UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from _________to_________
Commission file number 0-22904
-------
PARKERVISION, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2971472
(State or other jurisdiction of I.R.S. Employer ID No.
incorporation or organization)
8493 Baymeadows Way
Jacksonville, Florida 32256
(904) 737-1367
(Address of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ].
Indicate by check mark whether the registrant is an accelerated filer (as
defined by rule 12b-2 of the Exchange Act). Yes [X] No [ ].
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ___ No ___.
APPLICABLE ONLY TO CORPORATE ISSUERS
As of May 5, 2003, 15,245,282 shares of the Issuer's Common Stock, $.01 par
value, were outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
PARKERVISION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31,
2003 December 31,
ASSETS (unaudited) 2002
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 7,542,644 $ 1,087,033
Short-term investments 9,053,027 13,867,763
Accounts receivable, net of allowance for
doubtful accounts of $109,584 at March 31,
2003 and December 31, 2002, respectively 1,634,954 2,158,577
Inventories, net 2,851,769 3,090,884
Prepaid expenses and other 1,924,440 2,587,376
------------ ------------
Total current assets 23,006,834 22,791,633
PROPERTY AND EQUIPMENT, net 6,026,727 6,183,534
OTHER ASSETS, net 9,159,068 8,870,803
------------ ------------
Total assets $ 38,192,629 $ 37,845,970
============ ============
The accompanying notes are an integral part of these balance sheets.
2
PARKERVISION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31,
2003 December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited) 2002
------------ ------------
CURRENT LIABILITIES:
Accounts payable $ 1,823,676 $ 759,242
Accrued expenses:
Salaries and wages 910,996 951,430
Warranty reserves 255,771 248,230
Lease obligation 314,527 357,417
Professional fees 201,501 271,225
Other accrued expenses 67,762 107,598
Deferred revenue 931,966 1,003,466
------------ ------------
Total current liabilities 4,506,199 3,698,608
DEFERRED INCOME TAXES 100,773 100,773
COMMITMENTS AND CONTINGENCIES
(Notes 6, 8, 9 and 10)
------------ ------------
Total liabilities 4,606,972 3,799,381
------------ ------------
SHAREHOLDERS' EQUITY:
Convertible preferred stock, $1 par value,
5,000,000 shares authorized, 0 and 13,678
shares issued and outstanding at March 31,
2003 and December 31, 2002, respectively 0 13,678
Common stock, $.01 par value, 100,000,000
shares authorized, 15,244,532 and
13,989,329 shares issued and outstanding
at March 31, 2003 and December 31, 2002,
respectively 152,445 139,893
Warrants outstanding 16,807,505 16,807,505
Additional paid-in capital 95,645,788 90,428,998
Accumulated other comprehensive income 192,366 310,869
Accumulated deficit (79,212,447) (73,654,354)
------------ ------------
Total shareholders' equity 33,585,657 34,046,589
------------ ------------
Total liabilities and shareholders' equity $ 38,192,629 $ 37,845,970
============ ============
The accompanying notes are an integral part of these statements.
3
PARKERVISION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31, March 31,
2003 2002
------------ ------------
Product revenue $ 1,455,516 $ 2,722,422
Support and other services revenue 304,654 303,585
------------ ------------
Net revenues 1,760,170 3,026,007
------------ ------------
Cost of goods sold - products 921,538 1,443,035
Cost of goods sold - support and other services 272,716 309,498
------------ ------------
Total cost of goods sold 1,194,254 1,752,533
------------ ------------
------------ ------------
Gross margin 565,916 1,273,474
------------ ------------
Research and development expenses 4,259,750 3,449,456
Marketing and selling expenses 871,990 712,296
General and administrative expenses 1,173,671 1,041,673
Other expense 0 7,270
------------ ------------
Total operating expenses, net 6,305,411 5,210,695
------------ ------------
Loss from operations $ (5,739,495) $ (3,937,221)
Interest and other income 181,402 282,300
------------ ------------
Net loss $ (5,558,093) $ (3,654,921)
============ ============
Basic and diluted net loss per common share $ (0.39) $ (0.26)
============ ============
The accompanying notes are an integral part of these statements.
4
PARKERVISION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
-----------------------------
2003 2002
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,558,093) $ (3,654,921)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and patent amortization 743,365 710,441
Amortization of premium on investments 44,838 69,999
Provision for obsolete inventories 75,000 75,000
Stock compensation 393,096 402,943
Gain on sale of investments (105,523) (12,788)
Loss on sale of equipment 0 7,275
Changes in certain operating assets and liabilities:
Accounts receivable, net 523,623 (930,324)
Inventories 164,115 (723,268)
Prepaid, interest receivable and other assets 120,589 (269,279)
Accounts payable and accrued expenses 879,091 571,660
Deferred revenue (71,500) (346,584)
------------ ------------
Total adjustments 2,766,694 (444,925)
------------ ------------
Net cash used in operating activities (2,791,399) (4,099,846)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments available for sale (3,023,065) (1,335,163)
Proceeds from sale of investments 7,779,984 3,766,774
Purchase of property and equipment (341,897) (128,711)
Proceeds from sale of equipment 0 7,200
Payment for patent costs and other assets (232,927) (306,407)
------------ ------------
Net cash provided by investing activities 4,182,095 2,003,693
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 5,064,915 0
------------ ------------
Net cash provided by financing activities 5,064,915 0
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
6,455,611 (2,096,153)
CASH AND CASH EQUIVALENTS, beginning of period 1,087,033 4,563,535
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 7,542,644 $ 2,467,382
============ ============
The accompanying notes are an integral part of these statements.
5
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ACCOUNTING POLICIES
-------------------
The accompanying unaudited consolidated financial statements of
ParkerVision, Inc. and subsidiary (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. All normal and recurring adjustments which, in the
opinion of management, are necessary for a fair presentation of the
financial condition and results of operations have been included. Operating
results for the three month period ended March 31, 2003 are not necessarily
indicative of the results that may be expected for the year ending December
31, 2003.
These interim consolidated financial statements should be read in
conjunction with the Company's latest Annual Report on Form 10-K for the
year ended December 31, 2002. There have been no changes in accounting
policies from those stated in the Annual Report on Form 10-K for the year
ended December 31, 2002.
COMPREHENSIVE INCOME. The Company's other comprehensive income is comprised
of net unrealized gains (losses) on investments available-for-sale which
are included in accumulated other comprehensive income in the consolidated
balance sheets. The Company's other comprehensive loss for the three-month
periods ended March 31, 2003 and 2002 was $(118,503) and $(233,709),
respectively. The Company's total comprehensive loss for the three-month
periods ended March 31, 2003 and 2002 was $(5,676,596) and $(3,888,630),
respectively.
CONSOLIDATED STATEMENTS OF CASH FLOWS. The Company paid no cash for income
taxes or interest for the three month periods ended March 31, 2003 and
2002.
WARRANTY COSTS
For camera products and related accessories, the Company warrants against
defects in workmanship and materials for approximately one year. For PVTV
systems, the Company warrants against software bugs and defects in
workmanship and material for a period of ninety days from the site
commissioning date. Estimated costs related to warranties are accrued at
the time of revenue recognition and are included in cost of sales. The
Company offers extended service and support contacts on its PVTV automated
production systems. A reconciliation of the changes in the aggregate
product warranty liability for the three month period ended March 31, 2003
is as follows:
Warranty Reserve
Debit/(Credit)
------------------
Balance at the beginning of the period $(248,230)
Accruals for warranties issued during the period (14,646)
Accruals related to pre-existing warranties (including
changes in estimates) 0
Settlements made (in cash or in kind) during the year 7,105
---------
Balance at the end of the period $(255,771)
=========
6
A reconciliation of the changes in the aggregate deferred revenue from
extended service contracts for the three month period ended March 31, 2003
is as follows:
Deferred Revenue
from Extended
Service Contracts
Debit/(Credit)
-----------------
Balance at the beginning of the period $(383,704)
Accruals for contracts issued during the period (125,245)
Revenue recognized during the period 147,877
---------
Balance at the end of the period $(361,072)
=========
ACCOUNTING FOR STOCK BASED COMPENSATION. At March 31, 2003, the Company has
two stock-based employee compensation plans, which are accounted for under
the recognition and measurement principles of APB Opinion No. 25,
"Accounting for Stock Issued to Employees", and related Interpretations. No
stock-based employee compensation cost is reflected in net income, as all
options granted under those plans had an exercise price equal to the market
value of the underlying common stock on the date of the grant. The
following table illustrates the effect on the net loss and loss per share
if the Company had applied the fair value recognition provisions of FASB
Statement No. 123, "Accounting for Stock-Based Compensation" to stock-based
employee compensation.
Three months ended
---------------------------
March 31, March 31,
2003 2002
----------- -----------
Net Loss, as reported $(5,558,093) $(3,654,921)
Deduct: Total stock-based employee
compensation expense determined under fair
value based method for all awards, net of
related tax effects (3,606,019) (4,657,238)
----------- -----------
Pro Forma net loss (9,164,112) (8,312,159)
=========== ===========
Basic Net Loss Per Share: As Reported $ (.39) $ (.26)
=========== ===========
Pro Forma $ (.65) $ (.60)
=========== ===========
RECLASSIFICATIONS. Certain reclassifications have been made to the 2002
financial statements in order to conform to the 2003 presentation.
2. LIQUIDITY
---------
The Company has made substantial investment in developing the technologies
for its products, the returns on which are dependent upon the generation
and realization of future revenues. The Company has incurred losses from
operations and negative cash flows in every year since inception and has
utilized the proceeds from the sale of its equity securities to fund
operations. For the quarter ended March 31, 2003, the Company incurred a
net loss of approximately $5.6 million and
7
negative cash flows from operations of approximately $2.8 million. At March
31, 2003, the Company had an accumulated deficit of approximately $79.2
million and working capital of approximately $18.5 million. Although
management expects to generate additional revenues in 2003 from initial
sales of its wireless products, it does not anticipate that these revenues
will be sufficient to offset the expenses from continued investment in its
video and wireless product development and marketing activities. Therefore,
management expects operating losses and negative cash flows to continue in
2003 and possibly beyond. As more fully discussed in Note 9, the Company
has obtained equity financing that it believes, along with existing
financial resources, will allow for sufficient liquidity to fund operations
through at least fiscal 2003.
The long-term continuation of the Company's business plans is dependent
upon generation of sufficient revenues from its products to offset
expenses. In the event that the Company does not generate sufficient
revenues, it will be required to obtain additional funding through public
or private financing and/or reduce certain discretionary spending.
Management believes certain operating costs could be reduced if working
capital decreases significantly and additional funding is not available. In
addition, the Company currently has no outstanding long-term debt
obligations. Failure to generate sufficient revenues, raise additional
capital and/or reduce certain discretionary spending could have a material
adverse effect on the Company's ability to achieve its intended long-term
business objectives.
3. LOSS PER SHARE
--------------
Basic loss per share is determined based on the weighted average number of
common shares outstanding during each period. 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 outstanding for the three-month periods
ended March 31, 2003 and 2002 is 14,076,966 and 13,917,620, respectively.
The total number of options and warrants to purchase 6,715,095 and
5,988,799 shares of common stock that were outstanding at March 31, 2003
and 2002, respectively, were excluded from the computation of diluted
earnings per share as the effect of these options and warrants would have
been anti-dilutive.
4. INVENTORIES:
------------
Inventories consist of the following:
March 31, December 31,
2003 2002
------------ ------------
Purchased materials $ 1,601,189 $ 2,010,578
Work in process 79,673 74,707
Finished goods 885,653 672,356
Spare parts and demonstration inventory 1,167,771 1,165,545
------------ ------------
3,734,286 3,923,186
Less allowance for inventory obsolescence (882,517) (832,302)
------------ ------------
$ 2,851,769 $ 3,090,884
============ ============
8
5. OTHER ASSETS:
-------------
Other assets consists of the following:
March 31, 2003
----------------------------------------------
Gross
Carrying Accumulated
Amount Amortization Net Value
------------ ------------ ------------
Patents and copyrights $ 9,844,755 $ (2,146,340) $ 7,698,415
Prepaid licensing fees 1,080,000 (174,167) 905,833
Other intangible assets 364,830 (364,830) 0
Deposits and other 554,820 0 554,820
------------ ------------ ------------
$ 11,844,405 $ (2,685,337) $ 9,159,068
============ ============ ============
December 31, 2002
----------------------------------------------
Gross
Carrying Accumulated
Amount Amortization Net Value
------------ ------------ ------------
Patents and copyrights $ 9,611,828 $ (1,981,020) $ 7,630,808
Prepaid licensing fees 1,080,000 (120,167) 959,833
Other intangible assets 364,830 (339,489) 25,341
Deposits and other 254,821 0 254,821
------------ ------------ ------------
$ 11,311,479 $ (2,440,676) $ 8,870,803
============ ============ ============
6. CONCENTRATIONS OF CREDIT RISK
-----------------------------
For the quarter ended March 31, 2003, three broadcast customers accounted
for an aggregate of approximately 59% of the Company's total revenues. Four
broadcast customers accounted for approximately 71% of accounts receivable
at March 31, 2003. For the quarter ended March 31, 2002, two broadcast
customers, accounted for an aggregate of approximately 65% of the Company's
total revenues. Two broadcast customers accounted for approximately 82% of
accounts receivable at March 31, 2002. The Company closely monitors
extensions of credit and has never experienced significant credit losses.
9
7. BUSINESS SEGMENT INFORMATION
----------------------------
The Company's segments include the Video Products Division ("Video
Division") and the Wireless Technology Division ("Wireless Division").
Segment results are as follows (in thousands):
Three months ended
-----------------------------
March 31, March 31,
2003 2002
------------ ------------
NET SALES:
Video Division $ 1,760 $ 3,026
Wireless Division 0 0
------------ ------------
Total net sales $ 1,760 $ 3,026
============ ============
LOSS FROM OPERATIONS:
Video Division $ (1,040) $ (175)
Wireless Division (4,699) (3,762)
------------ ------------
Total loss from operations $ (5,739) $ (3,937)
============ ============
DEPRECIATION:
Video Division $ 128 $ 136
Wireless Division 371 357
------------ ------------
Total depreciation $ 499 $ 493
============ ============
AMORTIZATION OF IDENTIFIABLE
INTANGIBLES AND OTHER ASSETS:
Video Division $ 33 $ 29
Wireless Division 211 188
------------ ------------
Total amortization $ 244 $ 217
============ ============
CAPITAL EXPENDITURES:
Video Division $ 58 $ 53
Wireless Division 284 70
Corporate 0 6
------------ ------------
Total capital expenditures $ 342 $ 129
============ ============
March 31, December 31,
2003 2002
------------ ------------
ASSETS:
Video Division $ 6,285 $ 7,052
Wireless Division 13,322 13,758
Corporate 18,586 17,036
------------ ------------
Total assets $ 38,193 $ 37,846
============ ============
10
Corporate assets consist of the following:
March 31, December 31,
2003 2002
------------ ------------
Cash and investments $ 16,596 $ 14,955
Interest and other receivables 77 187
Prepaid expenses 1,021 1,267
Property and equipment, net 392 427
Other assets 500 200
------------ ------------
Total assets $ 18,586 $ 17,036
============ ============
8. STOCK OPTIONS
-------------
For the three month period ended March 31, 2003, the Company granted stock
options under the 1993 Stock Plan (the "1993 Plan") to purchase an
aggregate of 29,250 shares of its common stock at exercise prices ranging
from $4.87 to $5.64 per share in connection with hiring and retention of
employees. These options vest ratably over five years and expire five years
from the date they become vested.
The Company also granted stock options under the 2000 Performance Equity
Plan (the "2000 Plan") to its non-employee directors to purchase an
aggregate of 172,500 shares of its common stock at an exercise price of
$7.72 per share. Options to purchase 122,500 shares are immediately vested
and options to purchase the remaining 50,000 shares vest in December 2003.
These options expire ten years from the date of the grant.
As of March 31, 2003 options to purchase 2,781,540 and 438,506 shares of
common stock were available for future grants under the 2000 and 1993
Plans, respectively.
9. STOCK AUTHORIZATION AND ISSUANCE
--------------------------------
PREFERRED STOCK
In March 2000, the Company issued 79,868 shares of Series D Preferred
Stock, $1 par value, $25 stated value, for the acquisition of substantially
all of the assets of STI. The Company also issued an aggregate of 34,151
shares of Series A, B, and C Preferred Stock, $1 par value, $25 stated
value as signing bonuses and compensation under employment contracts for
certain employees of STI.
In March 2001, the Series A and D preferred shares were converted to
approximately 86,000 shares of common stock. In March 2002, the Series B
shares were converted to approximately 16,600 shares of common stock. The
Series C Preferred Stock was automatically converted to approximately
73,000 shares of common stock in March 2003.
COMMON STOCK
On March 26, 2003, the Company received $5,078,200 from the sale of an
aggregate of 1,154,437 shares of its common stock in private placement
transactions pursuant to Section 4(2) of the Securities Act of 1933, as
amended. These shares constitute approximately 7.6% of the Company's
outstanding common stock on an after-issued basis. Leucadia National
Corporation and another
11
third party purchased 659,387 shares of common stock at a price of $3.91
per share. The Parker family, including CEO Jeffrey Parker, purchased
495,050 shares of common stock at the market price of $5.05 per share.
10. LEGAL PROCEEDINGS
-----------------
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. Although occasional adverse decisions or
settlements may occur, the Company believes that the final disposition of
such matters will not have a material adverse effect on its financial
position, results of operations or liquidity.
11. SUBSEQUENT EVENT
----------------
On April 28, 2003, the Company entered into an agreement with a corporate
third party to conceive and develop new business opportunities for the
Company. In consideration of the services to be rendered over a three-year
term, the Company issued 250,000 shares of restricted common stock, under
the terms of the 2000 Performance Equity Plan with an aggregate value of
approximately $2,400,000, or $9.60 per share. The shares are fully vested
and non-forfeitable, and they are subject to a sales limitation of a
maximum of 83,334 shares per year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward-Looking Statements
- --------------------------
When used in this Form 10-Q and in future filings by the Company with the
Securities and Exchange Commission, the words or phrases "will likely result",
"management expects" or "Company expects", "will continue", "is anticipated",
"estimated" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Readers are cautioned not to place undue reliance on such
forward-looking statements, each of which speaks only as of the date made. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected, including the timely development and acceptance of new
products, sources of supply and concentration of customers. The Company has no
obligation to publicly release the results of any revisions, which may be made
to any forward-looking statements to reflect, anticipated events or
circumstances occurring after the date of such statements.
Results of Operations for Each of the Three-Month Periods Ended March 31, 2003
- --------------------------------------------------------------------------------
and 2002
- --------
Revenues
- --------
Revenues for the three months ended March 31, 2003 decreased by $1,265,837 as
compared to the same period in 2002. This decrease was due to a decrease in
camera revenue of approximately $138,000, and a decrease in PVTV(TM) system
revenue of approximately $1,128,000. The number of camera and PVTV systems sold
and the average selling price per system for the three month periods were as
follows:
Average Selling
Number of Systems Sold Price per System
------------------------ ------------------------
March 31, March 31, March 31, March 31,
2003 2002 2003 2002
---------- ---------- ---------- ----------
PVTV SYSTEMS 4 5 $271,000 $442,000
CAMERA SYSTEMS 21 79 $ 17,800 $ 7,000
12
The decrease in PVTV revenues for the three month period was primarily due to
the mix in products sold, resulting in a decline in the average selling price
per system. For the three month period ended March 2002, the systems sold were
primarily dual configuration systems for higher broadcast markets. In
comparison, for the period ended March 2003, all of the systems sold were single
configuration systems which have a substantially lower selling price per system.
Camera revenues declined due to a decline in the number of units sold, offset by
an increase in the average selling price per system. The decline in unit sales
is due to the discontinuation of the Company's single chip product line late in
2002, offset somewhat by an increase in sales of the Company's higher-end three
chip camera systems. The increase in average selling price per system is
reflective of the shift in sales to the higher priced three chip systems.
Gross Margin
- ------------
For the three-month periods ended March 31, 2003 and 2002, gross margins based
on aggregate revenues as a percentage of sales were 32.2% and 42.1%,
respectively. The decrease in margin from period to period was primarily due to
the sale of lower margin products and the absorption of relatively fixed
overhead costs over a lower production volume in the first quarter of 2003.
Research and Development Expenses
- ---------------------------------
The Company's research and development expenses for the three-month period ended
March 31, 2003 increased $810,294 as compared to the same period in 2002. This
increase is primarily due to increased wireless chip development expenses
including foundry costs, increased personnel and increased third-party
development fees.
Marketing and Selling Expenses
- ------------------------------
Marketing and selling expenses increased $159,694 for the three-month period
ended March 31, 2003 as compared to the same period in 2002. This increase was
primarily due to an increase in personnel in the wireless division in late 2002
and early 2003, and increases in advertising, promotional expenses and trade
show expenses in the video division.
General and Administrative Expenses
- -----------------------------------
For the three-month period ended March 31, 2003, general and administrative
expenses increased $131,998 over the same period in 2002. This increase was
primarily due to increases in insurance premiums.
Interest and Other Income
- -------------------------
Interest and other income consist of interest earned on the Company's
investments, and net gains recognized on the sale of investments. Interest and
other income for the three-month period ended March 31, 2003 decreased $100,898
from the same period in 2002. This decrease is primarily due to the continued
use of cash and investments to fund operations.
Loss and Loss per Share
- -----------------------
The Company's net loss increased by $1,903,172 or $0.13 per common share from
the three-month period ended March 31, 2003 to the same period in 2002. This
increase was largely due to a decrease in gross margin of approximately $700,000
from decreased revenues, along with increases in operating expenses of
approximately $1.1 million and decreases in interest and other income of
approximately $100,000.
13
Backlog
- -------
At March 31, 2003, the Company had a backlog of approximately $550,000 which
consists primarily of PVTV systems and related services with expected delivery
dates during the second quarter of 2003.
Liquidity and Capital Resources
- -------------------------------
At March 31, 2003, the Company had working capital of $18.5 million, a decrease
of $0.6 million from $19.1 million at December 31, 2002. This decrease is
primarily due to the continued use of working capital to fund operations, offset
somewhat by equity funding received in March 2003. The Company's future business
plans call for continued investment in research and development and sales and
marketing costs related to its video and wireless technologies. Although
management may expect to generate revenues in 2003 from initial sales of its
wireless products, it does not anticipate that the potential revenues together
with the video related revenues will be sufficient to offset the expenses from
the continued investment in its video and wireless product development and sales
and marketing activities. Therefore, management expects operating losses and
negative cash flows to continue in 2003 and possibly beyond. The Company intends
to utilize its working capital to fund its future business plans. The Company's
principal source of liquidity at March 31, 2003 consisted of approximately $16.6
million in cash, cash equivalents and short-term investments.
On March 27, 2003, the Company received $5,078,200 from the sale of an aggregate
of 1,154,437 shares of its common stock in private placement transactions
pursuant to Section 4(2) of the Securities Act of 1933, as amended. These shares
constitute approximately 7.6% of the Company's outstanding common stock on an
after-issued basis. Leucadia National Corporation and another third party
purchased 659,387 shares of common stock at a price of $3.91 per share. The
Parker family, including CEO Jeffrey Parker, purchased 495,050 shares of common
stock at the market price of $5.05 per share.
The Company believes that its current capital resources together with the
proceeds of the March 2003 equity financing will be sufficient to support the
Company's liquidity requirements at least through fiscal 2003. The long-term
continuation of the Company's business plans is dependent upon generation of
sufficient revenues from its products to offset expenses. In the event that the
Company does not generate sufficient revenues, it will be required to obtain
additional funding through public or private financing and/or reduce certain
discretionary spending. Management believes certain operating costs could be
reduced if working capital decreases significantly and additional funding is not
available. In addition, the Company currently has no outstanding long-term debt
obligations. Failure to generate sufficient revenues, raise additional capital
and/or reduce certain discretionary spending could have a material adverse
effect on the Company's ability to achieve its intended long-term business
objectives.
ITEM 4. CONTROLS AND PROCEDURES.
Based on the evaluation conducted by the Chief Executive Officer ("CEO") and
Chief Accounting Officer ("CAO"), as of a date within 90 days of the filing date
of this quarterly report ("Evaluation Date"), of the effectiveness of the
Company's disclosure controls and procedures, the CEO and CAO concluded that, as
of the Evaluation Date, (1) there were no significant deficiencies or material
weaknesses in the Company's disclosure controls and procedures, (2) there were
no significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the Evaluation Date and (3)
no corrective actions were required to be taken.
14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. Although occasional adverse decisions or
settlements may occur, the Company believes that the final disposition of such
matters will not have a material adverse effect on its financial position,
results of operations or liquidity.
ITEM 2. CHANGES IN SECURITIES.
Sales of Unregistered Securities
- --------------------------------
Consideration received and Exemption If option, warrant or
description of underwriting or from convertible security,
Date of sale Title of Number other discounts to market price registration terms of exercise or
security sold afforded to purchasers claimed conversion
- --------------------------------------------------------------------------------------------------------------------
1/03 - Options to 29,250 Option granted - no 4(2) Expire five years from
3/03 purchase consideration received by date vested, options
common stock Company until exercise vest ratably over five
granted to years at exercise prices
employees ranging from $4.87 to
$5.64 per share
1/15/03 Options to 122,500 Option granted - no 4(2) Options are fully vested
purchase consideration received by at an exercise price of
common stock Company until exercise $7.72 per share and
granted to expire ten years from
an officer the date of grant
and director
2/3/03 Options to 50,000 Option granted - no 4(2) Expire ten years from
purchase consideration received by the date of grant, vest
common stock Company until exercise on 12/31/03 at an
granted to a exercise price of $7.72
director
3/26/03 Common Stock 659,387 $3.91 per share 4(2) N/A
3/26/03 Common Stock 495,050 $5.05 per share 4(2) N/A
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable
15
ITEM 5. OTHER INFORMATION. Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS.
10.1 Strategic Collaboration Agreement between Peter Halmos and
Sons, Inc. and the Registrant
99.1 Certification pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2003
(B) REPORTS ON FORM 8-K. Not applicable
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ParkerVision, Inc.
Registrant
May 9, 2003 By: /s/ Jeffrey L. Parker
---------------------
Jeffrey L. Parker
Chairman and Chief Executive Officer
May 9, 2003 By: /s/ Cynthia L. Poehlman
-----------------------
Cynthia L. Poehlman
Chief Accounting Officer
17
FORM OF CERTIFICATION
PURSUANT TO RULE 13A-14 AND 15D-14
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
CERTIFICATIONS
I, Jeffrey L. Parker, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of ParkerVision, Inc.;
2. based on my knowledge, this Quarterly Report does not contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this Quarterly
Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Quarterly Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this Quarterly Report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this Quarterly Report is being
prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days of the filing date of this Quarterly
Report (the "Evaluation Date"); and
(c) presented in this Quarterly Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize, and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
Quarterly Report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 9, 2003 /s/ Jeffrey L. Parker
----------- ---------------------
Name: Jeffrey L. Parker
Title: Chairman and Chief Executive Officer
18
FORM OF CERTIFICATION
PURSUANT TO RULE 13A-14 AND 15D-14
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
CERTIFICATIONS
I, Cynthia L. Poehlman, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of ParkerVision, Inc.;
2. based on my knowledge, this Quarterly Report does not contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this Quarterly
Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Quarterly Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this Quarterly Report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this Quarterly Report is being
prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days of the filing date of this Quarterly
Report (the "Evaluation Date"); and
(c) presented in this Quarterly Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize, and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
Quarterly Report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 9, 2003 /s/ Cynthia L. Poehlman
----------- -----------------------
Name: Cynthia L. Poehlman
Title: Chief Accounting Officer
19