 31, 1997, 1996 and 1995, gross margins as a
percentage of sales were 43%, 35% and 37%, respectively. The increase in margin
from 1996 to 1997 is primarily due to price increases on the majority of the
Company's product line, as well as a reduction of manufacturing overhead during
1997.
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 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 Company continuously works 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 1997 due to the highly
competitive nature of the industry, the introduction of new products, and
fluctuations in the cost of component parts.
Marketing and Selling Expenses
Marketing and selling expenses increased by $1,085,378, or 45% from 1996 to 1997
and increased by $390,569, or 20%, from 1995 to 1996. Marketing and selling
expenses as a percentage of revenues were 32%, 26%, and 51% for the years ended
December 31, 1997, 1996 and 1995, respectively.
The increase in marketing and selling expenses from 1996 to 1997 is, in part, a
reflection of a full year of personnel and related costs resulting from
additions to the sales and marketing staff during 1996. In addition, the Company
increased its expenditures related to trade shows, advertising and other
promotional campaigns in order to promote the Company's studio product line and
to expand distribution into international markets.
15
<PAGE>
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 and other national accounts, and to expand the internal sales
staff in preparation for the release of CameraManSTUDIO(TM). 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.
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, and anticipates further increases in sales and marketing expenses in
1998 in order to support the Company's wireless technology licensing efforts.
General and Administrative Expenses
The Company's general and administrative expenses increased by $419,136 or 29%
from 1996 to 1997 and by $43,321, or 3%, from 1995 to 1996. 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 1996 to 1997 is the
result of increases in personnel costs and outside professional fees during
1997. During 1996, two officers voluntarily reduced their salaries resulting in
a decrease in personnel costs. These salaries were adjusted back to their
previous levels during 1997. In addition, the Company increased its use of
outside professional services, primarily legal services, in connection with its
wireless technology.
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.
As a percentage of revenues, general and administrative expenses were 17%, 16%,
and 36% in 1997, 1996 and 1995, 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 $1,812,881, or 122%
from 1996 to 1997 and increased by $303,999, or 26% from 1995 to 1996. Research
and development expenses as a percentage of revenues were 31%, 16% and 30% in
1997, 1996 and 1995, respectively.
From 1996 to 1997, the increase in research and development expenses was a
result of increased personnel and prototype materials for the continued
development of the Company's studio product line and its wireless technology.
16
<PAGE>
From 1995 to 1996, the increase in research and development expenses was
primarily due to costs incurred by the wireless research team 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.
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. The Company expects to invest an amount
comparable to or in excess of amounts invested in 1997 for research and
development activities in 1998.
Nonrecoverable Start-up and Excess Capacity Costs
The Company incurred nonrecoverable start-up and excess capacity costs of
$91,350 and $556,675 in 1996 and 1995, respectively. No such costs were incurred
in 1997. Non-recoverable start-up and excess capacity costs represent materials,
labor and overhead costs incurred by the Company in excess of those directly or
indirectly attributable to system sales.
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 future periods.
Interest Expense
The Company incurred interest expense of $75,547 and $277,786 in 1996 and 1995,
respectively. No interest expense was incurred in 1997. Interest expense
represents interest on the subordinated debentures payable to related parties.
These subordinated debentures were converted to equity in April 1996.
Interest Income
Interest income increased by $404,970 from 1996 to 1997 and by $215,641 from
1995 to 1996. 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
and 1997. The increase in interest income from 1996 to 1997 is due to the
investment of the proceeds from the Company's Regulation S offering and private
placement transactions during September 1997. 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.
17
<PAGE>
Other Expense, net
Other expense decreased by $10,810 from 1996 to 1997 and by $241,902 from 1995
to 1996. Other expense in 1995 included losses recognized on obsolete
inventories due to the discontinuation of the initial CameraMan(R) system
product line. No similar losses were incurred in 1996 or 1997. 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, 1997, 1996 and 1995, the Company had backlog of approximately
$31,000, $260,000 and $170,000, respectively. Backlog consists of orders
received from customers which generally have a specified delivery schedule
within three to five weeks of receipt. The decrease in backlog from 1996 to 1997
is primarily due to the Company's ability to shorten its delivery schedule to
approximately one week during the fourth quarter of 1997.
Liquidity and Capital Resources
At December 31, 1997 and 1996, the Company had working capital of $24,424,291
and $8,213,864, respectively. The $16,210,427 increase in working capital from
1996 to 1997 is primarily due to the increase in short term investments
resulting from the investment of the proceeds from the Company's September 1997
Regulation S and private placement transactions. During 1996 and 1997, the
Company financed its operations from the proceeds of its initial public
offering, and subsequent Regulation S and private placement transactions, and
interest earned on maturing investments of such proceeds.
The Company used cash for operating activities of $3,409,705, $1,280,403,
$4,436,612 for the years ended December 31, 1997, 1996 and 1995, respectively.
The increase in cash used for operating activities from 1996 to 1997 is
primarily attributable to increased operating losses due to substantial
investments in research and development activities and increases in inventories
due to the purchase of studio inventory components and single-source supply
items. The decrease in cash used for operating activities from 1995 to 1996 is
primarily attributable to increased sales volume.
The Company used cash in investing activities of $18,786,094 and $6,700,317 for
the years ended December 31, 1997 and 1996, respectively and generated cash from
investing activities of $1,065,284 for the year ended December 31, 1995. The
cash used in investing activities in 1997 and 1996 is primarily due to the
investment of the proceeds from the Regulation S offering and private placement
transactions during April 1996 and September 1997 and the reinvestment of
maturing investments from the Company's initial public offering. The cash
generated from investing activities in 1995 is due to the maturity of
investments, somewhat offset by capital expenditures.
The Company incurred $1,541,007, $948,183, and $596,133 for capital expenditures
in 1997, 1996 and 1995, respectively. These capital expenditures primarily
represent the purchase of certain research and development test equipment and
the purchase of computer and office equipment to
18
<PAGE>
support additional sales, marketing, product development and administrative
personnel. In 1997, capital expenditures also included leasehold improvement
costs incurred to remodel the Company's offices. The Company was granted rent
concessions in 1996 and 1997 to offset the remodeling costs. At December 31,
1997, the Company was not subject to any significant commitments to make
additional capital expenditures.
The Company generated cash from financing activities of $22,774,260, $8,243,925
and $113,870 for the years ended December 31, 1997, 1996 and 1995, respectively.
The cash generated from financing activities in 1997 and 1996 represents
proceeds from the issuance of common stock primarily as a result of Regulation S
offerings 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's principal source of liquidity at December 31, 1997 consisted of
$20,949,150 in cash and short-term investments resulting from its initial public
offering and subsequent offerings. Until the Company generates sufficient
revenues from system and other 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,
1997, the Company has $9,494,404 in long-term investments which the Company
believes is sufficient to sustain its operations on a longer term basis, if
necessary.
Year 2000
The Company has evaluated the potential impact of the situation commonly
referred to as the "Year 2000 Issue" ("Year 2K"). The issue concerns the
inability of information systems, primarily computer software programs, to
properly recognize and process date sensitive information relating to the year
2000 and beyond. The inability to properly interpret dates beyond the year 1999
could lead to business disruptions.
To ensure that the Company's computer systems are Year 2K compliant, the Company
has been reviewing each of its systems and programs during the past year. The
Company is also working with its major external vendors and suppliers to assess
their compliance efforts and the exposure of the Company to them.
As a result of researching the Company's software programs and the systems of
its external vendors and suppliers, the Company has determined that based upon
available information, the additional costs associated with the Year 2K issue
should not have a material effect on the Company's operating results or
financial condition.
19
<PAGE>
Item 7. Financial Statements
Index to Financial Statements
Page
----
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 21
BALANCE SHEETS -- DECEMBER 31, 1997 AND 1996 22-23
STATEMENTS OF OPERATIONS -- FOR THE YEARS ENDED
DECEMBER 31, 1997, 1996 AND 1995 24
STATEMENTS OF SHAREHOLDERS' EQUITY - FOR THE YEARS
ENDED DECEMBER 31, 1997, 1996 AND 1995 25
STATEMENTS OF CASH FLOWS -- FOR THE YEARS ENDED
DECEMBER 31, 1997, 1996 AND 1995 26
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 1997, 1996
AND 1995 27-38
20
<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, 1997 and 1996, and the related statements of
operations, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 1997. 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, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Jacksonville, Florida
February 9, 1998
21
<PAGE>
PARKERVISION, INC.
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
1997 1996
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 2,133,193 $ 1,554,732
Short-term investments 18,815,957 3,987,149
Accounts receivable, net of allowance for doubtful
accounts of $38,405 and $33,033 at December 31,
1997 and 1996, respectively 660,947 1,143,121
Interest and other receivables 386,634 142,374
Inventories, net 2,970,087 1,957,896
Prepaid expenses and other 610,915 309,988
----------- -----------
Total current assets 25,577,733 9,095,260
LONG-TERM INVESTMENTS 9,494,404 6,965,995
PROPERTY AND EQUIPMENT, net 2,541,123 1,516,685
OTHER ASSETS, net 1,071,772 583,972
----------- -----------
Total assets $38,685,032 $18,161,912
=========== ===========
The accompanying notes are an integral part of these balance sheets.
22
<PAGE>
PARKERVISION, INC.
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
1997 1996
------------ ------------
CURRENT LIABILITIES:
Accounts payable $ 560,106 $ 555,269
Accrued expenses:
Salaries and wages 313,267 195,864
Warranty reserve 92,674 37,204
Rebates payable 76,261 0
Other accrued expenses 90,161 65,663
Deferred revenue 20,973 27,396
------------ ------------
Total current liabilities 1,153,442 881,396
DEFERRED INCOME TAXES 4,678 3,477
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, 11,337,707 and 10,032,604 shares
issued and outstanding at December 31, 1997
and 1996, respectively 113,377 100,326
Warrants outstanding 3,795,618 1,152,360
Additional paid-in capital 45,920,419 25,392,608
Accumulated deficit (12,302,502) (9,368,255)
------------ ------------
Total shareholders' equity 37,526,912 17,277,039
Total liabilities and shareholders' equity $ 38,685,032 $ 18,161,912
============ ============
The accompanying notes are an integral part of these balance sheets.
23
<PAGE>
PARKERVISION, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995
------------ ------------ ------------
Revenues, net $ 10,799,067 $ 9,195,811 $ 3,902,546
Cost of goods sold 6,115,412 5,987,097 2,440,656
------------ ------------ ------------
Gross margin 4,683,655 3,208,714 1,461,890
Marketing and selling expenses 3,471,674 2,386,296 1,995,727
Research and development expenses 3,295,652 1,482,771 1,178,772
General and administrative expenses 1,869,835 1,450,699 1,407,378
Nonrecoverable start-up and excess
capacity costs 0 91,350 556,675
Interest expense to related parties 0 75,547 277,786
Interest income (1,019,259) (614,289) (398,648)
Other expense, net 0 10,810 252,712
------------ ------------ ------------
Net loss $ (2,934,247) $ (1,674,470) $ (3,808,512)
============ ============ ============
Basic loss per common share $ (0.28) $ (0.17) $ (0.43)
============ ============ ============
The accompanying notes are an integral part of these statements.
24
<PAGE>
PARKERVISION, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Common Stock
---------------------------
Additional Total
Warrants Paid-In Accumulated Shareholders'
Shares Par Value out-standing Capital Deficit Equity
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
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
Issuance of common stock upon
employee stock option exercise 122,607 1,226 0 486,915 0 488,141
Issuance of common stock upon
underwriters' warrant exercise 192,496 1,925 (222) 1,266,916 0 1,268,619
Issuance of common stock on
September 5, 1997, net of cash
offering costs of $1,257,500 990,000 9,900 2,233,620 18,773,980 0 21,017,500
Issuance of warrants for
business consulting services 0 0 409,860 0 0 409,860
Net loss for the period ended
December 31, 1997 0 0 0 0 (2,934,247) (2,934,247)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE, December 31, 1997 11,337,707 $ 113,377 $ 3,795,618 $ 45,920,419 $(12,302,502) $ 37,526,912
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
25
<PAGE>
PARKERVISION, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,934,247) $ (1,674,470) $ (3,808,512)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization 717,780 609,485 499,605
Amortization of discounts on investments (112,130) (139,452) (142,605)
Provision for obsolete inventories 100,000 330,000 309,311
Loss on disposal of property 0 0 4,877
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net 482,174 (691,847) (310,540)
(Increase) decrease in interest and other receivables (244,260) 252,515 (221,813)
Increase in inventories (1,112,191) (13,132) (907,148)
Increase in prepaid expenses (217,746) (73,071) (24,012)
Increase in other assets (361,131) (27,852) (122,691)
Increase in accounts payable and accrued expenses 278,469 207,979 198,962
(Decrease) increase in deferred revenue (6,423) (60,558) 87,954
------------ ------------ ------------
Total adjustments (475,458) 394,067 (628,100)
------------ ------------ ------------
Net cash used for operating activities (3,409,705) (1,280,403) (4,436,612)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments classified as available for sale (10,009,375) 0 0
Purchase of investments classified as held to maturity (12,735,712) (11,890,092) (8,811,583)
Proceeds from maturity of investments 5,500,000 6,137,958 10,473,000
Purchase of property and equipment (1,541,007) (948,183) (596,133)
------------ ------------ ------------
Net cash (used for) provided by investing activities (18,786,094) (6,700,317) 1,065,284
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 22,774,260 8,243,925 113,870
------------ ------------ ------------
Net cash provided by financing activities 22,774,260 8,243,925 113,870
------------ ------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 578,461 263,205 (3,257,458)
CASH AND CASH EQUIVALENTS, beginning of year 1,554,732 1,291,527 4,548,985
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, end of year $ 2,133,193 $ 1,554,732 $ 1,291,527
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
26
<PAGE>
PARKERVISION, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
1. THE COMPANY AND NATURE OF BUSINESS:
ParkerVision, Inc. (the "Company") is engaged in the design, manufacture and
marketing of automated video equipment and the development and marketing of
wireless radio frequency ("RF") technologies. The Company was incorporated under
the laws of the state of Florida on August 22,1989.
The Company sells its video products through audiovisual dealers and other
equipment manufacturers throughout the United States, as well as in Canada,
Latin America and Asia. Approximately 95% 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 1998, 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.
Cash and Cash Equivalents
Cash and cash equivalents include overnight repurchase agreements and U.S.
Treasury money market investments totaling approximately $1,845,000 and
$1,321,000 at December 31, 1997 and December 31, 1996, respectively.
27
<PAGE>
Investments
Investments consist of funds invested in U.S. Treasury notes, U.S. Treasury
bills and Federal Mortgage Backed Securities. At December 31, 1997, short-term
investments included investments classified as available-for-sale reported at
their fair value of $10,008,203 and investments classified as held-to-maturity
reported at their amortized cost of $8,807,754. The investments classified as
available-for-sale range in maturity from one to two years. Short-term
investments classified as held-to-maturity range in maturity from one to nine
months. At December 31, 1997, long-term investments consist of investments
classified as held-to-maturity and are reported at their amortized cost of
$9,494,404 and range in maturity from two to three years. At December 31, 1996,
all of the Company's investments were classified as held-to-maturity. For the
years ended December 31, 1997 and 1996, no unrealized gains or losses were
recognized.
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 inventory through future product sales and that the
Company's purchased materials net 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 Three to seven years
Furniture and fixtures Seven years
Other assets
Included in other assets are patent costs, prepaid licensing fees and prepaid
consulting fees. Patent costs 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.
28
<PAGE>
Prepaid licensing fees represent costs incurred to obtain licenses for use of
certain technologies in future products. Prepaid licensing fees are being
amortized over the estimated term of the licensing agreements. Prepaid
consulting fees represent the estimated fair market value of warrants issued as
consideration for such consulting services (see Note 10). These fees are being
amortized over the term of the consulting agreements.
Nonrecoverable start-up and excess capacity costs
Nonrecoverable start-up and excess capacity costs include materials, 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
In February 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings Per Share". SFAS No. 128 replaces the presentation of primary and
fully-diluted earnings per share with a presentation of basic and diluted
earnings per share. The Company adopted SFAS No. 128 as of the year ended
December 31, 1997. As the affect of common stock equivalents was anti-dilutive
in prior periods, no restatement of prior period loss per share is required in
order to conform with the provisions of this statement.
Basic loss per share is determined based on the weighted-average number of
common shares assumed to be outstanding during each year. Diluted loss per share
is the same as basic loss per share as all common share equivalents are excluded
from the calculation as their effect is anti-dilutive. The weighted-average
number of common shares assumed to be outstanding for the years ended December
31, 1997, 1996 and 1995, is 10,490,480, 9,681,182 and 8,757,802, respectively.
Statements of Cash Flows
The Company paid interest of $0, $83,658, and $269,676 during 1997, 1996 and
1995, respectively.
The Company issued 50,000 options in 1997 for professional services to be
provided over a five year period, valued at approximately $410,000.
The Company issued 324,425 shares of common stock in 1996 for conversion of
subordinated debentures totaling $3,244,250. The Company also issued 200,000
warrants in 1996 for professional services to be provided over a five year
period valued at $512,000.
29
<PAGE>
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,
1997, 1996, and 1995 is as follows:
1997 1996 1995
----------- ----------- -----------
Tax benefit at statutory rate $ (997,644) $ (569,320) $(1,294,894)
State tax benefit (146,712) (83,724) (190,426)
Increase in valuation allowance 1,295,305 613,711 1,583,926
Increase in research and
development credit (223,974) 0 0
Other 73,025 39,333 (98,606)
----------- ----------- -----------
$ 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, 1997 and 1996:
1997 1996
--------- ---------
Current deferred taxes:
Current deferred tax assets:
Inventory obsolescence reserve $ 173,077 $ 170,095
Warranty reserve 38,460 15,440
Vacation accrual 22,825 0
Allowance for doubtful accounts 15,938 13,709
Deferred revenue 8,704 11,369
Related-party payables and accruals 2,793 4,845
Inventory capitalization 0 4,231
--------- ---------
261,797 219,689
Less valuation allowance (257,119) (216,212)
--------- ---------
Total current deferred tax assets $ 4,678 $ 3,477
========= =========
30
<PAGE>
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Noncurrent deferred taxes:
Noncurrent deferred tax assets:
Net operating loss carryforward $ 4,842,441 $ 3,856,108
Research and development credit carryforward 223,974 0
Patent amortization and other 112,983 16,783
----------- -----------
5,179,398 3,872,891
Less valuation allowance (5,065,999) (3,811,601)
----------- -----------
Total noncurrent deferred tax assets 113,399 61,290
Noncurrent deferred tax liabilities:
Depreciation (118,077) (64,767)
----------- -----------
Total current deferred tax assets
Net noncurrent deferred income tax liability $ (4,678) $ (3,477)
=========== ===========
</TABLE>
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, 1997 and 1996 was $5,323,118 and
$4,027,813, respectively.
At December 31,1997, the Company had net operating loss and research and
development carryforwards for income tax purposes of approximately $11,700,000
and 540,000, respectively which expire from 2008 to 2012. The Company's ability
to benefit from the net operating loss and research and development
carryforwards could be limited under certain provisions 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, 1997 and 1996:
1997 1996
----------- -----------
Purchased materials $ 1,948,581 $ 1,353,499
Work in process 378,859 329,983
Finished goods 1,059,699 684,282
----------- -----------
3,387,139 2,367,764
Less allowance for inventory
obsolescence (417,052) (409,868)
----------- -----------
$ 2,970,087 $ 1,957,896
=========== ===========
31
<PAGE>
5. PROPERTY AND EOUIPMENT, NET:
Property and equipment, at cost, consist of the following at December 31, 1997
and 1996:
1997 1996
----------- -----------
Manufacturing and office equipment $ 3,737,218 $ 2,582,790
Tools and dies 792,688 789,865
Leasehold improvements 366,581 101,303
Furniture and fixtures 134,877 28,079
----------- -----------
5,031,364 3,502,037
Less accumulated depreciation (2,490,241) (1,985,352)
----------- -----------
$ 2,541,123 $ 1,516,685
=========== ===========
Depreciation expense related to property and equipment was $516,569, $524,762,
and $477,907, in 1997, 1996, and 1995, respectively.
6. OTHER ASSETS
Other assets consist of the following at December 31, 1997 and 1996:
1997 1996
----------- -----------
Prepaid consulting fees $ 737,480 $ 409,600
Prepaid licensing fees 325,000 75,000
Patents and copyrights 325,164 214,033
Other assets 4,450 4,450
----------- -----------
1,392,094 703,083
Less accumulated amortization (320,322) (119,111)
----------- -----------
$ 1,071,772 $ 583,972
=========== ===========
Amortization of patents and copyrights was $47,591, $42,058, and $21,698, in
1997, 1996 and 1995, respectively. Amortization of prepaid consulting fees was
$153,620, $42,659, and $0 in 1997, 1996 and 1995, respectively.
32
<PAGE>
7. RELATED-PARTY TRANSACTIONS:
Subordinated debentures
On April 12, 1996, certain related parties converted subordinated debentures
into 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's current terms
obligate the Company through February 28, 2002 at a base monthly lease payment
of $24,288.
Future minimum payments as of December 31, 1997 are as follows:
1998 $291,456
1999 291,456
2000 291,456
2001 291,456
Thereafter 48,576
Rent expense related to the above lease was $174,465, $106,500, and $215,551,
for the years ended December 31, 1997, 1996 and 1995, respectively.
8. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK:
In 1997, Vtel Corporation ("VTEL") accounted for approximately 35% of total
revenues. 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.
Financial instruments which potentially subject the Company to concentrations of
credit risk consist primarily of trade receivables. VTEL and two other resellers
accounted for approximately 54% of accounts receivable at December 31, 1997. The
Company closely monitors extensions of credit and has never experienced
significant credit losses.
9. COMMITMENTS AND CONTINGENCIES:
At December 31, 1997, the Company has commitments to purchase materials
aggregating approximately $500,000 through 1998 from two suppliers. One of these
suppliers is a single-source supplier of the Company's camera modules and
accounted for approximately 40%, 21% and 23% of the Company's component
purchases for the years ended December 31, 1997, 1996 and 1995, respectively.
The Company maintains a six to twelve month inventory of this component as an
alternative source of supply would require modifications to the existing system.
No other supplier accounted for more than 15% of the Company's component
purchases in 1997, 1996, or 1995.
33
<PAGE>
10. STOCK OPTIONS, WARRANTS 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. Pursuant to an employment
agreement, the Company issued nonqualified stock options to purchase an
aggregate of 250,000 shares of its common stock for $15.125 per share to an
employee of the Company, vesting ten years from the date of grant. These options
were forfeited in 1997.
The following table summarizes activity related to these options for each of the
three years ended December 31, 1997:
Option Wtd. Avg.
Shares Exercise Price
---------- --------------
Outstanding at December 31, 1994 233,972 $ 2.13
Exercised (78,041) 1.36
Forfeited (443) 1.36
----------
Outstanding at December 31, 1995 155,488 2.52
Exercised (22,638) 1.36
Forfeited (43) 1.36
----------
Outstanding at December 31, 1996 132,807 2.72
Issued 250,000 15.13
Exercised (82,807) 1.36
Forfeited (250,000) 15.13
----------
Outstanding and exercisable at December 31, 1997 50,000 $ 5.00
==========
1993 Stock Plan
The Company adopted a stock plan in September 1993 (the "1993 Plan"). The 1993
Plan, as amended, provides for the grant of options and other Company stock
awards, not to exceed 2,000,000 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.
34
<PAGE>
Options granted to employees under the 1993 Plan generally vest over zero to ten
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 765,500 shares of common stock were available for future grants under
the 1993 Plan at December 31, 1997.
The following table summarizes activity under the 1993 Plan for each of the
years ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------- ----------------------- -----------------------
Wtd. Avg. Wtd. Avg. Wtd. Avg.
Shares Ex. Price Shares Ex. Price Shares Ex. Price
----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of year 297,275 $ 9.96 168,500 $ 7.07 27,500 $ 4.52
Granted 941,000 14.41 134,275 13.33 143,500 7.50
Exercised (39,800) 9.45 (5,000) 3.25 (2,500) 3.25
Forfeited (11,275) 14.40 (500) 10.50 0
----------------------- ----------------------- -----------------------
Outstanding at
end of year 1,187,200 13.46 297,275 9.96 168,500 7.07
----------------------- ----------------------- -----------------------
Exercisable at
end of year 398,800 11.24 256,875 10.05 140,500 7.16
======================= ======================= =======================
Weighted average
fair value of
options granted $ 9.02 $ 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 SFAS No.123, the Company's net loss and net
loss per share would have been increased to the following pro forma amounts:
1997 1996 1995
----------- ----------- -----------
Net Loss: As Reported $(2,934,247) $(1,674,470) $(3,808,512)
Pro Forma (4,557,861) (2,412,705) (4,193,457)
Basic Net Loss Per Share: As Reported $ (0.28) $ (0.17) $ (0.43)
Pro Forma (0.45) (0.25) (0.48)
Of the options outstanding at December 31, 1997, options for 434,200 shares have
exercise prices ranging between $5.00 and $11.875, with a weighted average
exercise price of $10.28 per share and a weighted average remaining contractual
life of approximately 9 years. Options representing
35
<PAGE>
255,300 shares with exercise prices between $5.00 and $11.875 are currently
exercisable and have a weighted average exercise price of $9.50 per share. The
remaining 753,000 options outstanding at December 31, 1997 have exercise prices
ranging from $13.875 to $21.50, with a weighted average exercise price of $15.30
per share and a weighted average remaining contractual life of approximately 13
years. Options representing 143,500 shares with exercise prices between $13.875
and $21.50 are currently exercisable and have a weighted average exercise price
of $14.32 per share.
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 1997, 1996 and 1995, respectively: risk free
interest rates of 5.75% to 6.85% in 1997, 6.04% to 6.78% in 1996, and 5.38% to
5.52% in 1995; no expected dividend yields; expected lives from two to eleven
years in 1997 and five years in 1996 and 1995; and expected volatility of 55% in
1997 and 40% in 1996 and 1995.
In May 1997, the company retained outside counsel to serve as a consultant and
advisor for a period of five years. As compensation for these services, the
Company issued a nonqualified option, under the 1993 Plan, to purchase 50,000
shares of common stock at an exercise price of $15.125 per share. The option
vests ratably over a five year period and expires five years from the date the
option becomes vested. The estimated fair value of this option is approximately
$8.20 per share or $410,000, which is included in other assets and is being
amortized to expense over the term of the consulting agreement. The fair value
of this option 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 6.63%, no expected dividend yield, expected life of 7 years and
expected volatility of 40%.
In connection with its Regulation S offering (see Note 11), on September 5,
1997, the Company granted warrants to an outside financial consultant 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 market value of $12.41 per share, or $2,233,800 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 6.08%, no
expected dividend yield, an expected life of three years, and expected
volatility of 64%.
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
36
<PAGE>
five years from the date of issuance and their estimated fair value of $2.56 per
share or $512,000 is included in other assets and is being amortized to expense
over the term of the consulting agreement. The fair value of the warrants is
estimated on the date of issuance using the Black-Scholes option pricing model
with the following weighted average assumptions: risk free interest rate of
6.34%, no expected dividend yield, expected life of two years and expected
volatility of 40%.
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 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 "1997 Offering"). 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
issuance and offering costs of $1,257,500, the Company received net proceeds
therefrom of $18,992,500.
The Company engaged an outside financial consultant in connection with the 1997
Offering, and as compensation for his services, on September 5, 1997, the
Company granted the consultant a warrant to purchase an aggregate of 180,000
shares of common stock of the Company (see Note 10).
Also on September 5, 1997, the Company completed an offering of an aggregate of
90,000 shares of its common stock to three 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 $22.50 per share
and the Company received net proceeds therefrom of $2,025,000.
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 "1996 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 1996
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 1996 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 (see Note 7).
37
<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. OUARTERLY RESULTS OF OPERATIONS (Unaudited):
First Second Third Fourth
Quarter Quarter Quarter Quarter
----------- ----------- ----------- -----------
Year ended
December 31, 1997:
Revenues, net $ 2,079,957 $ 4,007,472 $ 2,887,216 $ 1,824,422
Gross margin 920,821 1,834,498 1,288,914 639,422
Operating expenses 1,838,804 2,270,368 2,084,482 2,443,507
Interest expense 0 0 0 0
Interest income 174,902 168,138 233,047 443,172
Net loss (743,081) (267,732) (562,521) (1,360,913)
Loss per share (0.07) (0.03) (0.05) (0.12)
Year ended
December 31, 1996:
Revenues, net $ 1,531,875 $ 3,230,387 $ 2,416,798 $ 2,016,751
Gross margin 513,074 1,159,609 927,071 608,960
Operating expenses 1,164,903 1,352,284 1,264,733 1,629,196
Interest expense 66,913 8,634 0 0
Interest income 82,066 160,374 185,554 186,295
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 $ 313,774 $ 996,725 $ 1,602,856 $ 989,191
Gross margin 97,808 375,834 648,784 339,464
Operating expenses 1,292,740 1,268,565 1,229,648 1,347,135
Interest expense 89,217 89,217 89,217 10,135
Interest income 103,285 99,912 88,036 107,415
Net loss (1,122,251) (913,041) (660,286) (1,112,934)
Loss per share (0.13) (0.10) (0.08) (0.12)
38
<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 information contained under the captions "Election of Directors" in the
Company's definitive Proxy Statement for its 1998 Annual Meeting of
Stockholders, which will be filed with the Commission pursuant to Regulation 14A
under the Securities and Exchange Act of 1934, as amended, (the "1998 Proxy
Statement"), is incorporated herein by reference.
Item 10. Executive Compensation
The information contained under the caption "Election of Directors - Executive
Compensation" in the 1998 Proxy Statement is incorporated herein by reference.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The information contained under the caption "Security Ownership of Certain
Beneficial Owners" in the 1998 Proxy Statement is incorporated herein by
reference.
Item 12. Certain Relationships and Related Transactions
The information contained under the caption "Election of Directors - Certain
Relationships and Related Transactions" in the 1998 Proxy Statement is
incorporated herein by reference.
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).
39
<PAGE>
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).
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 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).
4.4 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).
4.5 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).
4.6 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).
4.7 Purchase option agreement dated September 5, 1997
between the Registrant and Jack Ferraro
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 October 11, 1993 between
the Registrant and Jeffrey Parker (incorporated by
reference from Exhibit 10.13 of Registration Statement
No.33-70588-A).
40
<PAGE>
10.4 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).
10.5 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).
10.6 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).
10.7 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).
10.8 Third 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 10.19 of Annual Report of Form
10-KSB for the period ended December 31, 1996).
23.1 Consent of Arthur Andersen LLP.
27.1 Financial data schedule
(b) Reports on Form 8-K
None.
41
<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 30, 1998 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 30, 1998
------------------
Jeffrey Parker
Chairman of the Board,
Chief Executive Officer
and President
By: /s/ Stacie Parker Wilf Date: March 30, 1998
----------------------
Stacie Parker Wilf
Secretary, Treasurer and Director
By: /s/ David F. Sorrells Date: March 30, 1998
---------------------
David F. Sorrells
Chief Technical Officer and Director
By: /s/ Cynthia Poehlman Date: March 30, 1998
--------------------
Cynthia Poehlman
Controller and Chief Accounting Officer
By: /s/ Todd Parker Date: March 30, 1998
----------------
Todd Parker
Director
By: /s/ William L. Sammons Date: March 30, 1998
----------------------
William L. Sammons
Director
By: /s/ Arthur G. Yeager Date: March 30, 1998
--------------------
Arthur G. Yeager
Director
42
Exhibit 4.7
THE SECURITIES EVIDENCED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE SECURITIES LAWS OF ANY STATE
OR JURISDICTION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
THE REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES
THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN
PROVIDED.
VOID AFTER 5:00 P.M. EASTERN TIME, SEPTEMBER 5, 2002.
PURCHASE OPTION
For the Purchase of
180,000 Shares of Common Stock
of
PARKERVISION, INC.
(A Florida Corporation)
1. Purchase Option.
THIS CERTIFIES THAT, in consideration of services rendered by Jack M. Ferraro
("Holder"), as registered owner of this Purchase Option, to ParkerVision, Inc.
("Company"), Holder is entitled, at any time or from time to time at or after
September 5, 1997 ("Commencement Date"), and at or before 5:00 p.m., Eastern
Time, September 5, 2002 ("Expiration Date"), but not thereafter, to subscribe
for, purchase and receive, in whole or in part, up to one hundred eighty
thousand (180,000) shares of Common Stock of the Company, $.01 par value
("Common Stock"). If the Expiration Date is a day on which banking institutions
are authorized by law to close, then this Purchase Option may be exercised on
the next succeeding day which is not such a day in accordance with the terms
herein. During the period ending on the Expiration Date, the Company agrees not
to take any action that would terminate the Purchase Option. This Purchase
Option is initially exercisable at $22.50 per share of Common Stock; provided,
however, that upon the occurrence of any of the events specified in Section 6
hereof, the rights granted by this Purchase Option, including the exercise price
and the number of shares of Common Stock to be received upon such exercise,
shall be adjusted as therein specified. The term "Exercise Price" shall mean the
initial exercise price or the adjusted exercise price,
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depending on the context, of a share of Common Stock.
2. Exercise.
2.1 Exercise Form. In order to exercise this Purchase Option, the exercise
form attached hereto must be duly executed and completed and delivered to the
Company, together with this Purchase Option and payment of the Exercise Price in
cash or by certified check or official bank check for the Common Stock being
purchased. If the subscription rights represented hereby shall not be exercised
at or before 5:00 p.m., Eastern time, on the Expiration Date this Purchase
Option shall become and be void without further force or effect, and all rights
represented hereby shall cease and expire.
2.2 Legend. Each certificate for Common Stock purchased under this
Purchase Option shall bear a legend as follows unless the sale by the Company to
the Holder such Common Stock has been registered under the Securities Act of
1933, as amended ("Act"):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act") or
applicable state law. The securities may not be offered for sale,
sold or otherwise transferred except pursuant to an effective
registration statement under the Act, or pursuant to an exemption
from registration under the Act and applicable state law."
3. Transfer.
3.1 General Restrictions. The registered Holder of this Purchase Option,
by its acceptance hereof, agrees that it will not sell, transfer or assign or
hypothecate this Purchase Option; provided, however, that sales, transfers or
assignments may be made subject to compliance with or exemptions from applicable
securities laws and pursuant to the terms of this Purchase Option. In order to
make any permitted assignment, the Holder must deliver to the Company the
assignment form attached hereto duly executed and completed, together with the
Purchase Option and payment of all transfer taxes, if any, payable in connection
therewith. The Company shall immediately transfer this Purchase Option on the
books of the Company and shall execute and deliver a new Purchase Option or
Purchase Options of like tenor to the appropriate assignee(s) expressly
evidencing the right to purchase the aggregate number of shares of Common Stock
purchasable hereunder or such portion of such number as shall be contemplated by
any such assignment.
3.2 Restrictions Imposed by the Act. This Purchase Option and the Common
Stock underlying this Purchase Option shall not be transferred unless and until
(i) the Company has received the opinion of counsel for the Holder that this
Purchase Option or the Common Stock, as the case may be, may be transferred
pursuant to an exemption from registration under the Act and applicable state
law, the availability of which is established to the reasonable satisfaction of
the Company (the Holder hereby agreeing that the opinion of Graubard Mollen &
Miller shall be deemed satisfactory evidence of the availability of an
exemption), or (ii) a registration statement relating to such Common Stock has
been filed by the Company and declared effective by the Securities and Exchange
Commission and is in compliance with applicable state law.
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4. New Purchase Options to be Issued.
4.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3
hereof, this Purchase Option may be exercised or assigned in whole or in part.
In the event of the exercise or assignment hereof in part only, upon surrender
of this Purchase Option for cancellation, together with the duly executed
exercise or assignment form and funds sufficient to pay any Exercise Price
and/or transfer tax, the Company shall cause to be delivered to the Holder
without charge a new Purchase Option of like tenor to this Purchase Option in
the name of the Holder evidencing the right of the Holder to purchase the
aggregate number of shares of Common Stock purchasable hereunder as to which
this Purchase Option has not been exercised or assigned.
4.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Purchase Option and
of reasonably satisfactory indemnification, the Company shall execute and
deliver a new Purchase Option of like tenor and date. Any such new Purchase
Option executed and delivered as a result of such loss, theft, mutilation or
destruction shall constitute a substitute contractual obligation on the part of
the Company.
5. Registration Rights.
5.1 Demand Registration.
5.1.1 Grant of Right. The Company, upon written demand ("Initial
Demand Notice") of the Holder of this Purchase Option and/or the underlying
shares of Common Stock agrees to register under the Act, on one occasion, all or
any portion of the Common Stock underlying this Purchase Option as requested by
the Holder in the Initial Demand Notice ("Registrable Securities"). On such
occasion, the Company will file a Registration Statement with the Securities and
Exchange Commission ("SEC") covering the Registrable Securities within sixty
days after receipt of the Initial Demand Notice and use its best efforts to have
such registration statement declared effective promptly thereafter. The demand
for registration may be made at any time during a period of four years beginning
one year from the Commencement Date. The Company covenants and agrees to give
written notice of its receipt of any Initial Demand Notice by the Holder to all
other registered Holders of the Purchase Options and/or the Registrable
Securities within ten days from the date of the receipt of any such Initial
Demand Notice.
5.1.2 Terms. The Company shall bear all fees and expenses attendant
to registering the Registrable Securities with any SEC, but the Holders shall be
responsible for and pay any and all underwriting commissions and any fees and
the expenses of any legal counsel selected by the Holders to represent them in
connection with any filing with the National Association of Securities Dealers,
Inc. and sale of the Registrable Securities. The Company agrees to use its best
efforts to cause the filing required herein to become effective under the Act
promptly and to qualify or register the Registrable Securities in such States as
are reasonably requested by the Holder; provided, however, that in no event
shall the Company be required to register the Registrable Securities in a State
in which such registration would cause (i) the Company to be obligated to
register or license to do business in such State, or (ii) the principal
stockholders of the Company to be obligated to
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escrow their shares of capital stock of the Company. The Company shall cause any
registration statement filed pursuant to the demand rights granted under Section
5.1.1 to remain effective for a period of at least two years from the date that
the Holders of the Registrable Securities covered by such registration statement
are first given the opportunity to sell all of such securities.
5.2 "Piggy-Back" Registration.
5.2.1 Grant of Right. In addition to the demand right of
registration, the Holder of this Purchase Option shall have the right for a
period of six years commencing one year from the Commencement Date, to include
the Registrable Securities as part of any other registration of securities filed
under the Act by the Company (other than in connection with a transaction
contemplated by Rule 145(a) promulgated under the Act or pursuant to Form S-8 or
any equivalent form) provided, however, that if, in the written opinion of the
Company's managing underwriter or underwriters, if any, for such offering, the
inclusion of the Registrable Securities, when added to the securities being
registered by the Company or the selling stockholder(s), will exceed the maximum
amount of the Company's securities which can be marketed (i) at a price
reasonably related to their then current market value, or (ii) without
materially and adversely affecting the entire offering, the Company shall
nevertheless register all or any portion of the Registrable Securities required
to be so registered but such Registrable Securities shall not be sold by the
Holders until 180 days after the registration statement for such offering has
become effective and provided further that, if any securities are registered for
sale on behalf of other stockholders in such offering and such stockholders have
not agreed to defer such sale until the expiration of such 180 day period, the
number of securities to be sold by all stockholders in such public offering
during such 180 day period shall be apportioned pro rata among all such selling
stockholders, including all Holders of the Registrable Securities, according to
the total amount of securities of the Company owned by said selling
stockholders, including all Holders of the Registrable Securities.
5.2.2 Terms. The Company shall bear all fees and expenses attendant
to registering the Registrable Securities with the SEC, but the Holders shall be
responsible for and pay any and all underwriting commissions and any fees and
the expenses of any legal counsel selected by the Holders to represent them in
connection with any filing with the National Association of Securities Dealers,
Inc. and sale of the Registrable Securities. In the event of such a proposed
registration, the Company shall furnish the then Holders of outstanding
Registrable Securities with not less than thirty days written notice prior to
the proposed date of filing of such registration statement with the SEC. Such
notice to the Holders shall continue to be given for each registration statement
filed by the Company until such time as all of the Registrable Securities have
been sold by the Holder. The Holders of the Registrable Securities shall
exercise the "piggy-back" rights provided for herein by giving written notice,
within twenty days of the receipt of the Company's notice of its intention to
file a registration statement. The Company shall cause any registration
statement filed pursuant to the above "piggyback" rights to remain effective for
at least two years from the date that the Holders of the Registrable Securities
are first given the opportunity to sell all of such securities.
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5.3 General Terms.
5.3.1 Indemnification by the Company. The Company agrees to
indemnify and hold harmless the Holder(s) and each person, if any, who controls
the Holder(s) within the meaning of the Securities Act and/or the Securities
Exchange Act of 1934, as amended ("Exchange Act"), against any losses, claims,
damages or liabilities, joint or several, to which the Holder(s) or such
controlling person may become subject, under the Securities Act, Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any registration
statement for the Registrable Securities or (B) in any blue sky application or
other document executed by the Company specifically for blue sky purposes or
based upon any other written information furnished by the Company or on its
behalf to any state or other jurisdiction in order to qualify any or all of the
Registrable Securities under the securities laws thereof (any such application,
document or information being hereinafter called a "Blue Sky Application"), or
(ii) the omission or alleged omission by the Company to state in any
registration statement for the Registrable Securities or in any Blue Sky
Application a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and will reimburse the Holder(s) and each such controlling
person for any legal or other expenses reasonably incurred by the Holder(s) or
such controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information regarding the Holder(s) which is furnished to
the Company by the Holder(s) for inclusion in any registration statement for the
Registrable Securities or any such Blue Sky Application ("Non-Indemnity
Events").
5.3.2 Indemnification by the Holder(s). The Holder(s) agrees to
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act and/or the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
the Company or such controlling person may become subject, under the Securities
Act, Exchange Act or otherwise insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
Non-Indemnity Event; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action provided that such
loss, claim, damage or liability is found ultimately to arise out of or be based
upon any Non-Indemnity Event.
5.3.3 Procedure. Promptly after receipt by an indemnified party
under this Section 5 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 5, notify in writing the indemnifying
party of the commencement thereof; and the omission so to notify the
indemnifying party will relieve the indemnifying party from any liability under
this Section 5 as to the particular item for which indemnification is then being
sought (if such failure materially prejudices the indemnifying party), but not
from any other liability which it
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may have to any indemnified party. In case any such action is brought against
any indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein, and to
the extent that it may wish, jointly with any other indemnifying party,
similarly notified, to assume the defense thereof, with counsel who shall be to
the reasonable satisfaction of such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 5 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. Any such indemnifying party shall not be
liable to any such indemnified party on account of any settlement of any claim
or action effected without the consent of such indemnifying party, which consent
shall not be unreasonably withheld.
5.3.4 Contribution. If the indemnification provided for in this
Section 5 is unavailable to any indemnified party in respect to any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, will
contribute to the amount paid or payable by such indemnified party, as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand, and the Holder(s) on the other hand, from the Purchase Option
and/or Registrable Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above, but
also the relative fault of the Company on the one hand, and of the Holder(s) on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand, and the Holder(s) on the other hand, shall be deemed to be in
the same proportion as the total proceeds from the Purchase Option and/or
Registrable Securities received by the Company, bear to the total proceeds from
the Purchase Option and/or Registrable Securities received by the Holder(s). The
relative fault of the Company on the one hand, and the Holder(s) on the other
hand, will be determined with reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Company, and its relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
5.3.5 Equitable Considerations. The Company and the Holder(s) agree
that it would not be just and equitable if contribution pursuant to this Section
5 were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to in the
immediately preceding paragraph.
5.3.6 Attorneys' Fees. The amount payable by a party under this
Section 5 as a result of the losses, claims, damages, liabilities or expenses
referred to above will be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim (including, without limitation, fees and disbursements of
counsel incurred by an indemnified party in any action or proceeding between the
indemnifying party and indemnified party or between the indemnified party and
any third party or otherwise).
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5.3.7 Exercise of Purchase Options. Nothing contained in this
Purchase Option shall be construed as requiring the Holder to exercise its
Purchase Options.
5.3.8 Exclusivity. The Company shall not permit the inclusion of any
securities other than the Registrable Securities to be included in any
registration statement filed pursuant to Section 5.1 hereof without the prior
written consent of the Holders of the Registrable Securities.
5.3.9 Documents to be Delivered by Holder. Each Holder participating
in any of the foregoing offerings shall furnish to the Company a completed and
executed questionnaire provided by the Company requesting information
customarily sought of selling securityholders.
6. Adjustments.
6.1 Adjustments to Exercise Price and Number of Securities. The
Exercise Price and the number of shares of Common Stock underlying the Purchase
Option shall be subject to adjustment from time to time as hereinafter set
forth:
6.1.1 Stock Dividends - Recapitalization, Reclassification,
Split-Ups. If after the date hereof, and subject to the provisions of Section
6.3 below, the number of outstanding shares of Common Stock is increased by a
stock dividend payable in shares of Common Stock or by a split-up,
recapitalization or reclassification of shares of Common Stock or other similar
event, then, on the effective date thereof, the number of shares of Common Stock
issuable on exercise of the Purchase Option shall be increased in proportion to
such increase in outstanding shares.
6.1.2 Aggregation of Shares. If after the date hereof, and subject
to the provisions of Section 6.3, the number of outstanding shares of Common
Stock is decreased by a consolidation, combination or reclassification of shares
of Common Stock or other similar event, then, upon the effective date thereof,
the number of shares of Common Stock issuable on exercise of the Purchase Option
shall be decreased in proportion to such decrease in outstanding shares.
6.1.3 Adjustments in Exercise Price. Whenever the number of shares
of Common Stock purchasable upon the exercise of this Purchase Option is
adjusted, as provided in this Section 6.1, the Exercise Price shall be adjusted
(to the nearest cent) by multiplying such Exercise Price immediately prior to
such adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of this Purchase Option
immediately prior to such adjustment, and (y) the denominator of which shall be
the number of shares of Common Stock so purchasable immediately thereafter.
6.1.4 Replacement of Securities upon Reorganization, etc. In case of
any reclassification or reorganization of the outstanding shares of Common Stock
other than a change covered by Section 6.1.1 hereof or which solely affects the
par value of such shares of Common Stock, or in the case of any merger or
consolidation of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the
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continuing corporation and which does not result in any reclassification or
reorganization of the outstanding shares of Common Stock), or in the case of any
sale or conveyance to another corporation or entity of the property of the
Company as an entirety or substantially as an entirety in connection with which
the Company is dissolved, the Holder of this Purchase Option shall have the
right thereafter (until the expiration of the right of exercise of this Purchase
Option) to receive upon the exercise hereof, for the same aggregate Exercise
Price payable hereunder immediately prior to such event, the kind and amount of
shares of stock or other securities or property (including cash) receivable upon
such reclassification, reorganization, merger or consolidation, or upon a
dissolution following any such sale or other transfer, by a Holder of the number
of shares of Common Stock of the Company obtainable upon exercise of this
Purchase Option immediately prior to such event; and if any reclassification
also results in a change in shares of Common Stock covered by Section 6.1.1,
then such adjustment shall be made pursuant to Sections 6.1.1, 6.1.3 and this
Section 6.1.4. The provisions of this Section 6.1.4 shall similarly apply to
successive reclassifications, reorganizations, mergers or consolidations, sales
or other transfers.
6.1.5 Changes in Form of Purchase Option. This form of Purchase
Option need not be changed because of any change pursuant to this Section, and
Purchase Options issued after such change may state the same Exercise Price and
the same number of shares of Common Stock as are stated in the Purchase Options
initially issued pursuant to this Agreement. The acceptance by any Holder of the
issuance of new Purchase Options reflecting a required or permissive change
shall not be deemed to waive any rights to a prior adjustment or the computation
thereof.
6.2 Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise or of the Purchase Option upon its transfer, nor shall it be
required to issue scrip or pay cash in lieu of any fractional interests, it
being the intent of the parties that all fractional interests shall be
eliminated by rounding any fraction up or down to the nearest whole number of
Purchase Options, shares of Common Stock or other securities, properties or
rights.
7. Reservation and Listing. The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon exercise of the Purchase Options, such number of shares of
Common Stock or other securities, properties or rights as shall be issuable upon
the exercise thereof. The Company covenants and agrees that, upon exercise of
the Purchase Options and payment of the Exercise Price therefor, all shares of
Common Stock and other securities issuable upon such exercise shall be duly and
validly issued, fully paid and non-assessable and not subject to preemptive
rights of any stockholder. As long as the Purchase Options shall be outstanding,
the Company shall use its best efforts to cause all the shares of Common Stock
issuable upon exercise of the Purchase Options to be listed (subject to official
notice of issuance) on all securities exchanges (or, if applicable on Nasdaq) on
which the Common Stock of the Company is then listed and/or quoted.
8. Certain Notice Requirements.
8.1 Holder's Right to Receive Notice. Nothing herein shall be construed as
conferring upon the Holders the right to vote or consent or to receive notice as
a stockholder for the election of directors or any other matter, or as having
any rights
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whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Purchase Options and their exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the
Company shall give written notice of such event at least fifteen days prior to
the date fixed as a record date or the date of closing the transfer books for
the determination of the stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on such proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of the closing of the transfer books, as
the case may be.
8.2 Events Requiring Notice. The Company shall be required to give the
notice described in this Section 8 upon one or more of the following events: (i)
if the Company shall take a record of the holders of its shares of Common Stock
for the purpose of entitling them to receive a dividend or distribution payable
otherwise than in cash, or a cash dividend or distribution payable otherwise
than out of retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company, or (ii) the Company shall
offer to all the holders of its Common Stock any additional shares of capital
stock of the Company or securities convertible into or exchangeable for shares
of capital stock of the Company, or any option, right or warrant to subscribe
therefor, or (iii) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business shall be proposed.
8.3 Notice of Change in Exercise Price. The Company shall, promptly after
an event requiring a change in the Exercise Price pursuant to Section 6 hereof,
send notice to the Holders of such event and change ("Price Notice"). The Price
Notice shall describe the event causing the change and the method of calculating
same and shall be certified as being true and accurate by the Company's
President and Chief Financial Officer.
8.4 Transmittal of Notices. All notices, requests, consents and other
communications under this Purchase Option shall be in writing and shall be
deemed to have been duly made on the date of delivery if delivered personally or
sent by overnight courier, with acknowledgment of receipt to the party to which
notice is given, or on the fifth day after mailing if mailed to the party to
whom notice is to be given, by registered or certified mail, return receipt
requested, postage prepaid and properly addressed as follows: (i) if to the
registered Holder of the Purchase Option, to the address of such Holder as shown
on the books of the Company, or (ii) if to the Company, to its principal
executive office.
9. Miscellaneous.
9.1 Amendments. The Company may from time to time supplement or amend this
Purchase Option without the approval of any of the Holders in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
may deem necessary or desirable and which shall not adversely affect the
interest of the Holders. All other modifications or amendments shall require the
written consent of the party against whom enforcement of the modification or
amendment is sought.
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9.2 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Purchase Option.
9.3 Entire Agreement. This Purchase Option (together with the other
agreements and documents being delivered pursuant to or in connection with this
Purchase Option) constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.
9.4 Binding Effect. This Purchase Option shall inure solely to the benefit
of and shall be binding upon, the Holder and the Company and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Purchase Option or any provisions herein
contained.
9.5 Governing Law; Submission to Jurisdiction. This Purchase Option shall
be governed by and construed and enforced in accordance with the laws of the
State of New York, without giving effect to conflict of laws. The Company hereby
agrees that any action, proceeding or claim against it arising out of, or
relating in any way to this Purchase Option shall be brought and enforced in the
courts of the State of New York or of the United States of America for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company hereby waives any objection
to such exclusive jurisdiction and that such courts represent an inconvenient
forum. Any process or summons to be served upon the Company may be served by
transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
8 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the Company in any action, proceeding or claim. The Company agrees
that the prevailing party(ies) in any such action shall be entitled to recover
from the other party(ies) all of its reasonable attorneys' fees and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor.
9.6 Waiver, Etc. The failure of the Company or the Holder to at any time
enforce any of the provisions of this Purchase Option shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Purchase Option or any provision hereof or the right of the
Company or any Holder to thereafter enforce each and every provision of this
Purchase Option. No waiver of any breach, non-compliance or non-fulfillment of
any of the provisions of this Purchase Option shall be effective unless set
forth in a written instrument executed by the party or parties against whom or
which enforcement of such waiver is sought; and no waiver of any such breach,
non-compliance or non-fulfillment shall be construed or deemed to be a waiver of
any other or subsequent breach, non-compliance or non-fulfillment.
9.7 Execution in Counterparts. This Purchase Option may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement, and shall become
effective when one or more counterparts has
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been signed by each of the parties hereto and delivered to each of the other
parties hereto.
IN WITNESS WHEREOF, the Company has caused this Purchase Option to
be signed by its duly authorized officer as of the 5th day of September, 1997.
PARKERVISION, INC.
By:/s/ Jeffrey Parker
---------------------
Name: Jeffrey Parker
Title: President
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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 1O-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 27, 1998
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<TABLE> <S> <C>
<ARTICLE> 5
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