UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
1O-K
|
(Mark
One)
|
|
(X)
ANNUAL REPORT PURSUANT TO SECTION 13 OR
|
|
|
15(d)
OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the fiscal year ended December 31, 2006
(
)
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d)
OF
THE SECURITIES ACT OF 1934
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
of Incorporation)
|
(I.R.S.
Employer ID No.)
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7915
Baymeadows Way, Suite 400
Jacksonville,
Florida 32256
(904)
737-1367
(Address
of principal executive offices)
Securities
registered pursuant to Section 12(b) of the Act:
None
Securities
registered pursuant to Section 12(g) of the Act:
COMMON
STOCK, $.01 PAR VALUE
COMMON
STOCK RIGHTS
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined
in
Rule 405 of the Securities Act. Yes __ No
X
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes __ No
X
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 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 if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not 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-K or any amendment to
this
Form 10-K (X).
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated file (as defined in Rule 12b-2 of the
Exchange Act).
|
Large
accelerated filer ___
|
Accelerated
filer X
|
Non-accelerated
filer __
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
Yes
__ No
X
As
of
June 30, 2006, the aggregate market value of the Issuer's Common Stock, $.01
par
value, held by non-affiliates of the Issuer was approximately $171,972,947
(based upon $9.10 share closing price on that date, as reported by The Nasdaq
Global Market).
As
of
February 28, 2007, 24,386,507 shares of the Issuer's Common Stock were
outstanding.
Table
of
Contents
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Forward
Looking Statements
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4
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PART
I
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Item
1. Business
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4
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Item
1A. Risk Factors
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9
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Item
1B. Unresolved Staff Comments
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13
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Item
2. Properties
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13
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Item
3. Legal Proceedings
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13
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Item
4. Submission of Matters to a Vote of Security Holders
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13
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PART
II
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|
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Item
5. Market for the Registrant’s Common Equity, Related
Stockholder
Matters
and Issuer Purchases of Equity Securities
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13
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Item
6. Selected Financial Data
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16
|
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of
Operations
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16
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Item
7A. Quantitative and Qualitative Disclosures About Market
Risk
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25
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Item
8. Consolidated Financial Statements and Supplementary
Data
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26
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Item
9. Changes in and Disagreements with Accountants on Accounting and
Financial
Disclosure
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52
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Item
9A. Controls and Procedures
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53
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Item
9B. Other Information
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53
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PART
III
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Item
10. Directors, Executive Officers and Corporate Governance
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54
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Item
11. Executive Compensation
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57
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Item
12. Security Ownership of Certain Beneficial Owners and Management
and
Related
Stockholder Matters
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72
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Item
13. Certain Relationships and Related Transactions
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74
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Item
14. Principal Accountant Fees and Services
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75
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PART
IV
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Item
15. Exhibits, Financial Statement Schedules and Reports on Form
8-K
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75
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SIGNATURES
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80
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SCHEDULES
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81
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INDEX
TO EXHIBITS
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82
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Forward-Looking
Statements
We
believe that it is important to communicate our future expectations to our
shareholders and to the public. This report contains forward-looking statements,
including, in particular, statements about our future plans, objectives and
expectations under the headings “Item 1. Business” and “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in
this report. When used in this Form 10-K and in future filings by ParkerVision,
Inc., with the Securities and Exchange Commission, the words or phrases “will
likely result”, “management expects”, “we expect”, “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. Examples of such risks and uncertainties
include the timely development and commercial acceptance of new products and
technologies, reliance on key business and sales relationships, and reliance
on
our intellectual property. We have 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.
PART
I
Item
1. Business
Description
of Business
ParkerVision,
Inc. (the “Company” or “we”) was incorporated under the laws of the state of
Florida on August 22, 1989. We operate in the business of wireless technologies
and products.
We
are in
the business of designing, developing and marketing our proprietary wireless
radio frequency (“RF”) technologies for use in semiconductor circuits for
wireless radio applications. Our immediate market focus is on securing licensing
agreements for our Direct2Power™ or d2p™ RF transmit chain technology. Our
target customers are top tier mobile handset manufacturers and their key
semiconductor suppliers. We believe our proprietary wireless technologies embody
significant industry advances that can be commercialized in the near term.
From
late
2003 through June of 2005, we manufactured and sold branded wireless networking
products that incorporated our proprietary technology through retail and
internet retail distribution channels. All of our revenues from continuing
operations to date were generated from these retail products. In June 2005,
we
exited our manufacturing and retail sales activities in pursuit of our
longer-term business strategy of establishing relationships with original
equipment manufacturers (“OEMs”) for the incorporation of our technology into
their products. Our decision to exit the retail activities was precipitated
by
advances in our wireless technology resulting in increased interest from OEM
prospects, specifically in the mobile handset market. We determined that the
investment required to increase brand awareness, introduce new product
offerings, and expand the distribution channel for retail products, would
detract from our ability to capitalize on OEM opportunities.
Exiting
the retail business resulted in charges to our 2005 second quarter operating
results of approximately $4.7 million. During the second half of 2005, we sold
our remaining finished product inventories, including those products reclaimed
from retail and distribution channel partners, to a wholesaler. We also entered
into a consignment arrangement for the liquidation of our remaining raw
materials inventory and liquidated our manufacturing and prototype facility
assets and other property and equipment utilized in retail business activities.
As of December 31, 2005, we had substantially completed our retail exit
activities.
In
parallel with our retail exit activities in the second half of 2005, we began
demonstrating our d2p wireless technology to prospective OEM customers in the
mobile handset industry using semi-integrated circuits. At the end of 2005,
we
completed our first d2p integrated circuit (“IC”) which allowed us to
demonstrate the advantages of our technology and its manufacturability in
silicon. Throughout 2006, we continued to further integrate our technology
in
silicon while cultivating potential customer relationships. Our sales-related
activities in 2006 included prototype demonstrations of our increasingly
integrated D2P platform, support of in-depth technical due-diligence by
prospective customers, analysis of prospective customer product plans, delivery
of initial proposals and terms, and, ultimately, negotiations of proposed
business relationships. In addition, early in 2006, we expanded our target
customer base to include not only the top tier mobile handset OEM providers
but
also their key component suppliers. In the second half of 2006, we also
initiated a campaign targeted at the wireless network providers who are key
influencers to the OEMs in the mobile handset industry. We are also exploring
potential business arrangements with one or more target customers outside the
mobile handset industry who may have applications for our technology that are
in
concert with our development efforts in the mobile handset space.
Our
current business strategy is to become a provider of intellectual property
through licensing arrangements which will enable others to design and
manufacture ICs incorporating our proprietary wireless technology. Based on
the
current status of business negotiations, we believe our first licensing
arrangements will be realized in the near term.
To
date,
we have generated no revenue from licensing of our wireless RF transmit
technologies. Our ability to generate revenues sufficient to offset costs is
subject to our ability to successfully market our intellectual property for
design into widely deployed products that are manufactured by others. We believe
our technology has substantial advantages over competing technologies,
especially in the third generation, or 3G, mobile handset market and generations
that are likely to evolve beyond 3G, such as 3.9G and 4G mobile handset
standards and applications. Our unique technology processes the RF waveform
in a
more optimal manner than existing technologies, thereby allowing OEMs to create
handsets that have extended battery life, more easily incorporate multiple
air
interface standards and frequencies in smaller form factors, and reduce
manufacturing costs. Our technology provides such attractive benefits, in part,
because its unique integrated circuit architecture enables efficient digital
circuit processing, eliminating many of the limitations of legacy analog
processing. In addition, our technology has proven to be attractive to the
network providers as it can increase capacity, coverage and data throughput
of
their mobile networks
.
Recent
Developments
Sale
of Equity Securities to Fund Continuing Operations
On
February 23, 2007, we completed the sale of an aggregate of 992,441 shares
of
our common stock to a limited number of
domestic
institutional
and other investors in a private placement transaction pursuant to offering
exemptions under the Securities Act of 1933. The shares, which represent 4.1%
of
our outstanding common stock on an after-issued basis, were sold at a price
of
$8.50 per share, for net proceeds of approximately $8.4 million. The net
proceeds from this transaction will be used for general working capital
purposes.
We
will
register the Common Stock issued in the private offering for re-offer and
re-sale by the investors. We have committed to file the registration statement
within 45 days of closing and to cause the registration statement to become
effective on or prior to the earlier of (i) the fifth trading day following
the
date that we are notified by the SEC that the registration statement will not
be
reviewed or is no longer subject to review, and (ii) 120 days after the closing
date. If the Common Stock is not registered for resale within those time
periods, we will pay liquidated damages in the amount of one percent of the
amount invested for each 30-day period (pro rated) until the filing or
effectiveness of the registration statement, up to a maximum of ten percent
of
the gross proceeds.
Technology
and Products
Our
wireless technologies, collectively referred to as Energy Signal Processing
or
ESP™, represent unique, proprietary methods for processing RF waveforms in
wireless applications. The technology applies to the transmit (baseband data
to
an RF carrier signal) and receive (RF carrier signal to baseband data) functions
of a radio transceiver. The transmit portion of the technology is called
Direct2Power, or d2p, and enables the transformation of a digital baseband
signal to an RF carrier waveform, at the desired power output level, in a single
unified operation. The receiver portion of the technology is called
Direct2Data™, or d2d™, and enables the direct conversion of an RF carrier to
baseband data signal. We are currently focused solely on commercialization
of
our d2p technology solutions.
We
have
completed several engineering prototypes of our d2p-based ICs targeted at mobile
handset applications. These ICs were produced using a Silicon Germanium (SiGe)
process through a fabrication relationship with IBM Microelectronics (“IBM”).
These ICs are utilized to verify that our technology can be highly integrated
in
silicon and to demonstrate the benefits of the technology to OEM target
customers. The portion of the IC that embodies the core RF technology is not
customer-specific and therefore has been highly integrated in prototype ICs.
We
anticipate that OEM customers will engage us to customize the implementation
of
the core technology based on their specific interface and product requirements.
Our current prototypes support multi-band (meaning multiple frequencies) and
multi-mode (meaning multiple cellular standards and corresponding modulation
formats) functionality. Our ICs support multiple bands of cellular and PCS
frequencies and support the current and emerging cellular standards including
GSM/EDGE, CDMA, W-CDMA, and HSUPA. We are also able to demonstrate 802.16e
WiMax
standards using PCS frequencies with our current ICs.
Our
d2d
(receiver) technology was first introduced in the form of transceiver ICs for
the wireless local area networking (“WLAN”) market in 2002. In 2003, we began
marketing ICs to OEMs and original design manufacturers (“ODM”s) who manufacture
and sell WLAN products or application modules that incorporate WLAN
capabilities. We found that the unique nature of the technology and related
design requirements, the features that OEMs were interested in for volume WLAN
applications, and the lack of brand recognition in the marketplace hindered
our
marketing efforts. As a result, in 2003, we initiated a business strategy of
developing our own d2d-based WLAN products for marketing to end-users. We
believe this strategy would not only generate initial product revenue but would
also provide a proof of concept to OEMs and ODMs of the underlying technology.
In addition, we believed the development of finished products enabled better
understanding of the manufacturing requirements, design interface needs and
other requirements which allows refinement of designs in subsequent generations
of ICs.
In
the
fourth quarter of 2003, we introduced our first d2d-based WLAN end-user products
for wireless Internet data networking applications. These products included
a
wireless local area networking card, designed for use with laptop computers,
a
wireless universal serial bus adaptor for use with desktop computers and a
wireless four-port router for networking applications. All of our initial
products were compliant with the 802.11b industry standard for WLAN
communications. During 2004 and early 2005, we produced WLAN products for retail
distribution and our product development efforts focused on expanding the retail
offering to the 802.11g standard as well as to cordless telephones utilizing
the
d2d technology. In June 2005, we ceased production and development efforts
for
our WLAN end-user products and exited our retail business activities in order
to
focus exclusively on OEM opportunities, particularly with regard to our transmit
technology implementation which we believe has broad adoption potential in
the
mobile handset market.
We
anticipate that our receiver technology will also be ultimately adopted in
the
mobile handset market, however we estimate its adoption will lag behind the
adoption of our transmit technology by at least twelve to eighteen months.
Marketing
and Sales
Our
marketing and sales activities are currently focused on top tier OEMs that
design and/or manufacture mobile handsets, and the key semiconductor suppliers
to those OEMs. We are engaged in discussions with companies that, based on
industry data, collectively represent over 75% of the handset shipments
worldwide. We are also exploring potential business arrangements with one or
more target customers outside the mobile handset industry to the extent their
applications for our technology are complimentary to our efforts in the mobile
handset market. Our sales and sales support activities include prototype
demonstrations of both semi-integrated and highly integrated circuits that
showcase the benefits of the technology; support of detailed technology
due-diligence discussions and testing; analysis of potential customer product
roadmaps and integration alternatives; and negotiations of specific terms of
potential business relationships.
We
believe the sales cycle, from the initial customer meeting to the consummation
of a business arrangement, is approximately 18-24 months. The length of the
sales cycle is a result of many factors, including the unique nature of our
technology; intense technology evaluation and due-diligence required based
on
the complex nature of radio frequency technology, in general, and the cellular
specifications, in particular; our lack of tenure in the cellular industry;
and
the variety of licensing implementations and integration decisions that must
be
evaluated by the customer in order to assess the specific value proposition
for
their needs. We believe our initial design wins will occur in the near term
and
furthermore, we believe our sales cycle with additional customers will shorten
significantly following initial adoption. Future sales cycles may be influenced
by the terms of our initial customers and our ability to expand internal
resources to support multiple customers.
Prior
to
June 2005, we promoted and sold our WLAN end-user products in the United States
and Canada through traditional retailers, online retailers, value-added
resellers (“VARs”) and direct through our own online store. In June 2005, we
exited our retail business activities to pursue OEM opportunities. The retail
exit included a reduction in retail sales and marketing staff and cessation
of
all retail marketing activities. We continued to work with our retail and
distribution partners throughout the balance of 2005 to facilitate returns
of
unsold product in the channel. We sold our remaining retail product inventory
to
a wholesaler and anticipate no further revenue from retail product
sales.
Competition
We
operate in a highly competitive industry against companies with substantially
greater financial, technical, and sales and marketing resources. Our transmit
technology, which is currently being marketed to mobile handset OEMs, faces
competition from incumbent providers of transmitters and power amplifiers
including companies such as RF Microdevices, Anadigics, Skyworks, Texas
Instruments, Freescale, Philips, and others. Each of our competitors, however,
also has the potential of becoming a licensee of our technology. We also compete
against RF engineering programs within the research and development
organizations of our target customers. To date, we are unaware of any competing
or emerging RF technologies that provide all the simultaneous benefits that
our
technology enables.
We
believe we can gain OEM adoption, and therefore compete, based on the
performance and cost advantages enabled by our unique circuit architecture,
as
supported by a solid and defensible intellectual property portfolio. Our
intellectual property offering is capable of being compliant with mobile
standards-based 3G requirements and can accept the same baseband data input
as
traditional or future offerings. In addition, we believe the improved power
efficiencies enabled by our technology provide a solution to an existing problem
in applications for 3G standards and beyond that the OEMs and wireless carriers
alike are seeking to solve.
Production
and Supply
Our
current business strategy is focused on licensing our intellectual property,
not
supply of ICs. As a result, the production capacity risk shifts to the OEM
and
its key semiconductor suppliers. We currently have a fabrication relationship
with IBM for the production of our d2p-based prototype ICs on a SiGe process.
We
believe IBM has sufficient capacity to meet our foreseeable needs. In addition,
our ICs can be produced using different materials and processes, if necessary,
to satisfy capacity requirements and/or customer preferences.
Discontinued
Operations
In
May
2004, we completed the sale of certain designated assets of our video division
to Thomson Broadcast & Media Solutions, Inc. and Thomson Licensing, SA
(collectively referred to as “Thomson”). The assets sold included the PVTV and
Cameraman products, services, patents, patent applications, trademarks,
tradenames and other intellectual property, inventory, specified design,
development and manufacturing equipment, and obligations under outstanding
contracts for products and services and other assets.
The
sales
price of the assets was approximately $13.4 million. We recognized a gain on
the
sale of discontinued operations in 2004 of approximately $11.2 million which
is
net of losses on the disposal of remaining assets related to the video
operations of approximately $0.6 million. We agreed not to compete with the
business of the video division for five years after the closing date. We also
agreed not to seek legal recourse against Thomson in respect of our intellectual
property that was transferred or should have been transferred if used in
connection with the video operations. Additionally, we indemnified Thomson
against intellectual property claims for an unlimited period of time, without
any minimum threshold, and with a separate maximum of $5,000,000. The operations
of our video business unit were classified as discontinued operations when
the
operations and cash flows of the business unit were eliminated from ongoing
operations. The prior years’ operating activities for the video business unit
have also been reclassified to “Gain from discontinued operations” in the
accompanying consolidated statement of operations.
8
Patents
and Trademarks
We
consider our intellectual property, including patents, patent applications
and
trademarks, to be significant to our competitive positioning. We have a
program
to file applications for and obtain patents, copyrights, and trademarks
in the
United States and in selected foreign countries where we believe filing
for such
protection is appropriate to establish and maintain our proprietary rights
in
our technology and products. As of December 31, 2006, we have obtained
44 U.S.
and 52 foreign patents related to our ESP technologies and have 94 patent
applications pending in the United States and other countries. In addition,
in
February 2007, we were granted our first United States patent specifically
related to our d2p transmit technology. We estimate the economic lives
of our
patents to be fifteen to twenty years.
Research
and Development
For
the
years ended December 31, 2006, 2005 and 2004, we spent approximately $9.5
million, $10.3 million, and $11.4 million, respectively, on research and
development for continuing operations. Our research and development efforts
have
been devoted to the development of RF technologies and related products.
Employees
As
of
December 31, 2006, we had 51 full-time employees, of which 28 are employed
in
engineering research and development and product operations, 10 in sales and
marketing, and 13 in executive management, finance and administration. Our
employees are not represented by a labor union. We consider our employee
relations satisfactory.
Available
Information and Access to Reports
We
file
our annual report on Form 10-K and quarterly reports on Forms 10-Q, including
amendments, as well as our proxy and other reports electronically with the
Securities and Exchange Commission (“SEC”). The SEC maintains an Internet site
(
http://www.sec.gov
)
where
these reports may be obtained at no charge. Copies of any materials filed with
the SEC may also be obtained from the SEC’s Public Reference Room at 100 F
Street, NE, Washington, DC 20549. Information on the operation of the SEC Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. Copies
of
these reports may also be obtained via the Company’s website
(http://www.parkervision.com) via the link “SEC filings”. This provides a direct
link to our reports on the SEC Internet site. We will provide copies of this
annual report on Form 10-K and the quarterly reports on Forms 10-Q, including
amendments, filed during the current fiscal year upon written request to
Investor Relations, 7915 Baymeadows Way, Suite 400, Jacksonville, Florida,
32256. These reports will be provided at no charge. In addition, exhibits may
be
obtained at a cost of $.25 per page plus $5.00 postage and handling.
Item
1A. Risk Factors
In
addition to other information in this Annual Report on Form 10-K, the following
risk factors should be carefully considered in evaluating our business because
such factors may have a significant impact on our business, operating results,
liquidity and financial condition. As a result of the risk factors set forth
below, actual results could differ materially from those projected in any
forward-looking statements.
9
We
have had a history of losses which may ultimately compromise our ability
to
implement our business plan and continue in operations.
We
have
had losses in each year since our inception in 1989, and continue to have
an
accumulated deficit which, at December 31, 2006, was $149.4 million. The
net
loss for 2006 was $15.8 million. To date, our technologies and products
have not
produced revenues sufficient to cover operating, research and development
and
overhead costs. We also will continue to make expenditures on marketing,
research and development, pursuit of patent protection for our intellectual
property and operational costs for fulfillment of any contracts that we
achieve
for the sale of our products or technologies. We expect that our revenues
in the
near term will not bring the company to profitability. If we are not able
to
generate sufficient revenues or we have insufficient capital resources,
we will
not be able to implement our business plan and investors will suffer a
loss in
their investment. This may result in a change in our business
strategies.
We
expect to need additional capital in the future, which if we are unable to
raise
will result in our not being able to implement our business plan as currently
formulated.
Because
we have had net losses and, to date, have not generated positive cash flow
from
operations, we have funded our operating losses from the sale of equity
securities from time to time and the sale of our video division in 2004. We
anticipate that our business plan will continue to require significant
expenditures for research and development, patent protection, sales and
marketing and general operations. Our current capital resources, including
cash
and short-term investments of $13.2 million and net proceeds from our February
2007 private placement transaction of approximately $8.4 million, are expected
to sustain operations through the first quarter of 2008, if not longer.
Thereafter, unless we increase revenues to a level that they cover operating
expenses or we reduce costs, we will require additional capital to fund these
expenses. Financing, if any, may be in the form of loans or additional sales
of
equity securities. A loan or the sale of preferred stock may result in the
imposition of operational limitations and other covenants and payment
obligations, any of which may be burdensome to us. The sale of equity securities
will result in dilution to the current stockholders’ ownership. The long-term
continuation of our business plan is dependent upon the generation of sufficient
revenues from the sale of our products, additional funding or reducing expenses
or a combination of the foregoing. The failure to generate sufficient revenues,
raise capital or reduce expenses could have a material adverse effect on our
ability to achieve our long-term business objectives.
Our
industry is subject to rapid technological changes which if we are unable to
match or surpass, will result in a loss of competitive advantage and market
opportunity.
Because
of the rapid technological development that regularly occurs in the
microelectronics industry, we must continually devote substantial resources
to
developing and improving our technology and introducing new product offerings.
For example, in fiscal years 2005 and 2006, we spent approximately $10.3 and
$9.5 million, respectively, on research and development, and we expect to
continue to spend a significant amount in this area in the future. These efforts
and expenditures are necessary to establish and increase market share and,
ultimately, to grow revenues. If another company offers better products or
our
product development lags, a competitive position or market window opportunity
may be lost, and therefore our revenues or revenue potential may be adversely
affected.
If
our products are not commercially accepted, our developmental investment will
be
lost and our future business continuation will be
impaired.
There
can
be no assurance that our research and development will produce commercially
viable technologies and products. If existing or new technologies and products
are not commercially accepted, the funds expended will not be recoverable,
and
our competitive and financial position will be adversely affected. In addition,
perception of our business prospects will be impaired with an adverse impact
on
our ability to do business and to attract capital and employees.
If
our patents and intellectual property do not provide us with the anticipated
market protections and competitive position, our business and prospects will
be
impaired.
We
rely
on our intellectual property, including patents and patent applications, to
provide competitive advantage and protect us from theft of our intellectual
property. We believe that many of our patents are for entirely new technologies.
If the patents are not issued or issued patents are later shown not to be as
broad as currently believed, or are otherwise challenged such that some or
all
of the protection is lost, we will suffer adverse effects from the loss of
competitive advantage and our ability to offer unique products and technologies.
In addition, there would be an adverse impact on our financial condition and
business prospects.
If
we cannot demonstrate that our technologies and products can compete in the
marketplace and are better than current competitive solutions, then we will
not
be able to generate the sales we need to continue our business and our prospects
will be impaired.
We
expect
to face competition from chip suppliers such as RF MicroDevices, Anadigics,
Skyworks, Texas Instruments and Philips, among others. Our technology may also
face competition from other emerging approaches or new technological advances
which are under development and have not yet emerged. If our technologies and
products are not established in the market place as improvements over current,
traditional chip solutions in wireless communications, our business prospects
and financial condition will be adversely affected.
We
believe that we will rely, in large part, on key business and sales
relationships for the successful commercialization of our products, which if
not
developed or maintained, will have an adverse impact on achieving market
awareness and acceptance and will result in a loss of business
opportunity.
To
achieve a wide market awareness and acceptance of our products, as part of
our
business strategy, we will attempt to enter into a variety of business
relationships with other companies which will incorporate our intellectual
property into their products and/or market products based on our technologies.
Our successful commercialization of our products will depend in part on our
ability to meet obligations under contracts with respect to the products and
related development requirements. The failure of the business relationships
will
limit the commercialization of our products which will have an adverse impact
on
our business development and our ability to generate revenues and recover
development expenses.
We
are highly dependent on Mr. Jeffrey Parker as our chief executive officer whose
services, if lost, would have an adverse impact on our leadership, industry
perception, and investor perception about our future.
Because
of Mr. Parker’s position in the company and the respect he has garnered in both
the industry in which we operate and the investment community, the loss of
the
services of Mr. Parker might be seen as an impediment to the execution of our
business plan. If Mr. Parker were no longer available to the company, investors
may experience an adverse impact on their investment. We do not currently have
an employment agreement with Mr. Parker. We maintain key-employee life insurance
for our benefit on Mr. Parker.
If
we are unable to attract highly skilled employees we will not be able to execute
our research and development plans or provide the highly technical services
that
our products require.
Our
business is very specialized, and therefore it is dependent on having skilled
and specialized employees to conduct our research and development activities,
operations, marketing and support. The inability to obtain these kinds of
persons will have an adverse impact on our business development because persons
will not obtain the information or services expected in the markets and may
prevent us from successfully implementing our current business
plans.
The
outstanding options and warrants may affect the market price and liquidity
of
the common stock.
At
December 31, 2006, we had 23,387,566 shares of common stock outstanding and
had
6,752,273 exercisable options and warrants for the purchase of shares of common
stock, assuming no terminations or forfeitures of such options and warrants.
On
December 31, 2007 and 2008, there will be 7,092,118 and 7,436,178 respectively,
currently outstanding and exercisable options and warrants (assuming no new
grants, terminations or forfeitures). All of the underlying common stock of
these securities is or will be registered for sale to the holder or for public
resale by the holder. The amount of common stock available for the sales may
have an adverse impact on our ability to raise capital and may affect the price
and liquidity of the common stock in the public market. In addition, the
issuance of these shares of common stock will have a dilutive effect on current
stockholders’ ownership.
Provisions
in the certificate of incorporation and by-laws could have effects that conflict
with the interest of stockholders.
Some
provisions in our certificate of incorporation and by-laws could make it more
difficult for a third party to acquire control. For example, the board of
directors has the ability to issue preferred stock without stockholder approval,
and there are pre-notification provisions for director nominations and
submissions of proposals from stockholders to a vote by all the stockholders
under the by-laws. Florida law also has anti-takeover provisions in its
corporate statute.
We
have a shareholder protection rights plan that may delay or discourage someone
from making an offer to purchase the company without prior consultation with
the
board of directors and management which may conflict with the interests of
some
of the stockholders.
On
November 17, 2005, the board of directors adopted a shareholder protection
rights plan which called for the issuance, on November 29, 2005, as a dividend,
rights to acquire fractional shares of preferred stock. The rights are attached
to the shares of common stock and transfer with them. In the future the rights
may become exchangeable for shares of preferred stock with various provisions
that may discourage a takeover bid. Additionally, the rights have what are
known
as “flip-in” and “flip-over” provisions that could make any acquisition of the
company more costly. The principal objective of the plan is to cause someone
interested in acquiring the company to negotiate with the board of directors
rather than launch an unsolicited bid. This plan may limit, prevent, or
discourage a takeover offer that some stockholders may find more advantageous
than a negotiated transaction. A negotiated transaction may not be in the best
interests of the stockholders.
Our
headquarters are located in a 14,000 square foot leased facility in
Jacksonville, Florida. We have an additional leased facility in Lake Mary,
Florida primarily for engineering design activities. We believe our properties
are in good condition and suitable for the conduct of our business.
Prior
to
June 2006, our headquarters and previous manufacturing operations were in a
leased facility in Jacksonville, Florida, pursuant to a lease agreement with
Jeffrey Parker, our chairman and chief executive officer, and Barbara Parker,
a
related party. Due to the cessation of our manufacturing activities in 2005,
we
relocated to a smaller facility in June 2006. We did not incur any losses
related to early termination of our lease for that facility.
Refer
to
“Lease Commitments” in Note 11 to the Consolidated Financial Statements included
in Item 8 for information regarding our outstanding lease obligations.
Item
3. Legal Proceedings
We
are
subject to legal proceedings and claims arising in the ordinary course of
business. Based upon the advice of outside legal counsel, we believe that the
final disposition of such matters will not have a material adverse effect on
our
financial position, results of operations or liquidity.
Item
4. Submission of Matters to a Vote of Security Holders
None.
PART
II
Item
5. Market for the Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Market
Information
Our
common stock is traded under the symbol PRKR
on
the
Nasdaq Global 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 three 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.
|
2006
|
2005
|
2004
|
||||||||||
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
|||||||
|
1
st
Quarter
|
$10.91
|
$7.61
|
$13.27
|
$6.61
|
$10.09
|
$5.45
|
||||||
|
2
nd
Quarter
|
12.00
|
9.02
|
8.50
|
3.70
|
7.03
|
4.00
|
||||||
|
3
rd
Quarter
|
9.63
|
5.30
|
10.24
|
4.72
|
5.89
|
3.45
|
||||||
|
4
th
Quarter
|
11.98
|
6.53
|
9.50
|
4.85
|
9.20
|
3.89
|
||||||
Holders
As
of
February 28, 2007, there were 171 holders of record. We believe there are
approximately 2600 beneficial holders of our common stock.
Dividends
To
date,
we have not paid any dividends on our common stock. The payment of dividends
in
the future is at the discretion of the board of directors and will depend upon
our ability to generate earnings, our capital requirements and financial
condition, and other relevant factors. We do not intend to declare any dividends
in the foreseeable future, but instead intend to retain all earnings, if any,
for use in the business.
Sales
of Unregistered Securities
|
Date
of
sale
|
Title
of security
|
Number
sold
|
Consideration
received and description of underwriting or
other
discounts to market price afforded to purchasers
|
Exemption
from
registration claimed
|
If
option, warrant or
convertible
security, terms
of
exercise or
conversion
|
|
10/2/06
|
Options
to purchase common stock granted to an employee pursuant to the 2000
Plan
|
2,680
|
Option
granted - no consideration received by Company until exercised
|
4(2)
|
Exercisable
for seven years from the grant date at an exercise price of $6.80
per
share.
|
|
10/12/06
|
Options
to purchase common stock granted to officers and management employees
pursuant to the 2000 Plan
|
203,000
|
Options
granted - no
consideration
received by
Company
until exercise
|
4(2)
|
Expire
seven years from date granted, options vest over three years at an
exercise price of $8.81
|
|
10/13/06
to 10/17/06
|
Options
to purchase common stock granted to employees pursuant to the 2000
Plan
|
60,900
|
Options
granted - no
consideration
received by
Company
until exercise
|
4(2)
|
Expire
seven years from date granted, options vest over three years at exercise
prices ranging from $8.68 to $8.73
|
|
11/06
- 12/06
|
Options
to purchase common stock granted to employees pursuant to the 2000
Plan
|
74,550
|
Options
granted - no
consideration
received by
Company
until exercise
|
4(2)
|
Expire
seven years from date granted, options vest over three years at exercise
prices of $9.88 to $10.17
|
|
12/15/06
|
Options
to purchase common stock granted to employee pursuant to the 2000
Plan
|
1,000
|
Options
granted - no
consideration
received by
Company
until exercise
|
4(2)
|
Exercisable
for seven years from the grant date at an exercise price of $9.88
per
share.
|
Issuer
Repurchase of Equity Securities.
None.
14
Performance
Graph
The
following graph shows a five-year comparison of cumulative total shareholder
returns for our company, the Nasdaq U.S. Stock Market Index, the Nasdaq
Electronic Components Index and Nasdaq Telecommunications Index for the
five
years ending December 31, 2006. The total shareholder returns assumes the
investment on December 31, 2001 of $100 in our common stock, the Nasdaq
U.S.
Stock Market Index, the Nasdaq Electronic Components Index, and Nasdaq
Telecommunications Index at the beginning of the period, with immediate
reinvestment of all dividends.
15
Item
6. Selected Financial Data
The
following table sets forth our consolidated financial data as of the dates
and
for the periods indicated. The data has been derived from our audited
consolidated financial statements. The selected financial data should be
read in
conjunction with our consolidated financial statements and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”. The
selected financial data for the statements of operations for all prior
years has
been restated to reflect the effects of discontinued operations.
|
For
the years ended December 31,
|
||||||||||||||||
|
|
2006
|
2005
|
2004
|
2003
|
2002
|
|||||||||||
|
(in
thousands, except per share amounts)
|
||||||||||||||||
|
Consolidated
Statement of Operations Data:
|
||||||||||||||||
|
Revenues,
net
|
$
|
0
|
$
|
996
|
$
|
441
|
$
|
23
|
$
|
0
|
||||||
|
Gross
margin
|
0
|
(2,041
|
)
|
(2,854
|
)
|
(7
|
)
|
0
|
||||||||
|
Operating
expenses
|
16,866
|
21,362
|
19,951
|
19,104
|
16,772
|
|||||||||||
|
Interest
and other income
|
1,051
|
304
|
217
|
476
|
905
|
|||||||||||
|
Loss
from continuing o
perations
|
(15,815
|
)
|
(23,099
|
)
|
(22,588
|
)
|
(18,635
|
)
|
(15,867
|
)
|
||||||
|
Gain
(loss) from discontinued
operations
|
0
|
0
|
7,773
|
(3,380
|
)
|
(1,405
|
)
|
|||||||||
|
Net
loss
|
(15,815
|
)
|
(23,099
|
)
|
(14,815
|
)
|
(22,015
|
)
|
(17,272
|
)
|
||||||
|
Basic
and diluted net loss per
common
share
Continuing
operations
|
(0.68
|
)
|
(1.14
|
)
|
(1.25
|
)
|
(1.21
|
)
|
(1.14
|
)
|
||||||
|
Discontinued
operations
|
n/a
|
n/a
|
0.43
|
(0.22
|
)
|
(0.10
|
)
|
|||||||||
|
Total
basic and diluted net loss
per
common share
|
(0.68
|
)
|
(1.14
|
)
|
(0.82
|
)
|
(1.43
|
)
|
(1.24
|
)
|
||||||
|
Consolidated
Balance Sheet Data:
|
||||||||||||||||
|
Total
assets
|
$
|
26,675
|
$
|
23,832
|
$
|
28,081
|
$
|
42,483
|
$
|
37,745
|
||||||
|
Shareholders’
equity
|
25,183
|
22,400
|
24,758
|
39,399
|
34,047
|
|||||||||||
|
Working
capital
|
13,313
|
10,833
|
10,471
|
23,225
|
18,992
|
|||||||||||
Item
7. Management's Discussion and Analysis of Financial Condition and Results
of
Operations
Executive
Overview
We
are in
the business of designing, developing and marketing our proprietary wireless
RF
technologies for use in semiconductor circuits for wireless radio applications.
Our immediate market focus is on securing licensing agreements for our d2p
RF
transmit chain technology. Our primary target customers are top tier mobile
handset manufacturers and their key semiconductor suppliers. We believe our
proprietary wireless technologies embody significant industry advances that
can
be commercialized in the near term.
16
We
have
made significant investments in developing our technologies and products,
the
returns on which are dependent upon the generation of future revenues for
realization. We have not yet generated revenues sufficient to offset our
operating expenses and have used the proceeds from the sale of equity securities
to fund our operations.
In
June
2005, we exited our retail business activities which represented our sole
source
of revenue from continuing operations. We expect to consummate initial
license
agreements in early 2007 for the design of our technology into mobile handsets.
We intend to continue to use our working capital to support future marketing,
sales, research and development and general operations. No assurance can
be
given that such expenditures will result in revenues, new products, or
technological advances or that we have adequate capital to complete our
products
or gain market acceptance before requiring additional
capital.
Critical
Accounting Policies
We
believe that the following are the critical accounting policies affecting the
preparation of our consolidated financial statements:
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. The more significant estimates made by management include
the volatility, risk-free interest rate, forfeiture rate and estimate lives
of
share-based awards used in the calculation of the fair market value of
share-based compensation, the assessment of impairment of assets and
amortization period for intangible and long-lived assets, and the valuation
allowance for deferred taxes. Actual results could differ from the estimates
made. Management periodically evaluates estimates used in the preparation of
the
consolidated financial statements for continued reasonableness. Appropriate
adjustments, if any, to the estimates used are made prospectively based upon
such periodic evaluation.
Accounting
for Stock Based Compensation
Effective
January 1, 2006, we adopted the provisions of Statement of Financial
Accounting Standards (“SFAS”) No. 123R, “Share-Based Payment,” (“FAS 123R”)
which establishes accounting for equity instruments exchanged for employee
services. Under the provisions of FAS 123R, share-based compensation cost is
measured at the grant date, based on the calculated fair value of the award,
and
is recognized as an expense on a straight-line basis over the employee’s
requisite service period (generally the vesting period of the equity grant).
In
March 2005, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 107 (“SAB 107”) relating to FAS 123R. We have applied the
provisions of SAB 107 in our adoption of FAS 123R.
Prior
to
January 1, 2006, we accounted for share-based compensation to employees in
accordance with Accounting Principles Board Opinion (“APB”) No. 25, “Accounting
for Stock Issued to Employees,” and related interpretations. We also followed
the disclosure requirements of SFAS No. 123, “Accounting for Stock-Based
Compensation”, as amended by SFAS 148, “Accounting for Stock-Based Compensation
- Transition and Disclosure”. We elected to adopt the modified prospective
transition method as provided by FAS 123R and, accordingly, financial statement
amounts for the prior periods have not been retroactively adjusted to reflect
the fair value method of expensing share-based compensation. Under the modified
prospective method, share-based expense recognized after adoption includes:
(a) share-based expense for all awards granted prior to, but not yet vested
as of January 1, 2006, based on the grant date fair value estimated in
accordance with the original provisions of SFAS No. 123, as amended by SFAS
148 and (b) share-based expense for all awards granted or modified
subsequent to January 1, 2006, based on the grant-date fair value estimated
in accordance with the provisions of FAS 123R. Further, as required under
FAS123R, we estimate forfeitures for options granted which are not expected
to
vest. Changes in these inputs and assumptions can materially affect the measure
of estimated fair value of our stock-based compensation expense.
In
November 2005, the FASB issued FASB Staff Position (“FSP”) FAS
No. 123R-3, Transition Election Related to Accounting for the Tax Effects
of Share-Based Payment Awards, (“FSP FAS 123R-3”). FSP FAS 123R-3 provides a
practical exception when a company transitions to the accounting requirements
in
FAS123R. FAS123R requires a company to calculate the pool of excess tax benefits
available to absorb tax deficiencies recognized subsequent to adopting FAS123R
(termed the “APIC Pool”), assuming the company had been following the
recognition provisions prescribed by SFAS No. 123. We have elected to use the
shortcut method under FAP FAS 123R-3 to calculate our APIC Pool.
Impairment
of Long Lived Assets
Property
and equipment, patents, copyrights and other intangible assets are amortized
using the straight-line method over their estimated period of benefit, ranging
from three to twenty years. Management evaluates the recoverability of
long-lived assets periodically and takes into account events or circumstances
that warrant revised estimates of useful lives or that indicate impairment
exists.
Recent
Accounting Pronouncements
In
September 2006, the Financial Accounting Standards Board issued SFAS No. 157,
“Fair Value Measurements” (“SFAS 157”). This statement defines fair value as
used in numerous accounting pronouncements, establishes a framework for
measuring fair value in generally accepted accounting principles (“GAAP”) and
expands disclosure related to the use of fair value measures in financial
statements. SFAS 157 does not expand the use of fair value measures in financial
statements, but standardizes its definition and guidance in GAAP. SFAS 157
is
effective for fiscal years beginning after November 15, 2007. We will adopt
the
provisions of SFAS 157 on January 1, 2008. We have evaluated SFAS 157 and do
not
anticipate that it will have an impact on our financial statements when adopted.
In
September 2006, the Securities and Exchange Commission (“SEC”) released Staff
Accounting Bulletin No. 108, “Considering the Effects of Prior Year
Misstatements When Quantifying Misstatements in Current Year Financial
Statements” (“SAB 108”). SAB 108 provides guidance on how the effects of the
carryover or reversal of prior year financial statement misstatements should
be
considered in quantifying a current year misstatement. Prior practice allowed
the evaluation of materiality on the basis of (1) the error quantified as the
amount by which the current year income was misstated (“rollover method”) or (2)
the cumulative error quantified as the cumulative amount by which the current
year balance sheet was misstated (“iron curtain method”). The guidance provided
by SAB 108 requires both methods to be used in evaluating materiality.
Immaterial prior year errors may be corrected with the first filing of prior
year financial statements after adoption. The cumulative effect of the
correction would be reflected in the opening balance sheet with appropriate
disclosure of the nature and amount of each individual error corrected in the
cumulative adjustment, as well as a disclosure of the cause of the error and
that the error had been deemed to be immaterial in the past. SAB 108 is
effective for our fiscal year ended December 31, 2006 . We have evaluated SAB
108 and determined that it does not have an impact on our financial
statements.
In
June
2006, the Financial Accounting Standards Board issued FASB Interpretation No.
48
(“FIN 48”), “Accounting for Uncertainty in Income Taxes, an interpretation of
SFAS No. 109, “Accounting for Income Taxes.” FIN 48 provides a comprehensive
model for how a company should recognize, measure, present and disclose
uncertain tax positions that a company has taken or expects to take on a tax
return. FIN 48 becomes effective for annual periods beginning after December
15,
2006. We will adopt the provisions of FIN 48 effective January 1, 2007. We
are
in the process of evaluating the impact of FIN 48 and its impact on our
financial statements when adopted.
Results
of Operations for Each of the Years Ended December 31, 2006, 2005 and 2004
Exit
from Retail Business Activities
In
June
2005, we announced our plan to exit our retail business activities and continue
our pursuit of an OEM business strategy for commercialization of our proprietary
wireless technologies. Our decision to exit the retail activities was
precipitated by advances in our wireless technology that generated increased
interest from OEM prospects, especially in the mobile handset market. Management
determined that the investment required to increase brand awareness, expand
product offerings, and expand the distribution channel for retail products
would
detract from our ability to capitalize on OEM opportunities.
Exiting
the retail business resulted in charges to our second quarter 2005 operating
results totaling approximately $4.7 million, primarily related to employee
severance benefits and the reduction of assets to their expected recovery value.
During the second half of 2005, we reclaimed unsold product inventory from
the
distribution channel, liquidated our raw materials and finished product
inventories through wholesale channels and liquidated our manufacturing and
prototype facility assets and other property and equipment utilized in the
retail business activities. We substantially completed our retail exit
activities by the end of 2005.
Revenues
We
had no
revenues for the year ended December 31, 2006. Revenues for the years ended
December 31, 2005 and 2004 included retail product revenue of $995,991 and
$190,811, respectively. In addition, revenues for the year ended December 31,
2004 included royalty revenue of $250,000 from a one-time previously deferred
royalty payment upon termination of a licensing agreement.
Prior
period product revenues represent sales of wireless consumer product through
retail channels. The increase in product revenue of $805,180 from 2004 to 2005
was primarily a result of the expansion of our retail distribution channel
starting in the third quarter of 2004. At the time of our exit from retail
business activities we had products in approximately 300 retail storefronts.
Although we exited our retail business activities in June 2005, product revenues
from the retail channel continued through the second half of 2005 as retailers
continued to sell through discontinued products and we recognized previously
deferred revenue based on expiration of retailers rights to return products.
At
December 31, 2004, we had deferred revenue from product sales in the
distribution channel of $407,403.
Revenues
for the period ended December 31, 2005 and 2004 were net of an allowance
(recovery) for sales returns of $(80,333) and $97,958, respectively. In addition
to the reserve for sales returns, gross revenue was reduced for price protection
programs, customer rebates and cooperative marketing costs deemed to be sales
incentives under Emerging Issues Task Force, (EITF) Issue 01-19, to derive
net
revenue. For the years ended December 31, 2005 and 2004, net revenue was reduced
for cooperative marketing costs in the amount of $29,932 and $233,201,
respectively.
Our
generation of future revenues is dependent upon our ability to successfully
consummate relationships with OEMs for integration of our technology into widely
deployed products that are manufactured by others. To date, we do not have
any
OEM contracts for our technology. We anticipate consummating initial licensing
agreements for our technology in the near term. We expect that revenues from
these agreements will include up-front technology access fees, non-recurring
engineering fees for design support services, and ultimately royalty revenues
on
a per unit sold basis. Based on the design cycle in the mobile handset market,
we anticipate that royalty revenues will not be recognized within the first
twelve months following the initial customer agreement. As such, we do not
anticipate that revenues in 2007 will be sufficient to offset our operating
expenses.
Gross
Margin
The
gross
margins for products and royalties for the years ended December 31, 2005 and
2004 were as follows:
|
2005
|
|
2004
|
|||||
|
Products
|
$
|
(2,040,823
|
)
|
$
|
(3,103,900
|
)
|
|
|
Royalties
|
0
|
250,000
|
|||||
|
Total
|
$
|
(2,040,823
|
)
|
$
|
(2,853,900
|
)
|
|
Our
product margin in 2005 reflects a write down of inventory to net realizable
value in the amount of $2,250,586. This write down was a result of our exit
from
retail activities in the second quarter of 2005, resulting in a mark down of
remaining product inventory to estimated wholesale values.
Our
product margin in 2004 reflects a write down of inventory to net realizable
value in the amount of $2,768,854. This write down was triggered by a
significant price decrease on our wireless networking product line in the fourth
quarter of 2004, along with the high carrying costs of initial production
inventory.
The
margin recognized on royalty revenues in 2004 was due to the recognition of
a
one-time, previously deferred prepaid royalty in connection with the termination
of a licensing agreement.
Research
and Development Expenses
Our
research and development expenses decreased by $763,111 or 7%, from $10,284,305
in 2005 to $9,521,194 in 2006. Our research and development expenses decreased
by $1,138,396 or 10%, from $11,422,701 in 2004 to $10,284,305 in
2005.
The
decrease in research and development expenses from 2005 to 2006 was primarily
due to cost reductions following the June 2005 retail exit including a reduction
in retail product development personnel and related costs of approximately
$1,800,000 and a reduction in depreciation and amortization of retail related
assets of approximately $900,000. These decreases were offset by increases
in
expenses for the use of outside design firms of approximately $1,000,000,
increases in employee stock compensation expense due the adoption of “FAS123R”
of approximately $700,000, and increases in prototype costs of approximately
$220,000 stemming from increases in the number of prototype chip production
runs.
The
decrease in research and development expenses from 2004 to 2005 was primarily
due to the reduction of personnel and third party development fees of
approximately $750,000, a reduction in depreciation and amortization expense
of
approximately $570,000, and a reduction in outside prototype costs, including
foundry costs, of approximately $320,000. These reductions were somewhat offset
by increases in maintenance costs for software development tools of
approximately $200,000, increases in professional fees related to patents of
approximately $160,000, and an increase in overhead and other costs related
to
utilizing our manufacturing facility in the first half of 2005 for prototypes
of
approximately $230,000. The decreases in personnel, third party development
fees, amortization expense and prototype expenses resulted from our exit from
retail activities in June 2005. The decreases in foundry costs are, in part,
due
to utilization of shared foundry services as opposed to dedicated foundry runs
which cost three to four times more per run.
The
markets for our products and technologies are characterized by rapidly changing
technology, evolving industry standards and frequent new product introductions.
Our ability to successfully develop and introduce, on a timely basis, new and
enhanced products and technologies will be a significant factor in our ability
to grow and remain competitive. Although the percentage of revenues invested
in
our research and development programs may vary from period to period, we are
committed to continue investing in our technology development. We anticipate
that we will use a substantial portion of our working capital for research
and
development activities in 2007.
We
anticipate that the consummation of initial customer relationships in 2007
may
result in increased development expenses; however, we believe that some or
all
of such increases may be offset by non-recurring engineering fees paid to us
by
customers.
Marketing
and Selling Expenses
Marketing
and selling expenses decreased by $1,023,360 or 33%, from $3,141,187 in 2005
to
$2,117,827 in 2006. Marketing and selling expenses increased by $656,998 or
26%,
from $2,484,189 in 2004 to $3,141,187 in 2005.
The
decrease in marketing and selling expenses from 2005 to 2006 was primarily
due
to cost reductions in personnel and related costs of approximately $670,000
and
reduced retail promotional costs of approximately $540,000 following the June
2005 exit from retail. These costs reductions were partially offset by an
increase in employee stock compensation expense of approximately $320,000
following the adoption of “FAS123R.”
The
increase in marketing and selling expenses from 2004 to 2005 was primarily
due
to an increase of approximately $890,000 in payroll and related costs for
increases in sales and marketing personnel, offset by a decrease of
approximately $350,000 in costs related to marketing promotional activities.
The
increase in payroll and related costs was due to increases in sales and
marketing personnel late in 2004 and early in 2005 primarily related to the
retail business, as well as the severance costs for retail related employees
upon the exit from retail activities in June 2005. The decrease in overall
promotional costs from 2004 to 2005 was due to market launch expenses incurred
in the second half of 2004 upon expansion of the retail channel, as well as
the
cessation of retail marketing activities in June 2005.
We
are
committed to continuing our investment in marketing and selling efforts in
order
to continue to increase market awareness and penetration of our products and
technologies.
General
and Administrative Expenses
General
and administrative expenses consist primarily of executive, finance and
administrative personnel costs and costs incurred for insurance, shareholder
relations and outside professional services. Our general and administrative
expenses decreased by $805,144 or 13%, from $6,037,796 in 2005 to $5,232,652
in
2006. Our general and administrative expenses decreased by $6,665, or less
than
1%, from $6,044,461 in 2004 to $6,037,796 in 2005.
The
reduction in general and administrative costs from 2005 to 2006 is due to a
reduction in personnel costs of approximately $470,000 stemming from staff
reductions as well as the movement of certain senior management personnel to
different areas of supervision. We had a reduction in bad debt expense of
approximately $140,000 following the exit from retail, a reduction in
share-based consulting fees of approximately $680,000, and a reduction in
professional fees of approximately $310,000 from both legal and accounting
fees.
These reductions were partially offset by increases in employee and director
stock compensation expense of approximately $860,000 following the adoption
of
“FAS123R.”
From
2004
to 2005, the decrease in general and administrative expenses is due to a
decrease in payroll and related costs of approximately $320,000 and decreases
in
corporate insurance costs of approximately $200,000, offset by increases in
board expenses and outside professional fees of approximately $360,000 and
increases in bad debt expenses of approximately $120,000.
Impairment
Loss and Loss on Disposal of Equipment
For
2006,
we recognized a gain of $5,191 on the disposal of assets.
For
2005,
we recognized impairment charges on certain long-lived assets related to the
exit of our retail activities. These charges include impairment of prepaid
license fees of approximately $662,000, impairment of other intangible assets
of
approximately $584,000 and impairment of fixed assets, primarily the
manufacturing and prototype facility assets, of approximately $626,000.
Additionally, an aggregate loss of $27,000 was recognized on the disposal of
equipment in the normal course of business.
For
2004,
there were no impairment charges or losses on disposal of equipment.
Interest
Income and Other
Interest
income and other consist of interest earned on our investments, net gains
recognized on the sale of investments, and other miscellaneous income and
expense. Interest income and other was $1,050,824, $303,729, and $217,382,
for
the years ended December 31, 2006, 2005, and 2004, respectively.
The
increase of $747,095 from 2005 to 2006 is primarily due to higher interest
rates
and higher average cash balances in 2006.
The
increase of approximately $86,347 from 2004 to 2005 was primarily due to an
increase in interest earned from the proceeds of the private placement in the
first quarter of 2005.
Discontinued
Operations
On
May
14, 2004, we completed the sale of certain designated assets of our video
division to Thomson Broadcast & Media Solutions, Inc. and Thomson Licensing,
SA (collectively referred to as “Thomson”). The prior years’ operating
activities for the video business unit have been reclassified to “Gain from
discontinued operations” in the accompanying Statements of
Operations.
Net
gain
from discontinued operations for the year ended December 31, 2004 includes
the
following components:
|
2004
|
||||
|
Net
revenues
|
$
|
1,507,955
|
||
|
Cost
of goods sold and
operating
expenses
|
4,955,098
|
|||
|
(Loss)
from operations
|
(3,447,143
|
)
|
||
|
Gain
on sale of assets
|
11,220,469
|
|||
|
Gain
from discontinued operations
|
$
|
7,773,326
|
||
Loss
and Loss per Common Share
Our
net
loss decreased from $23,099,448 or $1.14 per common share in 2005 to $15,815,658
or $0.68 per common share in 2006, representing a net loss decrease of
$7,283,790 or $0.46 per common share. Our net loss increased from $14,814,543
or
$0.82 per common share in 2004 to $23,099,448 or $1.14 per share, representing
a
net loss increase of $8,284,905 or $0.32 per common share. The results of
operations are as follows:
|
2006
|
|
2005
|
|
2004
|
||||||
|
Loss
from continuing o
perations
|
$
|
(15,815,658
|
)
|
$
|
(23,099,448
|
)
|
$
|
(22,587,869
|
)
|
|
|
Gain
from discontinued o
perations
|
0
|
0
|
7,773,326
|
|||||||
|
Net
loss
|
$
|
(15,815,658
|
)
|
$
|
(23,099,448
|
)
|
$
|
(14,814,543
|
)
|
|
The
decrease in net loss from 2005 to 2006 is primarily due to reduced operating
expenses as a result of our exit from retail business activities in June 2005,
as well as one-time charges related to impairment of inventory and other
retail-related assets recognized in June 2005.
The
increase in net loss from 2004 to 2005 is primarily due to the 2004 net gain
on
the sale of the video business unit assets of $7.8 million and impairment
charges of $1.9 million related to our exit from its retail business activities
in June 2005, offset somewhat by inventory impairment charges in 2004 that
exceeded those incurred in 2005.
Liquidity
and Capital Resources
At
December 31, 2006, we had working capital of approximately $13,300,000 including
approximately $13,200,000 in cash and cash equivalents. We used cash in
operating activities of approximately $11,445,000, $15,667,000, and $21,809,000
for the years ended December 31, 2006, 2005, and 2004, respectively. Cash used
in operating activities includes cash used in discontinued operations of
$2,638,000 for the year ended December 31, 2004.
The
decrease in cash used for operating activities from 2005 to 2006 was
approximately $4,222,000 due to reduced operating costs following the retail
exit in June 2005.
The
decrease in cash used for operating activities from 2004 to 2005 was
approximately $6,142,000, including a decrease of approximately $2,638,000
in
cash used for discontinued operations. This decrease in cash used for continuing
operations is due to a decrease in cash used for inventory component purchases
in 2005 due to our cessation of product manufacturing as part of our exit from
retail business activities. The decrease in cash used by discontinued operations
is due to the sale of the video division in May 2004 (see Note 15 to the
consolidated financial statements).
We
(used)
generated cash from investing activities of approximately $(2,090,000),
$(1,037,000), and $10,776,000, for the years ended December 31, 2006, 2005,
and
2004, respectively. For the years ended December 31, 2005 and 2004, cash (used)
generated from investing activities includes cash generated from discontinued
operations of approximately $1,035,000 and $12,060,000, respectively.
The
cash
used for investing activities in 2006 was for the payment of patent costs,
equipment purchases, and leasehold improvements to our new facility. The cash
used for investing activities in 2005 was for the payment of patents costs
and
purchases of equipment, offset somewhat by the proceeds from the maturity of
investments and collection of purchase price receivable from Thomson. The cash
generated from investing activities in 2004 was primarily from the proceeds
of
the sale of the video business unit assets and maturity of investments, offset
somewhat by payment for patent costs and other intangible assets and purchases
of equipment.
We
incurred approximately $1,334,000, $1,607,000, and $1,953,000 in connection
with
patent costs and other intangible assets related to our technology in 2006,
2005, and 2004, respectively, including approximately $90,000 for patents
related to discontinued operations in 2004. We incurred approximately
$1,088,000, $744,000, and $996,000, for capital expenditures in 2006, 2005,
and
2004, respectively, including approximately $5,000 for capital expenditures
related to discontinued operations in 2004. These capital expenditures primarily
represent the purchase of certain research and development software and test
equipment, prototype equipment, and computer and office equipment to support
additional personnel. In addition, in 2006, capital expenditures included
leasehold improvements to our new facility. At December 31, 2006, we were not
subject to any significant commitments to make additional capital
expenditures.
We
generated cash from financing activities of approximately $16,487,000 and
$20,543,000 for the years ended December 31, 2006 and 2005, respectively. The
cash generated from financing activities represents proceeds from the issuance
of common stock in 2006 and 2005 to institutional and other investors in private
placement transactions exempt from registration under the Securities Act of
1933
and the exercise of stock options. We generated no cash from financing
activities for the year ended December 31, 2004.
Our
future business plans call for continued investment in sales, marketing and
product development for our wireless technologies and products. Our ability
to
generate revenues will largely depend upon the rate at which we are able to
secure OEM adoption of our technology and products. The expected revenues for
2007 will not be sufficient to cover our operational expenses for 2007. The
expected continued losses and use of cash will continue to be funded from
available working capital.
On
February 23, 2007, we completed the sale of 992,441 shares of common stock
in a
private placement transaction for net proceeds of approximately $8.4 million.
We
plan to use these proceeds, together with the $13.2 million in cash and cash
equivalents at December 31, 2006, to fund our future business plans. We believe
that our current capital resources together with the proceeds of the February
2007 equity financing will be sufficient to support our liquidity requirements
at least through the first quarter of 2008. The long-term continuation of our
business plans is dependent upon generation of sufficient revenues from our
products to offset expenses. In the event that we do not generate sufficient
revenues, we 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, we currently
have 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 our ability to achieve our intended
long-term business objectives.
Off-Balance
Sheet Transactions, Arrangements and Other Relationships; Contractual
Obligations
As
of
December 31, 2006, we have outstanding warrants to purchase 2,455,736 shares
of
common stock that were issued in connection with the sale of equity securities
in various private placement transactions in 2000, 2001, 2005 and 2006. These
warrants have exercise prices ranging from $8.50 to $56.66 per share with a
weighted average exercise price of $25.36 and a weighted average remaining
contractual life of 4.3 years. The estimated fair value of these warrants at
their date of issuance of $20,290,878 is included in shareholders’ equity in our
consolidated balance sheets. Refer to “Non Plan Options/Warrants” in Note 8 to
the
Consolidated
Financial Statements included in Item 8 for information regarding the
outstanding warrants.
Our
c
ontractual
obligations and commercial commitments
at
December 31, 2006 were as follows (see “Lease Commitments” in Note 11 to the
Consolidated Financial Statements included in Item 8):
|
Payments
due by period
|
|
|||||||||||||||
|
Contractual
Obligations:
|
|
Total
|
|
1
year
or
less
|
|
2-3
years
|
|
4
-
5
Years
|
|
After
5
years
|
||||||
|
Operating
leases
|
$
|
2,252,000
|
$
|
480,000
|
$
|
1,005,000
|
$
|
767,000
|
$
|
0
|
||||||
Item
7A. Quantitative and Qualitative Disclosures about Market
Risk.
None.
Item 8. Consolidated Financial Statements and Supplementary Data
Index
to
Consolidated Financial Statements
Schedules
other than those listed have been omitted since they are
either
not required, not applicable or the information is otherwise
included.
R
eport
of Independent Registered Certified Public Accounting Firm
To
the
Board of Directors and Shareholders of ParkerVision, Inc.:
We
have
completed integrated audits of ParkerVision, Inc.’s consolidated financial
statements and of its internal control over financial reporting as of December
31, 2006, in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Our opinions, based on our audits, are
presented below.
Consolidated
financial statements and financial statement schedule
In
our
opinion, the consolidated financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of
ParkerVision, Inc. and its subsidiary at December 31, 2006 and 2005, and the
results of their operations and their cash flows for each of the three years
in
the period ended December 31, 2006 in conformity with accounting principles
generally accepted in the United States of America. In addition, in our opinion,
the financial statement schedule listed in the accompanying index
presents
fairly, in all material respects, the information set forth therein when read
in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.
We
conducted our audits of these statements in accordance with the standards of
the
Public Company Accounting Oversight Board
(United
States). 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 of financial statements includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
As
discussed in Note 8 to the consolidated financial statements, the Company
changed the manner in which it accounts for share-based compensation in
2006.
Internal
control over financial reporting
Also,
in
our opinion, management’s assessment, included in Management's Report on
Internal Control Over Financial Reporting appearing under Item 9A, that the
Company maintained effective internal control over financial reporting as of
December 31, 2006 based on criteria established in
Internal
Control - Integrated Framework
issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO),
is fairly stated, in all material respects, based on those criteria.
Furthermore, in our opinion, the Company maintained, in all material respects,
effective internal control over financial
reporting
as of December 31, 2006, based on criteria established in
Internal
Control - Integrated Framework
issued
by the COSO. The Company’s management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility
is to express opinions on management’s assessment and on the effectiveness
of the Company’s internal control over financial reporting based on our audit.
We conducted our audit of internal control over financial reporting in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit
to
obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. An audit of
internal control over financial reporting includes obtaining an understanding
of
internal control over financial reporting, evaluating management’s assessment,
testing and evaluating the design and operating effectiveness of internal
control, and performing such other procedures as we consider necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinions.
A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (i) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures
of
the company are being made only in accordance with authorizations of management
and directors of the company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use,
or
disposition of the company’s assets that could have a material effect on the
financial statements.
Because
of its inherent limitations, internal control over financial reporting may
not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
PricewaterhouseCoopers
LLP
Jacksonville,
Florida
March
8,
2007
PARKERVISION,
INC. AND SUBSIDIARY
CONSOLIDATED
BALANCE SHEETS
DECEMBER
31, 2006 AND 2005
The
accompanying notes are an integral part of these consolidated financial
statements.
PARKERVISION,
INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR
THE
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
|
2006
|
|
2005
|
|
2004
|
||||||
|
Product
revenue
|
$
|
0
|
$
|
995,991
|
$
|
190,811
|
||||
|
Royalty
revenue
|
0
|
0
|
250,000
|
|||||||
|
Net
revenues
|
0
|
995,991
|
440,811
|
|||||||
|
Cost
of goods sold
|
0
|
786,228
|
525,857
|
|||||||
|
Write
down of inventory to net realizable value
|
0
|
2,250,586
|
2,768,854
|
|||||||
|
Gross
margin
|
0
|
(2,040,823
|
)
|
(2,853,900
|
)
|
|||||
|
Research
and development expenses
|
9,521,194
|
10,284,305
|
11,422,701
|
|||||||
|
Marketing
and selling expenses
|
2,117,827
|
3,141,187
|
2,484,189
|
|||||||
|
General
and administrative expenses
|
5,232,652
|
6,037,796
|
6,044,461
|
|||||||
|
Impairment
loss and (gain) on disposal of
equipment
|
(5,191
|
)
|
1,899,066
|
0
|
||||||
|
Total
operating expenses
|
16,866,482
|
21,362,354
|
19,951,351
|
|||||||
|
Interest
income and other
|
1,050,824
|
303,729
|
217,382
|
|||||||
|
Loss
from continuing operations
|
(15,815,658
|
)
|
(23,099,448
|
)
|
(22,587,869
|
)
|
||||
|
Gain
from discontinued operations
|
0
|
0
|
7,773,326
|
|||||||
|
Net
loss
|
(15,815,658
|
)
|
(23,099,448
|
)
|
(14,814,543
|
)
|
||||
|
Unrealized
gain (loss) on investment securities
|
1,006
|
(579
|
)
|
(32,173
|
)
|
|||||
|
Comprehensive
loss
|
$
|
(15,814,652
|
)
|
$
|
(23,100,027
|
)
|
$
|
(14,846,716
|
)
|
|
|
Basic
and diluted net loss per common share:
|
||||||||||
|
Continuing
operations
|
$
|
(0.68
|
)
|
$
|
(1.14
|
)
|
$
|
(1.25
|
)
|
|
|
Discontinued
operations
|
0.00
|
0.00
|
0.43
|
|||||||
|
Basic
and diluted net loss per common share
|
$
|
(0.68
|
)
|
$
|
(1.14
|
)
|
$
|
(0.82
|
)
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
PARKERVISION,
INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR
THE
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
|
2006
|
2005
|
2004
|
||||||||
|
Common
shares - beginning of year
|
20,958,765
|
18,006,324
|
17,959,504
|
|||||||
|
Issuance
of common stock upon exercise of options and
Warrants
|
39,250
|
63,900
|
0
|
|||||||
|
Issuance
of restricted common stock as employee
Compensation
|
5,089
|
0
|
46,820
|
|||||||
|
Issuance
of common stock in private offering
|
2,373,335
|
2,880,000
|
0
|
|||||||
|
Issuance
of common stock as payment for services
|
11,127
|
8,541
|
0
|
|||||||
|
Common
shares - end of year
|
23,387,566
|
20,958,765
|
18,006,324
|
|||||||
|
Par
value of common stock - beginning of year
|
$
|
209,588
|
$
|
180,063
|
$
|
179,595
|
||||
|
Issuance
of common stock upon exercise of options and
Warrants
|
393
|
640
|
0
|
|||||||
|
Issuance
of restricted common stock as employee
Compensation
|
51
|
0
|
468
|
|||||||
|
Issuance
of common stock in private offering
|
23,733
|
28,800
|
0
|
|||||||
|
Issuance
of common stock as payment for services
|
111
|
85
|
0
|
|||||||
|
Par
value of common stock - end of year
|
$
|
233,876
|
$
|
209,588
|
$
|
180,063
|
||||
|
Warrants
outstanding - beginning of year
|
$
|
17,693,482
|
$
|
14,573,705
|
$
|
16,807,505
|
||||
|
Issuance
of warrants in connection with private offering
|
2,597,396
|
3,119,777
|
0
|
|||||||
|
Expiration
of warrants
|
0
|
0
|
(2,233,800
|
)
|
||||||
|
Warrants
outstanding - end of year
|
$
|
20,290,878
|
$
|
17,693,482
|
$
|
14,573,705
|
||||
|
Additional
paid-in capital - beginning of year
|
$
|
138,080,663
|
$
|
120,488,205
|
$
|
118,048,964
|
||||
|
Issuance
of common stock upon exercise of options and
Warrants
|
239,642
|
425,539
|
0
|
|||||||
|
Issuance
of restricted common stock as employee
Compensation
|
50,228
|
0
|
205,441
|
|||||||
|
Issuance
of common stock in private offering
|
13,625,721
|
16,967,923
|
0
|
|||||||
|
Issuance
of common stock as payment for services
|
164,313
|
198,996
|
0
|
|||||||
|
Stock
option compensation expense
|
1,896,096
|
0
|
0
|
|||||||
|
Expiration
of warrants
|
0
|
0
|
2,233,800
|
|||||||
|
Additional
paid-in capital - end of year
|
$
|
154,056,663
|
$
|
138,080,663
|
$
|
120,488,205
|
The
accompanying notes are an integral part of these consolidated financial
statements.
PARKERVISION,
INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR
THE
YEARS ENDED DECEMBER 31, 2006, 2005 and 2004
|
2006
|
|
2005
|
|
2004
|
||||||
|
Accumulated
other comprehensive (loss) income - beginning
of
year
|
|
(1,006
|
)
|
|
(427
|
)
|
$
|
31,746
|
||
|
Change
in unrealized loss on investments
|
1,006
|
(579
|
)
|
(32,173
|
)
|
|||||
|
Accumulated
other comprehensive (loss) income - end of y
ear
|
$
|
0
|
$
|
(1,006
|
)
|
$
|
(427
|
)
|
||
|
Accumulated
deficit - beginning of year
|
$
|
(133,583,143
|
)
|
$
|
(110,483,695
|
)
|
$
|
(95,669,152
|
)
|
|
|
Net
loss
|
(15,815,658
|
)
|
(23,099,448
|
)
|
(14,814,543
|
)
|
||||
|
Accumulated
deficit - end of year
|
$
|
(149,398,801
|
)
|
$
|
(133,583,143
|
)
|
$
|
(110,483,695
|
)
|
|
|
Total
shareholders’ equity - beginning of year
|
$
|
22,399,584
|
$
|
24,757,851
|
$
|
39,398,658
|
||||
|
Issuance
of common stock upon exercise of options and
warrants
|
240,035
|
426,179
|
0
|
|||||||
|
Issuance
of restricted common stock as employee
compensation
|
50,279
|
0
|
205,909
|
|||||||
|
Issuance
of common stock and warrants in private offering
|
16,246,850
|
20,116,500
|
0
|
|||||||
|
Issuance
of common stock as payment for services
|
164,424
|
199,081
|
0
|
|||||||
|
Stock
option compensation expense
|
1,896,096
|
0
|
0
|
|||||||
|
Comprehensive
loss
|
(15,814,652
|
)
|
(23,100,027
|
)
|
(14,846,716
|
)
|
||||
|
Total
shareholders’ equity - end of year
|
$
|
25,182,616
|
$
|
22,399,584
|
$
|
24,757,851
|
||||
The
accompanying notes are an integral part of these consolidated financial
statements.
PARKERVISION,
INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE
YEARS ENDED DECEMBER 31, 2006, 2005 and 2004
|
2006
|
|
2005
|
|
2004
|
||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||
|
Net
loss
|
$
|
(15,815,658
|
)
|
$
|
(23,099,448
|
)
|
$
|
(14,814,543
|
)
|
|
|
Adjustments
to reconcile net loss to net cash used in
operating
activities:
|
||||||||||
|
Depreciation
and amortization
|
1,690,497
|
2,460,324
|
3,101,138
|
|||||||
|
Amortization
of premium on investments
|
1,561
|
27,437
|
42,683
|
|||||||
|
Provision
for obsolete inventories
|
0
|
67,940
|
320,533
|
|||||||
|
Write-down
of inventory to net realizable value
|
0
|
2,250,586
|
2,768,854
|
|||||||
|
Impairment
loss on other assets
|
0
|
1,245,792
|
0
|
|||||||
|
Stock
compensation
|
2,350,853
|
940,783
|
1,005,909
|
|||||||
|
Gain
on sale of discontinued operations
|
0
|
0
|
(11,220,469
|
)
|
||||||
|
(Gain)/loss
on sale of equipment
|
(5,191
|
)
|
653,702
|
0
|
||||||
|
Changes
in operating assets and liabilities, net of
disposition
in 2004:
|
||||||||||
|
Accounts
receivable, net
|
14,854
|
295,546
|
758,953
|
|||||||
|
Inventories
|
0
|
307,237
|
(5,535,571
|
)
|
||||||
|
Prepaid
and other assets
|
150,630
|
1,073,908
|
105,062
|
|||||||
|
Accounts
payable and accrued expenses
|
(348,400
|
)
|
(1,483,338
|
)
|
1,261,072
|
|||||
|
Deferred
revenue
|
0
|
(407,403
|
)
|
397,845
|
||||||
|
Deferred
rent
|
515,751
|
0
|
0
|
|||||||
|
Total
adjustments
|
4,370,555
|
7,432,514
|
(6,993,991
|
)
|
||||||
|
Net
cash used in operating activities
|
(11,445,103
|
)
|
(15,666,934
|
)
|
(21,808,534
|
)
|
||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||
|
Purchase
of investments available for sale
|
0
|
(250,000
|
)
|
0
|
||||||
|
Proceeds
from maturity/sale of investments
|
295,000
|
1,290,000
|
1,570,000
|
|||||||
|
Proceeds
from sale of property and equipment and
video
business unit assets
|
36,867
|
273,874
|
12,153,939
|
|||||||
|
Purchase
of property and equipment
|
(1,087,889
|
)
|
(744,043
|
)
|
(995,567
|
)
|
||||
|
Payment
for patent costs
|
(1,333,868
|
)
|
(1,606,842
|
)
|
(1,952,812
|
)
|
||||
|
Net
cash (used in) provided by investing activities
|
(2,089,890
|
)
|
(1,037,011
|
)
|
10,775,560
|
|||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||
|
Net
proceeds from issuance of common stock
|
16,486,886
|
20,542,679
|
0
|
|||||||
|
Net
cash provided by financing activities
|
16,486,886
|
20,542,679
|
0
|
|||||||
|
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
2,951,893
|
3,838,734
|
(11,032,974
|
)
|
||||||
|
CASH
AND CASH EQUIVALENTS, beginning of year
|
10,273,635
|
6,434,901
|
17,467,875
|
|||||||
|
CASH
AND CASH EQUIVALENTS, end of year
|
$
|
13,225,528
|
$
|
10,273,635
|
$
|
6,434,901
|
||||
The
accompanying notes are an integral part of these consolidated financial
statements.
PARKERVISION,
INC. AND SUBSIDIARY
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2006, 2005 and 2004
1.
THE
COMPANY AND NATURE OF BUSINESS
ParkerVision,
Inc. (the "Company”) was incorporated under the laws of the state of Florida on
August 22, 1989. Following the sale of its video operations in May 2004 (Note
15), the Company operates in a single segment - wireless technologies and
products.
2.
LIQUIDITY
AND CAPITAL RESOURCES
The
Company operates in a highly competitive industry with rapidly changing and
evolving technologies and an increasing number of market entrants. The Company's
potential competitors have substantially greater financial, technical and other
resources than those of the Company. The Company has made significant
investments in developing its technologies and products, the returns 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 the sale of its equity securities to fund
its
operations.
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 year ended December 31, 2006, the Company
incurred a net loss of approximately $15.8 million and negative cash flows
from
operations of approximately $11.4 million. At December 31, 2006, the Company
had
an accumulated deficit of approximately $149.4 million and working capital
of
approximately $13.3 million.
Management
does not expect that revenues in 2007 will be sufficient to offset the expenses
from continued investment in product development and marketing activities.
Therefore, management expects operating losses and negative cash flows to
continue in 2007 and possibly beyond.
On
February 23, 2007, the Company completed the sale of an aggregate of 992,441
shares of its common stock to a limited number of domestic
institutional
and other investors in a private placement transaction pursuant to offering
exemptions under the Securities Act of 1933. The shares, which represent 4.1%
of
the Company’s outstanding common stock on an after-issued basis, were sold at a
price of $8.50 per share, for net proceeds of approximately $8.4 million. The
net proceeds from this transaction will be used for general working capital
purposes.
The
long-term continuation of the Company’s business plans is dependent upon
generation of sufficient revenues from its technologies and 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 meet its future liquidity needs and achieve its intended long-term
business objectives.
3.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Consolidation
The
Company formed a wholly owned subsidiary, D2D, LLC on October 2, 2000. The
consolidated financial statements include the accounts of ParkerVision, Inc.
and
D2D, LLC, after elimination of all significant inter-company transactions and
accounts.
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. The more significant estimates made by management include
the volatility, risk-free interest rate, forfeiture rate and estimate lives
of
share-based awards used in the estimate of the fair market value of share-based
compensation, the assessment of recoverability of long-lived assets and
amortization period for intangible and long-lived assets, and the valuation
allowance for deferred taxes. Actual results could differ from the estimates
made. Management periodically evaluates estimates used in the preparation of
the
consolidated financial statements for continued reasonableness. Appropriate
adjustments, if any, to the estimates used are made prospectively based upon
such periodic evaluation.
Cash
and Cash Equivalents
For
purposes of reporting cash flows, the Company considers cash and cash
equivalents to include cash on hand, interest-bearing deposits, overnight
repurchase agreements and investments with original maturities of three months
or less when purchased.
Investments
Investments
consist of funds invested in U.S. Treasury notes, U.S. Treasury bills and
mortgage- backed securities guaranteed by the U.S. government. These investments
are classified as available for sale and are intended to be held for indefinite
periods of time and are not intended to be held to maturity. Securities
available for sale are recorded at fair value. Net unrealized holding gains
and
losses on securities available for sale, net of deferred income taxes, are
included as a separate component of shareholders’ equity in the consolidated
balance sheet until these gains or losses are realized. If a security has a
decline in fair value that is other than temporary, then the security will
be
written down to its fair value by recording a loss in the consolidated statement
of operations.
Allowance
for Doubtful Accounts
The
Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. The
allowance is based on management’s assessment of the collectibility of customer
accounts. Management regularly reviews the allowance by considering factors
such
as historical experience, age of the account balance and current economic
conditions that may affect a customer’s ability to pay.
Property
and Equipment
Property
and equipment are stated at cost, less accumulated depreciation. Depreciation
is
determined using the straight-line method over the following estimated useful
lives:
|
Manufacturing
and office equipment
|
5-7
years
|
|
|
Leasehold
improvements
|
Remaining
life of lease
|
|
|
Aircraft
|
20
years
|
|
|
Furniture
and fixtures
|
7
years
|
|
|
Computer
equipment and software
|
3-5
years
|
The
cost
and accumulated depreciation of assets sold or retired are removed from their
respective accounts, and any resulting net gain or loss is recognized in the
accompanying consolidated statements of operations.
The
carrying value of long-lived assets is reviewed on a regular basis for the
existence of facts, both internally and externally, that may suggest impairment.
Recoverability of assets to be held and used is measured by comparing the
carrying amount of an asset to the estimated undiscounted future cash flows
expected to be generated by the asset. If the carrying amount of the assets
exceeds its estimated undiscounted future net cash flows, an impairment charge
is recognized in the amount by which the carrying amount of the asset exceeds
the fair value of the assets.
Intangible
Assets
Patents,
copyrights and other intangible assets are amortized using the straight-line
method over their estimated period of benefit, ranging from three to twenty
years. Management of the Company evaluates the recoverability of intangible
assets periodically and takes into account events or circumstances that warrant
revised estimates of useful lives or that indicate impairment exists.
Accounting
for Stock Based Compensation
Effective
January 1, 2006, the Company adopted the provisions of Statement of
Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Payment,”
(“FAS 123R”) which establishes accounting for equity instruments exchanged for
employee services. Under the provisions of FAS 123R, share-based compensation
cost is measured at the grant date, based on the calculated fair value of the
award, and is recognized as an expense on a straight-line basis over the
employee’s requisite service period (generally the vesting period of the equity
grant). In March 2005, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 107 (“SAB 107”) relating to FAS 123R. The Company has
applied the provisions of SAB 107 in its adoption of FAS 123R.
Prior
to
January 1, 2006, the Company accounted for share-based compensation to employees
in accordance with Accounting Principles Board Opinion (“APB”) No. 25,
“Accounting for Stock Issued to Employees,” and related interpretations. The
Company also followed the disclosure requirements of SFAS No. 123, “Accounting
for Stock-Based Compensation”, as amended by SFAS 148, “Accounting for
Stock-Based Compensation - Transition and Disclosure”. The Company elected to
adopt the modified prospective transition method as provided by FAS 123R and,
accordingly, financial statement amounts for the prior periods have not been
retroactively adjusted to reflect the fair value method of expensing share-based
compensation. Under the modified prospective method, share-based expense
recognized after adoption includes: (a) share-based expense for all awards
granted prior to, but not yet vested as of January 1, 2006, based on the
grant date fair value estimated in accordance with the original provisions
of
SFAS No. 123, as amended by SFAS 148 and (b) share-based expense for
all awards granted or modified subsequent to January 1, 2006, based on the
grant-date fair value estimated in accordance with the provisions of FAS 123R.
Further, as required under FAS123R, the Company estimates forfeitures for
options granted which are not expected to vest. Changes in these inputs and
assumptions can materially affect the measure of estimated fair value of the
Company’s stock-based compensation expense.
In
November 2005, the FASB issued FASB Staff Position (“FSP”) FAS
No. 123R-3, Transition Election Related to Accounting for the Tax Effects
of Share-Based Payment Awards, (“FSP FAS 123R-3”). FSP FAS 123R-3 provides a
practical exception when a company transitions to the accounting requirements
in
FAS123R. FAS123R requires a company to calculate the pool of excess tax benefits
available to absorb tax deficiencies recognized subsequent to adopting FAS123R
(termed the “APIC Pool”), assuming the company had been following the
recognition provisions prescribed by SFAS No. 123. We have elected to use the
shortcut method under FAP FAS 123R-3 to calculate our APIC Pool.
Revenue
Recognition
Revenue
from product sales is generally recognized at the time the product is shipped,
provided that persuasive evidence of an arrangement exists, title and risk
of
loss has transferred to the customer, the sales price is fixed or determinable
and collection of the receivable is reasonably assured. The Company did not
recognize any product revenue in 2006. The Company’s product revenue for 2005
and 2004 relates primarily to products sold through retail distribution
channels, with limited sales direct to end users through the Company’s own
website and direct value added resellers.
In
addition to reserves for sales returns, prior year gross product revenue was
reduced for price protection programs, customer rebates and cooperative
marketing expenses deemed to be sales incentives to derive net revenue. Revenues
for the periods ended December 31, 2005 and 2004 were reduced for cooperative
marketing costs in the amount of $29,932 and $233,201, respectively.
Shipping
and Handling Fees and Costs
The
Company included shipping and handling fees billed to customers in net revenue
in prior years. Shipping and handling costs associated with outbound freight
are
included in sales and marketing expenses and totaled $29,365 and $29,234 for
the
years ended December 31, 2005 and 2004, respectively.
Research
and Development Expenses
Research
and development costs are expensed as incurred and include salaries and
benefits, costs paid to third party contractors, prototype expenses, maintenance
costs for software development tools, depreciation, amortization, and a portion
of facilities costs.
Advertising
Costs
Advertising
costs are charged to operations when incurred. The Company incurred advertising
costs related to continuing operations of $1,893, $107,495, and $215,747, for
the years ended December 31, 2006, 2005 and 2004, respectively.
Loss
per Common Share
Basic
loss per common share is determined based on the weighted-average number of
common shares outstanding during each year. Diluted loss per common share is
the
same as basic loss per common share as all potential common shares are excluded
from the calculation, as their effect is anti-dilutive. The weighted-average
number of common shares outstanding for the years ended December 31, 2006,
2005
and 2004, was 23,130,036, 20,327,750, and 17,989,135, respectively. Options
and
warrants to purchase 7,680,326, 7,016,572, and 6,620,603, shares of common
stock
that were outstanding at December 31, 2006, 2005 and 2004, respectively, were
excluded from the computation of diluted earnings per share as the effect of
these options and warrants would have been anti-dilutive.
Other
Comprehensive Loss
The
Company’s other comprehensive loss is comprised of net unrealized losses on
investments available-for-sale which are included, net of tax, in accumulated
other comprehensive (loss) income in the consolidated statements of
shareholders’ equity.
Leases
The
Company uses operating leases for its facilities. For those leases that contain
rent escalations or rent concessions, the Company records the total rent payable
during the lease term on a straight-line basis over the term of the leases
with
the difference between the rents paid and the straight-line rent recorded as
a
deferred rent liability in the accompanying Consolidated Balance
Sheets.
Consolidated
Statements of Cash Flows
On
May
31, 2006, the Company issued options, valued at approximately $63,000, under
the
terms of the 2000 Performance Equity Plan as consideration for professional
services (see Note 8).
In
March
2006, the Company recorded leasehold improvements of $437,314 with a
corresponding entry to deferred rent, reflecting a tenant improvement allowance
under the lease agreement for the Company’s new corporate location (see Notes 5
and 11). The increase in deferred rent is included as a cash inflow in net
cash
used for operating activities and the related increase in leasehold improvements
is included as a cash outflow in net cash used for investing activities in
the
accompanying consolidated statements of cash flows.
In
connection with the private placement of 2,373,355 shares of the Company’s
common stock on February 3, 2006, the Company issued warrants to purchase
593,335 shares of common stock. These warrants were recorded at their relative
fair value of approximately $2.6 million (see Note 9).
The
Company issued 5,092 shares of its common stock valued at approximately $53,000
on April 3, 2006, 6,035 shares of its common stock valued at approximately
$53,000 on January 3, 2006 and 8,541 shares of its common stock valued at
approximately $53,000 on October 3, 2005 as consideration for engineering
consulting services (see Note 9).
In
connection with the private placement of 2,880,000 shares of the Company’s
common stock on March 10, 2005, the Company issued warrants to purchase 720,000
shares of common stock. These warrants were recorded at their estimated fair
value of approximately $3.1 million (see Note 9). On April 12, 2005, the Company
issued options, valued at approximately $146,000, under the terms of the 2000
Performance Equity Plan as consideration for professional services (see Note
8).
On
May
14, 2004, the Company issued 46,820 shares of restricted common stock, valued
at
approximately $206,000, under the terms of the 2000 Performance Equity Plan
to
former employees as part of the severance package pertaining to the discontinued
operations (see Notes 8,9 and 15).
Income
Tax Policy
The
provision for income taxes is based on loss before taxes as reported in the
accompanying consolidated statements of operations. Deferred tax assets and
liabilities are recognized for the expected future tax consequences of events
that have been included in the financial statements or tax returns. Deferred
tax
assets and liabilities are determined based on differences between the financial
statement carrying amounts and the tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse. Valuation allowances are established to reduce deferred tax assets
when, based on available objective evidence, it is more likely than not that
the
benefit of such assets will not be realized.
Recent
Accounting Pronouncements
In
September 2006, the Financial Accounting Standards Board issued SFAS No. 157,
“Fair Value Measurements” (“SFAS 157”). This statement defines fair value as
used in numerous accounting pronouncements, establishes a framework for
measuring fair value in generally accepted accounting principles (“GAAP”) and
expands disclosure related to the use of fair value measures in financial
statements. SFAS 157 does not expand the use of fair value measures in financial
statements, but standardizes its definition and guidance in GAAP. SFAS 157
is
effective for fiscal years beginning after November 15, 2007. We will adopt
the
provisions of SFAS 157 on January 1, 2008. We have evaluated SFAS 157 and do
not
anticipate that it will have an impact on our financial statements when adopted.
In
September 2006, the Securities and Exchange Commission (“SEC”) released Staff
Accounting Bulletin No. 108, “Considering the Effects of Prior Year
Misstatements When Quantifying Misstatements in Current Year Financial
Statements” (“SAB 108”). SAB 108 provides guidance on how the effects of the
carryover or reversal of prior year financial statement misstatements should
be
considered in quantifying a current year misstatement. Prior practice allowed
the evaluation of materiality on the basis of (1) the error quantified as the
amount by which the current year income was misstated (“rollover method”) or (2)
the cumulative error quantified as the cumulative amount by which the current
year balance sheet was misstated (“iron curtain method”). The guidance provided
by SAB 108 requires both methods to be used in evaluating materiality.
Immaterial prior year errors may be corrected with the first filing of prior
year financial statements after adoption. The cumulative effect of the
correction would be reflected in the opening balance sheet with appropriate
disclosure of the nature and amount of each individual error corrected in the
cumulative adjustment, as well as a disclosure of the cause of the error and
that the error had been deemed to be immaterial in the past. SAB 108 is
effective for the fiscal year ended December 31, 2006 . The Company has
evaluated SAB 108 and determined that it does not have an impact on its
financial statements.
In
June
2006, the Financial Accounting Standards Board issued FASB Interpretation No.
48
(“FIN 48”), “Accounting for Uncertainty in Income Taxes, an interpretation of
SFAS No. 109, “Accounting for Income Taxes.” FIN 48 provides a comprehensive
model for how a company should recognize, measure, present, and disclose
uncertain tax positions that a company has taken or expects to take on a tax
return. FIN 48 becomes effective for annual periods beginning after December
15,
2006. The Company will adopt the provisions of FIN 48 effective January 1,
2007.
The Company is in the process of evaluating the impact of Fin 48 on the
financial statements when adopted.
4.
PREPAID
EXPENSES
Prepaid
expenses consisted of the following at December 31, 2006 and 2005:
|
2006
|
|
2005
|
|||||
|
Prepaid
insurance
|
$
|
558,356
|
$
|
674,327
|
|||
|
Prepaid
services
|
0
|
200,000
|
|||||
|
Other
prepaid expenses
|
466,776
|
499,368
|
|||||
|
$
|
1,025,132
|
$
|
1,373,695
|
||||
5.
PROPERTY
AND EQUIPMENT, NET
Property
and equipment, at cost, consisted of the following at December 31, 2006 and
2005:
|
2006
|
|
2005
|
|||||
|
Equipment
and software
|
$
|
8,249,267
|
$
|
8,094,406
|
|||
|
Leasehold
improvements
|
762,076
|
282,993
|
|||||
|
Aircraft
|
340,000
|
340,000
|
|||||
|
Furniture
and fixtures
|
502,643
|
471,788
|
|||||
|
9,853,986
|
9,189,187
|
||||||
|
Less
accumulated depreciation and amortization
|
(7,759,686
|
)
|
(7,321,303
|
)
|
|||
|
$
|
2,094,300
|
$
|
1,867,884
|
||||
Depreciation
expense related to property and equipment was $829,797, $1,321,477, and
$1,814,892, in 2006, 2005, and 2004, respectively. Depreciation related to
discontinued operations of $159,467 in 2004 is included in gain from
discontinued operations.
In
2005,
the Company recognized impairment charges on certain long-lived assets related
to its retail activities. These charges include impairment of fixed assets,
primarily the manufacturing and prototype facility assets, of approximately
$626,000. These impairment charges are included as impairment loss in the
consolidated statement of operations.
6.
OTHER
ASSETS
Other
assets consisted of the following at December 31, 2006 and 2005:
|
2006
|
|
|||||||||
|
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Value
|
||||
|
Patents
and copyrights
|
$
|
13,426,154
|
$
|
3,706,477
|
$
|
9,719,677
|
||||
|
Prepaid
licensing fees
|
705,000
|
606,250
|
98,750
|
|||||||
|
Deposits
and other
|
390,057
|
0
|
390,057
|
|||||||
|
$
|
14,521,211
|
$
|
4,312,727
|
$
|
10,208,484
|
|||||
|
2005
|
||||||||||
|
Gross
Carrying Amount
(net
of impairment)
|
|
|
Accumulated
Amortization
|
|
|
Net
Value
|
||||
|
Patents
and copyrights
|
$
|
12,093,007
|
$
|
3,036,801
|
$
|
9,056,206
|
||||
|
Prepaid
licensing fees
|
705,000
|
415,250
|
289,750
|
|||||||
|
Prepaid
services, non current portion
|
200,000
|
200,000
|
0
|
|||||||
|
Deposits
and other
|
352,846
|
0
|
352,846
|
|||||||
|
$
|
13,350,853
|
$
|
3,652,051
|
$
|
9,698,802
|
|||||
The
Company has pursued an aggressive schedule for filing and acquiring patents
related to its wireless technologies. Patent costs represent legal and filing
costs incurred to obtain patents and trademarks for product concepts and
methodologies developed by the Company. Capitalized patent costs are being
amortized over the estimated lives of the related patents, ranging from fifteen
to twenty years.
In
2005,
the Company recognized impairment charges on certain long-lived assets related
to its retail activities. These charges include impairment of prepaid license
fees of approximately $662,000, and impairment of other intangible assets of
approximately $584,000. These impairment charges are included as impairment
loss
in the consolidated statement of operations.
Amortization
expense for the years ended December 31, 2006, 2005 and 2004 is as
follows:
|
Amortization
Expense
|
|||||||||||||
|
Weighted
average estimated life
(in
years)
|
2006
|
2005
|
2004
|
||||||||||
|
Patents
and copyrights
|
17
|
$
|
669,700
|
$
|
574,324
|
$
|
555,504
|
||||||
|
Prepaid
licensing fees
|
4
|
191,000
|
424,333
|
613,917
|
|||||||||
|
Other
intangibles
|
3
|
0
|
140,190
|
116,825
|
|||||||||
|
Total
amortization
|
$
|
860,700
|
$
|
1,138,847
|
$
|
1,286,246
|
|||||||
Amortization
related to discontinued operations of $65,637 for 2004 is included in gain
from
discontinued operations.
Future
estimated amortization expense for other assets that have remaining unamortized
amounts as of December 31, 2006 were as follows:
|
2007
|
|
$780,750
|
|
2008
|
|
$694,500
|
|
2009
|
|
$694,500
|
|
2010
|
|
$694,500
|
|
2011
|
|
$694,500
|
7.
INCOME
TAXES AND TAX STATUS
No
current or deferred tax provision or benefit was recorded for 2006, 2005 and
2004 as a result of current losses and full deferred tax valuation allowances
for all periods. 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, 2006, 2005 and 2004 is as follows:
|
2006
|
|
2005
|
|
2004
|
||||||
|
Tax
benefit at statutory rate
|
$
|
(5,377,324
|
)
|
$
|
(7,853,812
|
)
|
$
|
(5,036,945
|
)
|
|
|
State
tax benefit
|
(553,548
|
)
|
(808,481
|
)
|
(518,509
|
)
|
||||
|
Increase
in valuation allowance
|
6,340,888
|
9,454,464
|
6,382,942
|
|||||||
|
Research
and development credit
|
(597,550
|
)
|
(642,769
|
)
|
(733,481
|
)
|
||||
|
Other
|
187,534
|
(149,402
|
)
|
(94,007
|
)
|
|||||
|
$
|
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, 2006 and 2005:
|
2006
|
|
2005
|
|||||
|
Gross
deferred tax assets:
|
|||||||
|
Net
operating loss carryforward
|
$
|
54,830,089
|
$
|
50,158,875
|
|||
|
Research
and development credit
|
10,077,457
|
9,121,377
|
|||||
|
Patents
and other
|
1,610,196
|
1,522,373
|
|||||
|
Stock
compensation
|
588,358
|
0
|
|||||
|
Accrued
liabilities
|
50,100
|
78,162
|
|||||
|
67,156,200
|
60,880,787
|
||||||
|
Less
valuation allowance
|
(67,042,100
|
)
|
(60,701,212
|
)
|
|||
|
114,100
|
179,575
|
||||||
|
Gross
deferred tax liabilities:
|
|||||||
|
Fixed
assets
|
114,100
|
82,713
|
|||||
|
Restricted
stock issuance
|
0
|
96,862
|
|||||
|
|
114,100
|
179,575
|
|||||
|
Net
deferred tax asset
|
$
|
0
|
$
|
0
|
|||
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. At December 31, 2006, the Company
had net operating loss (“NOL”) and research and development tax credit
carry-forwards for income tax purposes of $146,213,571 and $10,077,457,
respectively, which expire in varying amounts from 2008 through 2025. The
Company’s ability to benefit from the net operating loss and research and
development tax credit carry-forwards could be limited under certain provisions
of the Internal Revenue Code if ownership of the Company changes by more than
50%, as defined.
8.
STOCK
OPTIONS, WARRANTS AND STOCK-BASED COMPENSATION PLANS:
The
following table presents share-based compensation expense included in the
Company’s consolidated statements of operations for the years ended December 31,
2006, 2005 and 2004, respectively:
|
Year
ended December 31,
|
|
|||||||||
|
|
|
2006
|
|
2005
|
|
2004
|
||||
|
Research
and development expense
|
$
|
819,366
|
$
|
53,333
|
$
|
57,977
|
||||
|
Sales
and marketing expense
|
336,241
|
-
|
144,330
|
|||||||
|
General
and administrative expense
|
1,195,246
|
887,450
|
803,602
|
|||||||
|
Total
share-based expense
|
$
|
2,350,853
|
$
|
940,783
|
$
|
1,005,909
|
||||
The
Company did not recognize compensation expense for employee stock option awards
for the years ended December 31, 2005 and 2004 when the exercise price of the
employee stock award equaled the market price of the underlying stock on the
date of grant. The Company did recognize compensation expense for non-employee
share-based awards of $940,783 and $800,000 for the years ended December 31,
2005 and 2004, respectively. In addition, the Company recognized the fair value
of restricted stock awards to employees, based on market price of the stock
on
the date of grant, of $205,909 for the year ended December 31, 2004.
The
Company did not capitalize any expense related to share-based
payments.
The
Company estimates the fair value of each option award on the date of the grant
using the Black-Scholes option valuation model. Estimates of fair value are
not
intended to predict actual future events or the value ultimately realized by
persons who receive equity awards. Key input assumptions used to estimate the
fair value of stock options include the exercise price of the award, the
expected option term, expected volatility of the Company’s stock over the
option’s expected term, the risk-free interest rate over the option’s expected
term, and the Company’s expected annual dividend yield.
The
fair
value of each option grant for the year ended December 31, 2006 was estimated
on
the grant date using the Black-Scholes option-pricing model with the following
assumptions:
|
Year
ended
December
31, 2006
|
||
|
Expected
option term (1)
|
4.25
to 7 years
|
|
|
Expected
volatility factor (2)
|
69.37%
to 80.33%
|
|
|
Risk-free
interest rate (3)
|
4.18%
to 5.21%
|
|
|
Expected
annual dividend yield
|
0%
|
| (1) |
The
expected term was determined based on historical activity for grants
with
similar terms and for similar groups of employees and represents
the
period of time that options are expected to be outstanding. For employee
options, groups of employees with similar historical exercise behavior
are
considered separately for valuation purposes. For directors and named
executive officers, the contractual term is used as the expected
term
based on historical behavior. In cases where there was not sufficient
historical information for grants with similar terms, the simplified,
or
“plain-vanilla” method of estimating option life was utilized.
|
| (2) |
The
stock volatility for each grant is measured using the weighted average
of
historical daily price changes of the Company’s common stock over the most
recent period equal to the expected option life of the grant.
|
| (3) |
The
risk-free interest rate for periods equal to the expected term of
the
share option is based on the U.S. Treasury yield curve in effect
at the
time of the grant.
|
The
Company had previously adopted the provisions of SFAS No. 123, as amended by
SFAS No. 148, through disclosure only. The following table illustrates the
effect on the net loss and loss per share for the years ended December 31,
2005
and 2004, as if the Company had applied the fair value recognition provisions
of
SFAS No. 123, as amended by SFAS No. 148, to stock-based employee
compensation.
|
Year
ended December 31,
|
|
||||||
|
|
|
2005
|
|
2004
|
|||
|
Net
loss, as reported
|
$
|
(23,099,448
|
)
|
$
|
(14,814,543
|
)
|
|
|
Stock-based
compensation expense that would
have
been included in reported net loss if the
fair
value provisions of SFAS No. 123 had been
applied
to all awards
|
(8,302,921
|
)
|
(12,213,448
|
)
|
|||
|
Pro
forma net loss
|
$
|
(31,402,369
|
)
|
$
|
(27,027,991
|
)
|
|
|
Basic
and diluted net loss per share:
|
|||||||
|
As
reported
|
$
|
(1.14
|
)
|
$
|
(0.82
|
)
|
|
|
Proforma
|
$
|
(1.54
|
)
|
$
|
(1.50
|
)
|
|
The
fair
value of each option grant for the years ended December 31, 2005 and 2004 were
estimated on the date of grant using the Black-Scholes option-pricing model
with
the following assumptions:
|
Year
ended December 31, 2005
|
Year
ended December 31, 2004
|
|
|
Expected
option term
|
3
to 10 years
|
5
to 10 years
|
|
Expected
volatility factor
|
76.42%
to 85.55%
|
77.36%
to 79.91%
|
|
Risk-free
interest rate
|
3.72%
to 4.49%
|
2.99%
to 4.80%
|
|
Expected
annual dividend yield
|
0%
|
0%
|
Stock
Incentive Plans
1993
Stock Plan
The
Company adopted a stock plan in September 1993 (the “1993 Plan”). As of
September 10, 2003, the Company was no longer able to issue grants under the
1993 Plan. The 1993 Plan, as amended, provided for the grant of options and
other Company stock awards to employees, directors and consultants, not to
exceed 3,500,000 shares of common stock. Options granted to employees and
consultants under the 1993 Plan vested for periods up to ten years and are
exercisable for a period of five years from the date the options vest. Options
granted to directors under the 1993 Plan were exercisable immediately and expire
ten years from the date of grant.
2000
Performance Equity Plan
The
Company adopted a performance equity plan in July 2000 (the “2000 Plan”). The
2000 Plan provides for the grant of options and other Company stock awards
to
employees, directors and consultants, not to exceed 5,000,000 shares of common
stock. The plan provides for benefits in the form of incentive stock options,
nonqualified stock options, and stock appreciation rights, restricted share
awards, stock bonuses and various stock benefits or cash. Options granted to
employees and consultants under the 2000 Plan generally vest over periods up
to
five years and are exercisable for a period of up to five years from the date
the options become vested. Options granted to directors under the 2000 Plan
are
generally exercisable immediately and expire seven to ten years from the date
of
grant. Options to purchase 895,093 shares of common stock were available for
future grants under the 2000 Plan at December 31, 2006.
A
summary
of option activity under the 1993 and 2000 Plans as of December 31, 2006, and
changes during the year then ended is presented below:
|
|
Shares
|
Weighted-Average
Exercise
Price
|
|
Weighted-Average
Remaining Contractual Term
|
|
Aggregate
Intrinsic
Value
($)
|
|||||||
|
Outstanding
at beginning of year
|
5,039,171
|
$
|
21.51
|
||||||||||
|
Granted
|
705,407
|
8.84
|
|||||||||||
|
Exercised
|
(39,250
|
)
|
10.14
|
$
|
157,910
|
||||||||
|
Forfeited
|
(110,544
|
)
|
9.19
|
||||||||||
|
Expired
|
(485,194
|
)
|
19.12
|
||||||||||
|
Outstanding
at end of year
|
5,109,590
|
$
|
20.38
|
4.29
years
|
$
|
7,522,307
|
|||||||
|
Exercisable
at end of year
|
4,181,537
|
$
|
23.20
|
3.82
years
|
$
|
4,321,179
|
|||||||
A
summary
of the status of the Company’s nonvested shares as of December 31, 2006, and
changes during the year ended December 31, 2006 is presented below:
|
Nonvested
Shares
|
|
||||||
|
|
|
Shares
|
|
Weighted-Average
Grant-Date
Fair
Value
|
|||
|
Nonvested
at January 1, 2006
|
675,898
|
$
|
5.00
|
||||
|
Granted
|
705,407
|
5.41
|
|||||
|
Vested
|
(342,708
|
)
|
6.15
|
||||
|
Forfeited
|
(110,544
|
)
|
5.61
|
||||
|
Nonvested
at December 31, 2006
|
928,053
|
$
|
4.82
|
||||
The
total
fair value of shares vested during the year ended December 31, 2006 was
$2,107,390. As of December 31, 2006, there was $3,492,623 of total unrecognized
compensation cost related to nonvested share-based compensation awards granted
under the 1993 and 2000 Plans. That cost is expected to be recognized over
a
weighted-average period of 2.4 years.
The
options granted under the 2000 Plan include a grant to an outside consultant
in
July 2006 for the purchase of up to 127,500 shares of its common stock at an
exercise price of $9.10 per share. These options were granted as performance
incentives in connection with a consulting agreement with a thirty-month term.
The number of options that will vest and the date on which they will vest are
dependent upon the completion of specific performance conditions. Vested
options, if any, will remain exercisable for four years from the date of grant.
The consulting arrangement may be terminated by the company for any reason
with
thirty days notice, and upon such termination, any unvested shares shall be
forfeited. As the number of shares that will ultimately vest is indeterminable
at the date of grant, management must adjust the options to their estimated
fair
value at each interim reporting date until vesting occurs. Fair value is
estimated at each interim reporting date using the Black-Scholes option pricing
model and then amortized on a straight line basis over the estimated remaining
requisite service period. At December 31, 2006, the total estimated fair value
of these options was approximately $94,950. For the year ended December 31,
2006, approximately $18,990 of expense related to these options was recognized
in the Company’s consolidated statement of operations.
The
options granted under the 2000 Plan also include a grant to an outside
consultant on May 31, 2006 for the purchase of an aggregate of 10,000 shares
of
its common stock at an exercise price of $10.20 per share for consulting
services to be provided over a one year period. The options vest in four equal
quarterly installments and expire five years from the grant date. The total
fair
value of these options of approximately $63,000 was estimated as of the date
of
grant using the Black-Scholes option pricing model and will be
amortized to expense in the Company’s
consolidated
statement of operations
over the
one-year term of the agreement.
On
April
12, 2005, the Company granted stock options to an outside consultant under
the
2000 Plan in connection with a consulting agreement to purchase an aggregate
of
40,000 shares of its common stock at an exercise price of $10 per share. These
options expire thirty-six months from the date they become vested. The first
20,000 options vested ratably over fifteen months. The remaining 20,000 options
vested if certain market conditions were met. These market conditions were
not
met and the options were cancelled unvested in 2006. The total fair value of
these options of approximately $146,000 was estimated as of the date of grant
using the Black-Scholes option pricing model with the following assumptions:
risk free interest rate of 3.86%, no expected dividend yield, expected life
of
three years and expected volatility of 81.86%.
The
estimated fair value of the options was amortized to expense in the Company’s
consolidated
statement of operations
over the
term of the contract. For the years ended December 31, 2006 and 2005,
approximately $58,550 and $87,450 was amortized to expense related to this
contract, respectively
Non-Plan
Options/Warrants
The
Company has granted options and warrants outside the 1993 and 2000 Plans for
employment inducements, non-employee consulting services, and for underwriting
and other services in connection with securities offerings. Non-plan options
and
warrants are generally granted with exercise prices equal to fair market value
of the underlying shares at the date of grant.
A
summary
of non-plan option and warrant activity as of December 31, 2006, and changes
during the year then ended is presented below:
|
|
Shares
|
|
Weighted-Average
Exercise
Price
|
|
Weighted-Average
Remaining Contractual Term
|
|
Aggregate
Intrinsic
Value
($)
|
||||||
|
Outstanding
at beginning of period
|
1,977,401
|
$
|
30.29
|
||||||||||
|
Granted
|
593,335
|
8.50
|
|||||||||||
|
Exercised
|
-
|
-
|
|
||||||||||
|
Forfeited
|
-
|
-
|
|||||||||||
|
Expired
|
-
|
-
|
|||||||||||
|
Outstanding
at end of period
|
2,570,736
|
$
|
25.26
|
4.2
years
|
$
|
3,120,338
|
|||||||
|
Exercisable
at end of period
|
2,570,736
|
$
|
25.26
|
4.2
years
|
$
|
3,120,338
|
|||||||
The
weighted average fair value of non-plan warrants granted in the year ended
December 31, 2006 was $4.38 per share.
Of
the
non-plan options and warrants outstanding and exercisable at December 31, 2006,
warrants representing 2,455,736 shares were issued in connection with the sale
of equity securities in various private placement transactions in 2000, 2001,
2005 and 2006. The estimated fair value of these warrants at the time of
issuance of $20,290,878 is included in shareholders’ equity in the Company’s
consolidated balance sheets. The remaining 115,000 share options outstanding
and
exercisable at December 31, 2006 represent options granted to employees and
directors in 1999.
Upon
exercise of options under the 1993 Plan and the 2000 Plan, the Company issues
new registered shares of its common stock. Cash received from option exercises
under all share-based payment arrangements for the year ended December 31,
2006
was $240,035. No tax benefit was realized for the tax deductions from exercise
of the share-based payment arrangements for the year ended December 31, 2006
as
the benefits were fully offset by a valuation allowance.
9.
STOCK
AUTHORIZATION AND ISSUANCE
Preferred
Stock
ParkerVision
has 15,000,000 shares of preferred stock authorized for issuance at the
direction of the board of directors. As of December 31, 2006, the Company has
no
outstanding preferred stock.
On
November 17, 2005, the board of directors designated 100,000 shares of
authorized preferred stock as the Series E Preferred Stock in conjunction with
its adoption of a Shareholder Protection Rights Agreement (Note
10).
Common
Stock and Warrants
On
February 23, 2007, the Company completed the sale of an aggregate of 992,441
shares of its common stock to a limited number of domestic
institutional
and other investors in a private placement transaction pursuant to offering
exemptions under the Securities Act of 1933. The shares, which represent 4.1%
of
the Company’s outstanding common stock on an after-issued basis, were sold at a
price of $8.50 per share, for net proceeds of approximately $8.4 million. The
net proceeds from this transaction will be used for general working capital
purposes.
The
Common Stock issued in the private offering will be registered by the Company
for re-offer and re-sale by the investors. The Company has committed to file
the
registration statement within 45 days of closing and to cause the registration
statement to become effective on or prior to the earlier of (i) the fifth
trading day following the date that we are notified by the SEC that the
registration statement will not be reviewed or is no longer subject to review,
and (ii) 120 days after the closing date. If the Common Stock is not registered
for resale within those time periods, the Company will pay liquidated damages
in
the amount of one percent of the amount invested for each 30-day period (pro
rated) until the filing or effectiveness of the registration statement, up
to a
maximum of ten percent of the gross proceeds.
On
February 3, 2006, ParkerVision completed the sale of an aggregate of 2,373,335
shares of common stock to a limited number of institutional and other investors
in a private placement transaction pursuant to offering exemptions under the
Securities Act of 1933. The shares, which represented 10.2% of the Company’s
outstanding common stock on an after-issued basis, were sold at a price of
$7.50
per share, for net proceeds of approximately $16.2 million. Warrants to purchase
an additional 593,335 shares of common stock were issued in connection with
the
transaction for no additional consideration. The warrants were immediately
exercisable at an exercise price of $8.50 per share and expire on February
3,
2011. The warrants may be redeemed by the Company after February 3, 2008, at
$.01 per warrant, provided that the shares underlying the warrants are
registered for resale and the common stock traded at a volume weighted-average
price equal to or greater than 200% of the then exercise price for a prescribed
period of time. The estimated fair value of the warrants of $2,597,396 was
classified as equity on the issuance date.
On
September 19, 2005, the Company entered into a consulting agreement with an
independent engineering consultant to perform services for the Company over
a
one year period. Total consideration for the services in the amount of $160,000
was payable to the consultant in cash or in shares of the Company’s common stock
at the Company’s sole option. The Company issued 11,127 and 8,541 shares of its
common stock in 2006 and 2005, respectively in settlement of this obligation.
The shares were issued under the Company’s 2000 Plan.
On
March
14, 2005, ParkerVision consummated the sale of an aggregate of 2,880,000 shares
of common stock to a limited number of institutional and other investors in
a
private placement transaction pursuant to offering exemptions under the
Securities Act of 1933. The shares, which represented 14% of the Company’s
outstanding common stock on an after-issued basis, were sold at a price of
$7.50
per share, for net proceeds of approximately $20.1 million. Warrants to purchase
an additional 720,000 shares of common stock were issued in connection with
the
transaction for no additional consideration. The warrants were immediately
exercisable at an exercise price of $9.00 per share and expire on March 10,
2010. The estimated fair value of the warrants of $3,119,777 was classified
as
equity on the issuance date.
On
May
14, 2004, the Company issued 46,820 shares of restricted common stock, valued
at
approximately $206,000, under the terms of the 2000 Plan to former employees
as
part of the severance package pertaining to the discontinued operations (Note
15).
10.
SHAREHOLDER
PROTECTION RIGHTS AGREEMENT
On
November 21, 2005, the Company adopted a Shareholder Protection Rights Agreement
(“Rights Agreement”) which calls for the issuance, on November 29, 2005, as a
dividend, rights to acquire fractional shares of Series E Preferred Stock.
The
Company did not assign any value to the dividend as the value of these rights
is
not believed to be objectively determinable. The principal objective of the
Rights Agreement is to cause someone interested in acquiring the Company to
negotiate with the Company’s Board of Directors rather than launch an
unsolicited or hostile bid. The Rights Agreement subjects a potential acquirer
to substantial voting and economic dilution. Each share of Common Stock issued
in the future by the Company will include an attached right.
The
rights initially are not exercisable and trade with the Common Stock of the
Company. In the future, the rights may become exchangeable for shares of Series
E Preferred Stock with various provisions that may discourage a takeover bid.
Additionally, the rights have what are known as “flip-in” and “flip-over”
provisions that could make any acquisition of the Company more costly to the
potential acquirer. The rights may separate from the Common Stock following
the
acquisition of 15% or more of the outstanding shares of Common Stock by an
acquiring person. Upon separation, the holder of the rights may exercise their
right at an exercise price of $45 per right (the “Exercise Price”), subject to
adjustment and payable in cash.
Upon
payment of the exercise price, the holder of the right will receive from the
Company that number of shares of Common Stock having an aggregate market price
equal to twice the Exercise Price, as adjusted. The Rights Agreement also has
a
flip over provision allowing the holder to purchase that number of shares of
common/voting equity of a successor entity, if the Company is not the surviving
corporation in a business combination, at an aggregate market price equal to
twice the Exercise Price.
The
Company has the right to substitute for any of its shares of Common Stock that
it is obligated to issue, shares of Series E Preferred Stock at a ratio of
one
ten-thousandth of a share of Series E Preferred Stock for each share of Common
Stock. The Series E Preferred Stock, if and when issued, will have quarterly
cumulative dividend rights payable when and as declared by the board of
directors, liquidation, dissolution and winding up preferences, voting rights
and will rank junior to other securities of the Company unless otherwise
determined by the board of directors.
The
rights may be redeemed upon approval of the board of directors at a redemption
price of $0.01. The Rights Agreement expires on November 21, 2015.
11.
COMMITMENTS
AND CONTINGENCIES
Lease
Commitments
The
Company entered into a lease agreement for its new headquarters facility in
Jacksonville, Florida, pursuant to a non-cancelable lease agreement effective
June 1, 2006. The lease provides for a straight-lined monthly rental payment
of
$15,806 through October 31, 2011 with an option for renewal. The lease provides
for a tenant improvement allowance of approximately $437,000 which has been
recorded in the accompanying balance sheet as leasehold improvements with a
corresponding entry to deferred rent. The leasehold improvements will be
depreciated over the lease term. Deferred rent will be amortized as a reduction
to lease expense over the lease term.
The
Company also leases office space in Lake Mary, Florida for a wireless design
center. The lease term, as amended, was renewed in September 2005 and provides
for a straight-lined monthly rental payment of approximately $20,296 through
December 2010.
In
addition to sales tax payable on base rental amounts, certain leases obligate
the Company to pay pro-rated annual operating expenses for the properties.
Rent
expense, net of sublease income, for the years ended December 31, 2006, 2005,
and 2004 was $510,014, $688,258, and $758,718, respectively. Future minimum
lease payments under all non-cancelable operating leases that have initial
or
remaining terms in excess of one year as of December 31, 2006 were as
follows:
|
2007
|
$
|
480,000
|
||
|
2008
|
495,000
|
|||
|
2009
|
510,000
|
|||
|
2010
|
525,000
|
|||
|
2011
|
242,000
|
|||
|
|
$
|
2,252,000
|
||
Legal
Proceedings
The
Company is subject to legal proceedings and claims which arise in the ordinary
course of its business. The Company believes, based upon advice from outside
legal counsel, that the final disposition of such matters will not have a
material adverse effect on its financial position, results of operations or
liquidity.
12.
RELATED-PARTY
TRANSACTIONS
The
Company paid approximately $1,532,000, $1,921,000 and $1,519,000 in 2006, 2005
and 2004, respectively, for patent-related legal services to a law firm, of
which Robert Sterne, a Company director since September 2006, is a
partner.
Through
June 2006, the Company leased its headquarters facility from the Chairman and
Chief Executive Officer of the Company and Barbara Parker, a related party.
The
lease provided annual base rental payments of approximately $280,000. The
Company did not incur any losses related to early termination of this lease.
13.
CONCENTRATIONS
OF CREDIT RISK
Financial
instruments that potentially subject the Company to a concentration of credit
risk principally consist of cash, cash equivalents and accounts receivable.
At
December 31, 2006, the Company had cash balances on deposit with banks that
exceeded the balance insured by the F.D.I.C. The Company maintains its cash
investments with what management believes to be quality financial institutions
and limits the amount of credit exposure to any one institution.
14.
COSTS
ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITY
In
June
2005, the Company formally announced its decision to exit its retail business
activities and terminated 44 employees whose roles were related to these
activities. For the year ended December 31, 2005, the Company paid approximately
$575,000 in termination benefits which are included in the consolidated
statement of operations.
In
addition to termination benefits, the Company recognized impairment charges
on
certain long-lived assets related to its retail activities. These charges
include impairment of prepaid license fees of approximately $662,000, impairment
of other intangible assets of approximately $584,000 and impairment of fixed
assets, primarily the manufacturing and prototype facility assets, of
approximately $626,000. These impairment charges are included as impairment
loss
in the consolidated statement of operations.
The
Company also reduced the carrying value of its inventories to their estimated
realizable value at June 30, 2005, resulting in a charge of approximately $2.25
million which is included as a separate component of cost of goods sold in
the
consolidated statement of operations.
During
the second half of 2005, the Company reclaimed unsold product inventory from
the
distribution channel, liquidated its raw materials and finished product
inventory through wholesale channels and liquidated its manufacturing and
prototype facility assets and other property and equipment utilized in the
retail business activities. This process was substantially completed as of
December 31, 2005.
15.
DISCONTINUED
OPERATIONS
On
May
14, 2004, the Company completed the sale of certain designated assets of its
video division to Thomson Broadcast & Media Solutions, Inc. and Thomson
Licensing, SA (collectively referred to as “Thomson”). The assets sold included
the PVTV and CameraMan products, services, patents, patent applications,
tradenames, trademarks and other intellectual property, inventory, specified
design, development and manufacturing equipment, and obligations under
outstanding contracts for products and services and other assets.
The
net
book value of the assets and liabilities sold to Thomson include the
following:
|
Patents,
net of accumulated amortization of $731,890
|
$
|
681,444
|
||
|
Inventories,
net of reserves for obsolescence of $1,095,354
|
1,702,797
|
|||
|
Furniture
and equipment, net of accumulated depreciation of $913,431
|
584,059
|
|||
|
Prepaids
and other deposits
|
37,364
|
|||
|
Deferred
revenue
|
(1,217,371
|
)
|
||
|
Warranty
reserves
|
(202,911
|
)
|
||
|
Net
book value
|
$
|
1,585,382
|
Inventories
sold consisted of the following:
|
Purchased
materials
|
$
|
1,069,897
|
||
|
Work
in process
|
100,089
|
|||
|
Finished
goods
|
359,174
|
|||
|
Spare
parts and demonstration inventory
|
1,268,991
|
|||
|
2,798,151
|
||||
|
Less
allowance for inventory obsolescence
|
(1,095,354
|
)
|
||
|
|
$
|
1,702,797
|
Property
and equipment sold consisted of the following:
|
Manufacturing
and office equipment
|
$
|
1,347,138
|
||
|
Tools
and dies
|
150,352
|
|||
|
1,497,490
|
||||
|
Less
accumulated depreciation
|
(913,431
|
)
|
||
|
|
$
|
584,059
|
The
sales
price of the assets was approximately $13.4 million. The Company recognized
a
gain on the sale of discontinued operations in 2004 of $11,220,469 which is
net
of losses on the disposal of remaining assets related to the video operations
of
$598,088.
The
Company agreed not to compete with the business of the video division for five
years after the closing date. The Company also agreed not to seek legal recourse
against Thomson in respect of its intellectual property that was transferred
or
should have been transferred if used in connection with the video operations.
Additionally, the Company must indemnify Thomson against intellectual property
claims for an unlimited period of time, without any minimum threshold, and
with
a separate maximum of $5,000,000. Certain other claims by Thomson will not
be
limited as to time or amount.
The
operations of the video business unit were classified as discontinued operations
when the operations and cash flows of the business unit were eliminated from
ongoing operations. The prior years’ operating activities for the video business
unit have also been reclassified to “Gain from discontinued operations” in the
accompanying consolidated statement of operations.
Net
gain
from discontinued operations for the year ended December 31, 2004 includes
the
following components:
|
2004
|
||||
|
Net
revenues
|
$
|
1,507,955
|
||
|
Cost
of goods sold and
operating
expenses
|
4,955,098
|
|||
|
Loss
from operations
|
(3,447,143
|
)
|
||
|
Gain
on sale of assets
|
11,220,469
|
|||
|
Gain
from discontinued operations
|
$
|
7,773,326
|
||
16.
QUARTERLY
FINANCIAL DATA (UNAUDITED)
The
quarterly financial data presented below is in thousands except for per share
data.
|
For
the three months ended
|
|
For
the year ended
|
|
|||||||||||||
|
|
|
March
31, 2006
|
|
June
30,
2006
|
|
September
30, 2006
|
|
December
31, 2006
|
|
December
31,
2006
|
||||||
|
Revenues
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
||||||
|
Gross
margin
|
0
|
0
|
0
|
0
|
0
|
|||||||||||
|
Net
loss from continuing operations
|
(4,344
|
)
|
(4,319
|
)
|
(3,787
|
)
|
(3,366
|
)
|
(15,816
|
)
|
||||||
|
Net
loss
|
$
|
(4,344
|
)
|
$
|
(4,319
|
)
|
$
|
(3,787
|
)
|
$
|
(3,366
|
)
|
$
|
(15,816
|
)
|
|
|
Basic
and diluted net loss
per
common share
|
$
|
(0.19
|
)
|
$
|
(0.18
|
)
|
$
|
(0.16
|
)
|
$
|
(0.14
|
)
|
$
|
(0.68
|
)
|
|
|
For
the three months ended
|
|
For
the year ended
|
|
|||||||||||||
|
|
|
March
31, 2005
|
|
June
30,
2005
|
|
September
30, 2005
|
|
December
31, 2005
|
|
December
31,
2005
|
||||||
|
Revenues
|
$
|
172
|
$
|
123
|
$
|
430
|
$
|
271
|
$
|
996
|
||||||
|
Gross
margin
|
(89
|
)
|
(2,262
|
)
|
91
|
219
|
(2,041
|
)
|
||||||||
|
Net
loss from continuing operations
|
(5,504
|
)
|
(10,191
|
)
|
(3,902
|
)
|
(3,502
|
)
|
(23,099
|
)
|
||||||
|
Net
loss
|
$
|
(5,504
|
)
|
$
|
(10,191
|
)
|
$
|
(3,902
|
)
|
$
|
(3,502
|
)
|
$
|
(23,099
|
)
|
|
|
Basic
and diluted net loss
per
common share
|
$
|
(0.30
|
)
|
$
|
(0.49
|
)
|
$
|
(0.19
|
)
|
$
|
(0.17
|
)
|
$
|
(1.14
|
)
|
|
Item
9. Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure
None.
Item
9A. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
Our
management has established disclosure controls and procedures to ensure that
material information relating to the Company, including its consolidated
subsidiary, is made known to the officers who certify the Company’s financial
reports and to other members of senior management and the Board of Directors.
An
evaluation of the effectiveness of the Company’s disclosure controls and
procedures as of December 31, 2006 was made under the supervision and with
the
participation of the Company’s senior management, including the chief executive
officer and chief financial officer. Based on that evaluation, they concluded
that the Company’s disclosure controls and procedures are effective as of the
end of the period covered by this report.
Management’s
Report on Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act
Rule 13a-15(f). Under the supervision and with the participation of our
management, including our chief executive officer and chief financial officer,
we conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the criteria established in
Internal
Control - Integrated Framework
issued
by
the Committee of Sponsoring Organizations of the Treadway Commission. Based
on
our evaluation under the criteria established in
Internal
Control - Integrated Framework,
our
management concluded that our internal control over financial reporting was
effective as of December 31, 2006. Our management’s assessment of the
effectiveness of the Company’s internal control over financial reporting as of
December 31, 2006 has been audited by PricewaterhouseCoopers LLP, an independent
registered certified public accounting firm, as stated in their report which
is
included herein.
Changes
in Internal Control Over Financial Reporting
For
the
three month period covered by this report, there has been no change in the
Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.
Item
9B. Other Information.
On
March
6, 2007, the Compensation Committee of the Board of Directors adopted a change
in control severance policy for its named executive officers, as discussed
more
fully in “Potential Payments Upon Termination or Change in Control” included in
Item 11.
PART
III
Item
10. Directors, Executive Officers and Corporate
Governance.
Our
directors and executive officers are listed below:
Jeffrey
L. Parker
has been
chairman of the board and our chief executive officer since our inception in
August 1989 and our president from April 1993 to June 1998. From March 1983
to
August 1989, Mr. Parker served as executive vice president for Parker
Electronics, Inc., a joint venture partner with Carrier Corporation performing
research development, manufacturing and sales and marketing for the heating,
ventilation and air conditioning industry.
Cynthia
Poehlman
has been
our chief financial officer since June 2004. From March 1994 to June 2004,
Ms.
Poehlman was our controller and our chief accounting officer.
David
F. Sorrells
has been
our chief technical officer since September 1996 and has been a director since
January 1997. From June 1990 to September 1996, Mr. Sorrells served as our
engineering manager.
William
A. Hightower
has been
a director since March 1999. From September 2003 to his retirement in November
2004, Mr. Hightower was the president of the company. Mr. Hightower was the
president and chief operating officer and a director of Silicon Valley Group,
Inc. (“SVGI”), from August 1997 until his retirement in May 2001. SVGI is a
publicly held company which designs and builds semiconductor capital equipment
tools for chip manufacturers. From January 1996 to August 1997, Mr. Hightower
served as chairman and chief executive officer of CADNET Corporation, a
developer of network software solutions for the architectural industry. From
August 1989 to January 1996, Mr. Hightower was the president and chief executive
officer of Telematics International, Inc.
John
Metcalf
has been
a director since June 2004. Since November 2002, Mr. Metcalf has been a CFO
Partner with Tatum LLC, an executive services and consulting firm providing
financial and information technology leadership with over 500 CFO and CIO
partners nationwide. Since September 2006, Mr. Metcalf has also served as Senior
Vice President and Chief Financial Officer for Electro Scientific Industries
Inc., a leading high-technology manufacturing equipment supplier of production
laser systems for micro-engineering applications. From August 2004 to September
2006, Mr. Metcalf was CFO for Siltronic Corporation, a silicon wafer
manufacturing company. From February 2001 to December 2001, Mr. Metcalf was
CFO
of Zight Corporation, a venture funded microdisplay company. Prior to Zight
Corporation, Mr. Metcalf was CFO for Wafertech from 1997 - 2000, CFO for Siltec
Corporation from 1992-1997, and CFO for Oki Semiconductor from 1987 - 1991.
Mr.
Metcalf began his career at Advanced Micro Devices where he held a number of
finance managerial positions form 1976 to 1987.
Todd
Parker
has been
a director since our inception and was a vice president of ours from inception
to June 1997 and from July 2002 to August 2006. Mr. Parker resigned his
employment with us effective September 1, 2006 to pursue other personal
interests. Mr. Parker acted as a consultant to us from June 1997 through
November 1997 and from September 2001 to July 2002. On July 31, 2002, Mr. Parker
was appointed president of the Video Business Unit of the company until that
division was sold in May 2004 when he took a position as Vice President for
Corporate Development. Following the exit from retail business activities in
June 2005, Mr. Parker took the position as our Vice President of Product
Operations. From January 1985 to August 1989, Mr. Parker served as general
manager of manufacturing for Parker Electronics.
William
L. Sammons
has been
a director since October 1993. From 1981 until his retirement in 1985, Mr.
Sammons was president of the North American Operations of Carrier
Corporation.
Nam
P. Suh
has been
a director since December 2003. Mr. Suh was inaugurated as President of Korea
Advanced Institute of Science and Technology (KAIST) in July 2006. He is
currently on a leave of absence from MIT where he has been a member of the
faculty since 1970. At MIT, Mr. Suh held many positions including director
of
the MIT Laboratory for Manufacturing and Productivity, head of the department
of
Mechanical Engineering (1991-2001) director of the MIT Manufacturing Institute
and director of the Park Center for Complex Systems. In 1984, Mr. Suh was
appointed the Assistant Director for Engineering of the National Science
Foundation by President Ronald Reagan and confirmed by the U.S. Senate. Mr.
Suh
is a widely published author of approximately 300 articles and seven books
on
topics related to tribology, manufacturing, plastics and design. Mr. Suh has
approximately 50 United States patents and many foreign patents, some of which
relate to plastics, polymers and design. Mr. Suh serves on two other public
company boards including Therma-Wave, Inc. and Integrated Device Technology,
Inc.
Robert
G. Sterne
has
been
a director since September 2006. Since 1978, Mr. Sterne has been a partner
of
the law firm of Sterne, Kessler, Goldstein & Fox PLLC, specializing in
patent and other intellectual property law. Mr. Sterne provides legal services
to us as one of our patent and intellectual property attorneys. Mr. Sterne
served as a director of ParkerVision from February 2000 to June 2003.
Papken
S. der Torossian
has been
a director since June 2003. Mr. der Torossian was chief executive officer of
SVGI from 1986 until 2001. Prior to his joining SVGI, he was president and
chief
executive officer of ECS Microsystems, a communications and PC company that
was
acquired by AMPEX Corporation where he stayed on as a manager for a year. From
1976 to 1981 Mr. der Torossian was president of the Santa Cruz Division of
Plantronics where he also served as vice president of the Telephone Products
Group. Previous to that he spent four years at Spectra-Physics and twelve years
with Hewlett-Packard in a variety of management positions. From 1997 to 2001,
Mr. der Torossian served on the board of the Silicon Valley Manufacturing Group.
Since March 2003, Mr. der Torossian has served as the chairman of the board
of
directors of Therma-Wave, Inc., a company engaged in the manufacture and sale
of
process control metrology systems used in manufacturing
semiconductors.
Family
Relationships
Messrs.
Jeffrey and Todd Parker are brothers.
Independence
of Directors
Our
common stock is listed on the Nasdaq Global Market System, and we follow the
rules of Nasdaq in determining if a director is independent. The board of
directors also consults with our counsel to ensure that the board of directors’
determination is consistent with those rules and all relevant securities and
other laws and regulations regarding the independence of directors. Consistent
with these considerations, the board of directors affirmatively has determined
that Messrs. John Metcalf, William L. Sammons, Robert G. Sterne, Nam P. Suh,
and
Papken S. der Torossian are the independent directors. The other remaining
directors are not considered independent due to their current or recent
employment by the company.
Audit
Committee and Financial Expert
We
have
an audit committee that is comprised of independent directors and is governed
by
a board-approved charter. The charter, among other things, contains the
committee’s membership requirements and responsibilities. The members of the
audit committee are Messrs. John Metcalf, William L. Sammons and Papken der
Torossian. Mr. Metcalf serves as chairman of the audit committee.
The
board
of directors made a qualitative assessment of each member of the audit committee
of the board of directors to determine their level of financial knowledge and
experience based on a number of factors and has determined that each member
is a
financial expert within the meaning of all applicable rules. This determination
was made with reference to the rules of Nasdaq and the SEC. The board of
directors considered each of the members’ ability to understand generally
accepted accounting principles and financial statements, their ability to assess
the general application of generally accepted accounting principles in
connection with our financial statements, including estimates, accruals and
reserves, their experience in analyzing or evaluating financial statements
of
similar breadth and complexity as our financial statements, their understanding
of internal controls and procedures for financial reporting and their
understanding of the audit committee functions.
Shareholder
Proposals and Nominations
There
have been no material changes to the procedures by which security holders may
recommend nominees to our board of directors.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our officers,
directors and persons who beneficially own more than ten percent of a registered
class of our equity securities to file reports of ownership and changes in
ownership with the SEC and the National Association of Securities Dealers,
Inc.
Officers, directors and ten percent shareholders are charged by SEC regulation
to furnish us with copies of all Section 16(a) forms they file. Based solely
upon our review of the copies of such forms received by us, or written
representations from certain reporting persons that no Forms 5 were required
for
those persons, we believe that, during the fiscal year ended December 31,
2006, all filing requirements applicable to the company executive officers,
directors and ten percent shareholders were fulfilled.
Code
of Ethics
The
board
of directors has adopted a code of ethics that is designed to deter wrongdoing
and to promote ethical conduct and full, fair, accurate, timely and
understandable reports that the company files or submits to the SEC and others.
A copy of the code of ethics may be found on the company’s website at
www.parkervision.com.
Item
11. Executive Compensation
Compensation
Discussion and Analysis
Overview
of Compensation Program
Our
compensation program is designed to support the business objectives of the
Company by structuring compensation packages to retain, reward, motivate and
attract employees who possess the required technical and entrepreneurial skills
and talent. The objectives of the business are to continue innovative
technological advances of our wireless technologies, achieve technical and
commercial acceptance of our wireless technologies, and, in doing so, to create
significant shareholder value. The Compensation Committee of our board of
directors (the “Committee”) is responsible for establishing and reviewing our
compensation policies for our executives and ensuring that our executives are
compensated in a manner consistent with those policies. The compensation of
our
executives is designed to reward the achievement of both quantitative and
qualitative performance goals which specifically relate to the objectives of
the
business both short and long term.
There
are
three primary components of our compensation plan: (1) base salaries, (2) annual
performance incentives, and (3) long-term incentives. These components are
the
same for all employees of the Company. The amount of each component is scaled
according to the level of business responsibilities of each individual. Each
component of the compensation program, and the manner in which the Committee
determined each component for our 2006 fiscal year, are discussed in detail
below. In addition, the Company provides standard employee benefits that include
health benefits, life insurance and tax-qualified savings plans. The Company
does not provide any special employee benefits or perquisites for executives
other than supplemental life insurance policies for the benefit of Messrs.
Jeffrey Parker and David Sorrells. The Company does not have pension or other
retirement benefits or any type of nonqualified deferred compensation programs
for its executives or other employees.
Comparative
Benchmarking
In
establishing the Company’s current executive compensation policies, programs and
awards, the Committee engaged Frederic W. Cook & Co., Inc. (“Cook”) in 2005
to assist with the compilation of comparative benchmark data. The Committee
reviewed the levels of compensation at competitive companies, consisting of
companies who provide equipment in various electronic and computer
communications industries. The data from this peer group was considered in
determining the proportions of base pay, annual incentive pay and long-term
compensation value. All of the components of compensation were targeted at
the
market median or 50
th
percentile of the market.
As
a
result of changes in the Company’s business activities, the Committee re-engaged
Cook in 2006 to review its comparative peer group and executive compensation
programs. As a result of this engagement, Cook recommended, and the Committee
approved, in October 2006, a revised peer group for determining compensation
for
executives for fiscal 2007.
With
the
new comparative peer group, base salaries, in the aggregate, continue to
be
targeted at the market median. The current peer group data provides the amounts
actually earned by peer company executives under incentive programs rather
than
the incentive target amounts. Our executives’ 2006 annual performance incentive
targets were established at the median of amounts earned for the comparator
group. The Committee has requested that management update the peer group
data
with annual performance incentive target information once the peer group
companies have filed their 2006 proxies under the new SEC disclosure rules.
The
Committee intends to structure our executives’ annual incentive opportunity in
line with the market median. The long-term incentive compensation for our
executives was determined by the Committee following its review of the revised
peer group data and the market median remained the target for this component
of
compensation.
The
new
comparative peer group companies were selected for comparative purposes based
on
major labor and/or capital market competitors, similar size in terms of market
capitalization and similar growth and performance potential. Our current peer
group consists of 15 companies from the communications equipment industry with
revenues ranging from $6 million to $242 million, EBITDA ranging from a loss
of
$27 million to earnings of $24 million; employee count ranging from 132 to
481
and market capitalization ranging from $81 million to $356 million. As we are
at
an early stage of our potential growth and financial performance, the Committee
considered market capitalization as the most relevant factor in selecting the
peer group. We expect that it will be necessary, as a result of changes in
the
business, to update the peer group periodically, using the criteria outlined
above, in order to maintain a list of relatively comparable companies for
compensation evaluation purposes.
Compensation
Elements
Base
Pay
-
Base
salaries and related benefits are designed to provide basic economic security
for our employees. Our base salaries are established at a level that is
consistent with competitive practices in a technological, innovative and
fast-moving industry in order to help retain and recruit our highly skilled
workforce. Overall, base salaries are targeted at the median base salaries
for
our comparator group in order to allow the Company to compete in the market
for
exceptional employees without placing an undue emphasis on fixed compensation.
The base salary for our CTO, Mr. Sorrells, falls at or above the 75
th
percentile of our comparator peer group. The Company’s business objectives are
heavily reliant upon technical innovation and the Company competes for technical
talent with multi-national organizations with significant financial resources
and superior employee benefits. As such, the Committee has determined that
targeting the 75
th
percentile or above for highly technical positions is appropriate.
Annual
Performance Incentives
- Annual
performance incentives are specifically designed to link a meaningful portion
of
the executive’s pay to accomplishment of specific short-term objectives that are
necessary for successful execution of the longer-term business plan of the
Company.
The
annual incentive plan for all employees, including executives, provides for
cash
awards that are determined at the end of each fiscal year immediately following
the performance measurement period. The target award depends upon the Company’s
achievement of corporate goals set at the beginning of the performance period,
the individual’s level of responsibility, the individual’s personal performance
for the period, and the individual’s achievement of specific individual goals
that support the overall corporate goals.
The
incentive award target for executives is determined annually by the Committee
and is defined as a percentage of base salary. Prior to 2006, the Company
utilized annual discretionary bonuses rather than a formal performance incentive
program. The executive bonuses were determined by the Committee at the end
of
each fiscal year based on corporate and individual performance and achievement.
In
2006,
the Committee approved a formal performance incentive plan with target incentive
compensation equal to 75% of base salary for the Chief Executive Officer
and 50%
of base salary for other named executive officers. These targets were determined
based on the median of annual bonuses earned by the original comparative
peer
group. The plan did not establish a minimum achievement level, nor did it
allow
for upside opportunity for above-target performance.
The
plan
allowed executives to elect, in advance, payment of a portion of their annual
award in equity. All of the executives elected to receive one-half of the value
of their annual award in performance-based share options priced at the market
price of the Company’s common stock on May 3, 2006, the date the plan was
approved by the Committee. Plan approval included the Committee’s approval of
the corporate goals as well as each executive’s individual goals.
For
2006,
the corporate goals included (i) sales goals, as measured by design wins with
target customers; (ii) technology goals, as measured by integrated circuit
design achievements against specified marketing requirements documents and
(iii)
financial goals, as measured by operating and cash flow targets. An achievement
multiplier for each executive is calculated based 75% on corporate goal
achievement and 25% on individual goal achievement, as determined by the
Committee. It was management's view that the 2006 goals were appropriate
but aggressive given the stature of the Company as a new entrant into the
targeted OEM space. Management believes that to create value for both management
and shareholders, it is desirable to continue establishing goals that are
aggressive yet achievable. For 2006, the achievement multipliers
ranged from 37% to 42% of the target opportunity. Each of the named executive
officers earned the following incentive awards for 2006:
|
Name
and Position
|
Value
of Award Earned
Under
the 2006 Incentive
Plan
($)
|
|
|
Jeffrey
Parker, Chief Executive Officer
|
$102,357
|
|
|
Cindy
Poehlman, Chief Financial Officer
|
$
43,261
|
|
|
David
Sorrells, Chief Technology Officer
|
$
52,610
|
The
awards were made through a combination of cash and equity and are reflected
in
columns (e) and (f) of the Summary Compensation Table below. The equity portion
of the awards are also reflected in columns (c) and (d) of the Grants of Plan
Based Awards Table below.
Long
Term Incentives
- Long
term incentives are specifically designed to align employee and shareholder
interests by rewarding performance that enhances shareholder value. Equity-based
awards are used for long-term incentives in order to link employee’s
compensation to the value of the Company’s common stock. Stock options have been
used as the primary vehicle for equity compensation for all employees, including
executives. Stock options are granted at market and have no value without
appreciation of the market price of the Company’s stock. Therefore, stock
options are considered a strong motivator for enhancing shareholder value
through corporate accomplishments.
In
2006,
executive long-term equity incentives, in the form of stock options, were
granted to executives on October 12, 2006, the date on which the Committee
approved the revised comparator peer group data from Cook. The Committee
determined the 2006 long-term option award amount based on the median of
the
comparative peer group data compiled by Cook. The Committee used a Shareholder
Value Transfer (“SVT”) Allocation methodology in determining grant award size.
SVT refers to the aggregate value or expense of grants as a percent of a
company’s total market capitalization. For each executive, a long-term award
value was determined and this value was then converted to a number of share
options using an estimated Black-Scholes value.
As
a
result of this analysis, in 2006, the Committee granted an aggregate of 153,000
share options to its named executive officers and an additional 50,000 shares
options to other senior management employees as long-term incentive awards,
representing approximately 0.6% of the Company’s total market capitalization and
approximately 0.9% of total shares outstanding. The options granted for named
executives, and all other employees, vest over three years, with the first
one-third vesting one year after grant and the remaining two-thirds vesting
in
monthly increments thereafter.
We
continue to evaluate the appropriate mix of long-term pay elements in comparison
to the market and in line with our strategy. We believe stock options provide
the most appropriate vehicle for long-term compensation because of the link
to
shareholder value. However, we have considered and will continue to evaluate
other forms of equity awards, including restricted stock and restricted share
units.
Equity
Grant Practices
The
Committee reviewed the Company’s equity grant practices with management and
determined that grants of equity awards are never back-dated. The grant date
of
annual and other grants is always on or after the date the Committee or its
delegate approves the grants. The Committee and management did determine,
however, that improvements could be made in the Company’s grant practices to
better align them with best practice guidance. Late in 2006, the Committee
adopted a policy to limit the timing of equity grants to specific,
pre-determined dates for grants made in 2007 and beyond as discussed in more
detail below.
Timing
of Equity Grants
.
The
Committee established new rules effective January 1, 2007 for the timing of
equity grants for all employees. Grants in connection with new hires and job
promotions are made on the 15
th
day of
the month following the new employee’s hire date and/or the effective date of
the job promotion. All other employee equity grants are made on one of four
pre-determined quarterly dates, whichever date most closely follows the date
that all terms of the grant are approved by the Committee or its delegate.
The
preset quarterly dates are February 15
th
,
May
15
th
,
August
15
th
and
November 15
th
,
or, if
the 15
th
falls on
a non-trading day, the first trading day following such date. In addition,
long-term equity grants made to executives and senior managers shall be granted
in four equal amounts on the four preset quarterly dates following the date
a
determination is made by the Committee as to the aggregate award. The intent
of
this new policy is to (a) eliminate the need to evaluate potential grant dates
in light of pending and/or recently disclosed material events and (b) to attempt
to mitigate the effect of significant price volatility when a single date is
utilized for annual equity awards.
Determination
of Option Exercise Prices
.
Stock
options are generally granted with an exercise price equal to closing market
value of the Company’s common stock on the grant date. In 2000, in connection
with an employment agreement for the Company’s chief executive officer, options
were granted at a premium to the closing market price. Options are never
granted
with exercise prices below market value on the date of grant.
Role
of Executive Officers in Determining Executive Pay
The
Committee makes all compensation decisions for all elements of compensation
for
the CEO and other named executive officers and approves recommendations
regarding equity awards for all employees. Our chief executive officer, chief
financial officer and human resource management personnel make recommendations
to the Committee annually with regard to overall pay strategy including program
designs, annual incentive plan design, and long-term incentive plan design
for
management employees. Our chief executive officer evaluates the performance
of
the other executive officers annually and makes recommendations regarding
their
compensation to the Committee for its consideration and determination. Human
resource management provides the Committee with market information regarding
Mr.
Parker’s and other executive officers’ base pay and annual performance
incentives as requested. Executives do not recommend or determine any element
or
component of their own pay package or total compensation amount.
Executive
and Director Stock Ownership Requirements
The
Company currently does not have a policy with regard to minimum stock ownership
for its executives or non-employee directors.
Summary
Compensation Table
The
following table summarizes the total compensation paid to or earned by each
of
our named executive officers who served as executive officers during all
or a
portion of the year ended December 31, 2006. Salary accounts for approximately
70% of total compensation for our chief executive officer and approximately
50%
of total compensation for the other named executive officers.
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
|||||||
|
Name
and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
(1)
($)
|
|
Option
Awards
(4)
($)
|
|
Non-equity
Incentive Plan Compensation
(1)
($)
|
|
All
other
(5)
($)
|
|
Total
($)
|
||||||||
|
Jeffrey
Parker,
Chief
Executive Officer &
Chairman
of the Board
|
2006
|
$
|
325,000
|
$
|
-
|
$
|
92,863
|
$
|
50,279
|
(2)
|
$
|
4,520
|
$
|
472,662
|
||||||||
|
Cynthia
Poehlman,
Chief
Financial Officer
|
2006
|
200,000
|
-
|
188,636
|
21,250
|
-
|
409,886
|
|||||||||||||||
|
David
Sorrells,
Chief
Technology Officer
|
2006
|
272,850
|
-
|
238,037
|
25,840
|
2,100
|
538,827
|
|||||||||||||||
|
Todd
Parker,
Vice
President
(3)
|
2006
|
141,540
|
-
|
60,376
|
-
|
(3)
|
-
|
201,916
|
||||||||||||||
| (1) |
The
named executive officers were not entitled to receive payments which
would
be characterized as “Bonus” payments for the year ended December 31, 2006
due to the implementation of the 2006 Performance Incentive Plan.
Cash
awards under this plan are reflected in column (f) as non-equity
incentive
plan compensation. The value of the equity portion of 2006 performance
incentive awards is included in column (e) along with the value of
other
equity based awards.
|
| (2) |
In
2006, our chief executive officer elected to forego a $50,279 cash
performance incentive award in lieu of a stock award of 5,089 shares
of
common stock. Refer to columns (c) and (f) of the Grants of Plan-Based
Awards Table below.
|
| (3) |
Todd
Parker resigned effective September 1, 2006. Our 2006 performance
incentive plan requires employment as of the end of the fiscal year
in
order to be eligible for awards under the plan. As such, Mr. Parker
was
not eligible for an annual performance incentive award. Furthermore,
as a
result of his separation from the company, Mr. Parker forfeited 7,541
performance-based share options granted on May 3, 2006 in connection
with
the 2006 performance incentive plan. Mr. Parker also forfeited 16,667
unvested share options granted in August 2005 and 10,000 unvested
share
options granted in July 2002.
|
| (4) |
The
amounts reported in column (e) represent the dollar amount of compensation
cost recognized in 2006 in accordance with FAS123R, excluding forfeiture
estimates. Refer to Note 8 of the Consolidated Financial Statements
included in Item 8 for the assumptions made in the valuation of stock
options.
|
| (5) |
The
amounts reported in column (g) represent the dollar value of premiums
paid
by the Company with respect to life insurance for the benefit of
the
executive. The Company has no perquisites or other personal benefits
for
its executives that exceed $10,000 in the
aggregate.
|
Grants
of Plan-Based Awards
The
following table summarizes each grant of an award made in 2006 to the executive
officers who served as executive officers during all or a portion of
2006.
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
|||||||||||||||
|
Name
|
Grant
Date
|
All
other stock awards: Number of shares of stock or units
(#)
|
All
other option awards: Number of securities underlying options
(#)
|
Exercise
or base price of option awards ($/Sh) ($)
|
Full
Grant Date Fair Value of Equity Award
($)
|
|||||||||||||||
|
Jeffrey
Parker, Chief Executive Officer & Chairman of the
Board
|
5/3/2006
|
-
|
18,382
|
(1)
|
$
|
9.80
|
|
$
126,242
|
(1)
|
|||||||||||
|
|
10/12/2006
|
-
|
90,000
|
(2)
|
$
|
8.81
|
|
$
558,000
|
(2)
|
|||||||||||
|
|
12/15/2006
|
5,089
|
(3)
|
-
|
n/a
|
|
$
50,279
|
(3)
|
||||||||||||
|
|
|
|||||||||||||||||||
|
Cynthia
Poehlman, Chief Financial Officer
|
5/3/2006
|
-
|
7,541
|
(4)
|
$
|
9.80
|
|
$
51,789
|
(4)
|
|||||||||||
|
|
10/12/2006
|
-
|
25,000
|
(2)
|
$
|
8.81
|
|
$
155,000
|
(2)
|
|||||||||||
|
|
|
|||||||||||||||||||
|
David
Sorrells, Chief Technology Officer
|
5/3/2006
|
-
|
9,898
|
(5)
|
$
|
9.80
|
|
$
67,976
|
(5)
|
|||||||||||
|
|
10/12/2006
|
-
|
38,000
|
(2)
|
$
|
8.81
|
|
$235,600
|
(2)
|
|||||||||||
|
|
|
|||||||||||||||||||
|
Todd
Parker, Vice President
|
5/3/2006
|
-
|
7,541
|
(6)
|
$
|
9.80
|
|
$51,789
|
(6)
|
|||||||||||
|
(1)
|
Represents
the number of shares and related grant date fair value of
performance-based share options granted in connection with the 2006
annual
performance incentive plan. In accordance with the plan, in December
2006,
the Compensation Committee determined that 7,583 of the share options
would vest based on performance achievement. The remaining 10,799
share
options with a grant date fair value of $74,164 were forfeited in
December
2006. Only the fair value of the vested shares, or $52,078, is recognized
as compensation in the Company's Consolidated Statement of Operations
included in Item 8 and in column (e) of the Summary Compensation
Table
above.
|
|
(2)
|
Represents
a long term equity incentive award for 2006. This award vests over
three
years and expires seven years from the date of grant.
|
|
(3)
|
Represents
shares of common stock issued at the election of the executive in
lieu of
the cash incentive award determined under the 2006 performance incentive
plan. The number of shares awarded was determined by dividing the
waived
cash award by the closing price of the common stock on December 15,
2006,
the date of the award. The fair value of this award is included in
column
(f) in the Summary Compensation Table above as the cash award was
foregone
at the election of the executive.
|
| (4) |
Represents
the number of shares and related grant date fair value of
performance-based share options granted in connection with the 2006
annual
performance incentive plan. In accordance with the plan, in December
2006,
the Compensation Committee determined that 3,205 of the share options
would vest based on performance achievement. The remaining 4,336
share
options with a grant date fair value of $29,778 were forfeited in
December
2006. Only the fair value of the vested shares, or $22,011, is recognized
as compensation in the Company's Consolidated Statement of Operations
included in Item 8 and in column (e) of the Summary Compensation
Table
above.
|
|
(5)
|
Represents
the number of shares and related grant date fair value of
performance-based share options granted in connection with the 2006
annual
performance incentive plan. In accordance with the plan, in December
2006,
the Compensation Committee determined that 3,898 of the share options
would vest based on performance achievement. The remaining 6,000
share
options with a grant date fair value of $41,206 were forfeited in
December
2006. Only the fair value of the vested shares, or $26,770, is recognized
as compensation in the Company's Consolidated Statement of Operations
included in Item 8 and in column (e) of the Summary Compensation
Table
above.
|
|
(6)
|
Represents
the number of shares and related grant date fair value of
performance-based share options granted in connection with the 2006
annual
performance incentive plan. Mr. Parker resigned effective September
1, 2006. The Company’s annual performance incentive plan requires
employment as of the end of the fiscal year in order to be eligible
for
awards under the plan. As such, Mr. Parker was not eligible for an
annual
performance award and forfeited the shares granted under this plan.
The
fair market value of the shares granted was not recognized in the
Company's financial statements in accordance with FAS123R and is
not
included in the Summary Compensation Table above.
|
Employment
and Other Agreements
As
of
December 31, 2006, we had an employment agreement in place with Mr. David
Sorrells, our Chief Technology Officer and a director. This agreement expired
March 6, 2007. We have non-compete arrangements in place with all of our
employees. The terms of the non-compete agreement provides for restrictions
on
(i) employment or consultation with competing companies or customers, (ii)
recruiting or hiring employees for a competing company and (iii) soliciting
or
accepting business from the Company’s customers.
Effective
March 6, 2007, the Company’s compensation committee approved a change in control
severance policy for the benefit of its named executives and other senior
management employees. This policy provides for compensation to covered employees
if they are terminated in connection with a change of control event. The
compensation to be paid under this policy includes (a) a multiple of base
salary, as determined on an individual by individual basis by the compensation
committee; (b) an amount in lieu of annual bonus or incentive compensation;
(c)
continuation of group health benefits and (d) acceleration of any unvested
and
outstanding performance-based equity awards. Amounts to be paid to each
executive in the event of a change in control are included in the tables under
“Potential Payments Upon Termination or Change in Control” below.
Outstanding
Equity Awards at Fiscal Year End
The
following table summarizes the outstanding equity awards as of December 31,
2006
for each executive officer who served as an executive officer during all
or a
portion of 2006.
|
Name
|
Option
Awards
|
||||
|
Number
of securities underlying unexercised options
(#)
exercisable
|
Number
of securities underlying unexercised options
(#)
unexercisable
|
Equity
incentive plan awards: number of securities underlying unexercised
unearned options
(#)
|
Option
Exercise price
($)
|
Option
expiration date
|
|
|
Jeffrey
Parker, Chief Executive Officer & Chairman of the
Board
|
112,500
|
-
|
-
|
$
11.88
|
1/09/2007
|
|
12,500
|
-
|
-
|
$
19.00
|
3/10/2008
|
|
|
350,000
|
-
|
-
|
$
41.00
|
9/07/2010
|
|
|
150,000
|
-
|
-
|
$
61.50
|
10/01/2010
|
|
|
15,000
|
-
|
-
|
$
19.99
|
2/26/2012
|
|
|
75,000
|
-
|
-
|
$
5.77
|
8/09/2012
|
|
|
10,908
|
-
|
-
|
$
8.91
|
12/20/2012
|
|
|
7,583
|
-
|
-
|
$
9.80
|
5/03/2013
|
|
|
0
|
90,000
(1)
|
-
|
$
8.81
|
10/12/2013
|
|
|
Cynthia
Poehlman, Chief Financial Officer
|
5,500
|
-
|
-
|
$
15.13
|
5/15/2007
|
|
3,500
|
-
|
-
|
$
23.13
|
5/16/2007
|
|
|
7,500
|
-
|
-
|
$
15.13
|
5/15/2008
|
|
|
4,500
|
-
|
-
|
$
23.13
|
5/16/2008
|
|
|
9,500
|
-
|
-
|
$
15.13
|
5/15/2009
|
|
|
5,000
|
-
|
-
|
$
23.13
|
5/16/2009
|
|
|
30,000
|
-
|
-
|
$
41.50
|
12/31/2009
|
|
|
12,000
|
-
|
-
|
$
20.00
|
1/15/2011
|
|
|
11,111
|
13,889
(1)
|
-
|
$
5.77
|
8/09/2012
|
|
|
4,563
|
-
|
-
|
$
8.91
|
12/20/2012
|
|
|
3,205
|
-
|
-
|
$
9.80
|
5/03/2013
|
|
|
0
|
25,000
(1)
|
-
|
$
8.81
|
10/12/2013
|
|
|
60,000
|
90,000
(2)
|
-
|
$
5.70
|
6/25/2014
|
|
Name
|
Option
Awards
|
||||
|
Number
of securities underlying unexercised options (#)
exercisable
|
Number
of securities underlying unexercised options
(#)
unexercisable
|
Equity
incentive plan awards: number of securities underlying unexercised
unearned options (#)
|
Option
Exercise price
($)
|
Option
expiration date
|
|
|
David
Sorrells, Chief Technology Officer
|
100,000
|
-
|
-
|
$
15.13
|
5/15/2007
|
|
50,000
|
-
|
-
|
$
15.13
|
5/15/2008
|
|
|
12,500
|
-
|
-
|
$
19.00
|
3/10/2008
|
|
|
100,000
|
-
|
-
|
$
23.13
|
12/11/2008
|
|
|
162,000
|
-
|
-
|
$
28.25
|
2/15/2008
|
|
|
200,000
|
-
|
-
|
$
48.00
|
12/31/2010
|
|
|
100,000
|
25,000
(2)
|
-
|
$
9.00
|
11/21/2012
|
|
|
15,111
|
18,889
(1)
|
-
|
$
5.77
|
8/9/2012
|
|
|
5,988
|
-
|
-
|
$
8.91
|
12/20/2012
|
|
|
3,898
|
-
|
-
|
$
9.80
|
5/3/2013
|
|
|
0
|
38,000
(1)
|
-
|
$
8.81
|
10/12/2013
|
|
| (1) |
Options
vest over the first three years of the seven year option term, with
33%
vesting one year following the grant date and the remaining 66% vesting
in
monthly increments for 24 months thereafter.
|
| (2) |
Options
vest at a rate of 20% per year for the first five years of the ten-year
option term.
|
Option
Exercises and Stock Vested
The
following table summarizes the option exercises and vesting of stock awards
for
the fiscal year ended December 31, 2006 for each executive officer who served
as
an executive officer during all or a portion of 2006.
|
Name
|
Option
Awards
|
Stock
Awards
|
||
|
Number
of
shares
acquired
on
exercise
(#)
|
Value
realized
on
exercise
($)
|
Number
of
shares
acquired
on
vesting
(#)
|
Value
realized
on
vesting
($)
|
|
|
Jeffrey
Parker, Chief Executive Officer
|
-
|
$
-
|
5,089
|
$
50,279
(1)
|
|
Cynthia
Poehlman, Chief Financial Officer
|
-
|
-
|
-
|
-
|
|
David
Sorrells, Chief Technology Officer
|
-
|
-
|
-
|
-
|
|
Todd
Parker, Vice President
|
-
|
-
|
-
|
-
|
|
(1)
|
Represents
shares granted to Jeffrey Parker in lieu of cash under the 2006
performance incentive plan.
|
Potential
Payments Upon Termination or Change in Control
Payments
Made Upon Termination -
When
an
executive officer’s employment is terminated for any reason, other than for
cause, he or she is entitled to receive his or her base salary through the
date
of termination and any earned but unused vacation pay. When an executive
officer’s employment is terminated for cause, he or she is only entitled to his
or her base salary through the date of termination.
Payments
Made Upon Death or Disability -
In
the
event of the death or disability of a named executive officer, in addition
to
the benefits listed under “Payments Made Upon Termination” above, named
executive officers, or their designated beneficiaries, will receive automatic
acceleration of fifty percent of any unvested options in accordance with the
terms of their individual option agreements. In addition upon death, the
beneficiaries of Messrs. Parker and Sorrells will each receive proceeds from
company-paid life insurance policies provided to them in their name.
Payments
Made Upon a Change in Control-
In
the
event of a change in control event, in addition to the benefits listed under
“Payments Made Upon Termination”, named executive officers will receive
automatic acceleration of all unvested options in accordance with the terms
of
their individual option agreements. Furthermore, effective March 6, 2007, the
Company’s compensation committee approved a change in control severance policy
which provides for compensation to each of the named executives if they are
terminated in connection with a change of control event. The compensation to
be
paid under this policy includes (a) a multiple of base salary, as determined
on
an individual by individual basis by the compensation committee; (b) an amount
in lieu of annual bonus or incentive compensation; (c) continuation of group
health benefits and (d) acceleration of unvested and outstanding
performance-based equity awards, if any. Amounts to be paid to each executive
in
the event of a change in control are included in the table below.
The
following table reflects the estimated amount of compensation due to each
of our
named executive officers in the event of termination of their employment.
Actual
amounts to be paid out could only be determined at the time of an executive’s
actual separation from the Company.
Todd
Parker, Vice President, voluntarily resigned from the Company
effective September 1, 2006 and received no payments upon termination.
|
Executive
|
Benefit
and Payments Upon Separation
|
Termination
due to Change in Control
|
Disability
|
Death
|
Other
Termination
|
|
Jeffrey
Parker, Chief Executive Officer
|
Salary
|
$
975,000
(1)
|
$
0
|
$
0
|
$
0
|
|
Short-term
Incentive Compensation
|
135,200
(2)
|
0
|
0
|
0
|
|
|
Long-Term
Incentive Compensation:
|
|
|
|||
|
Stock
Options
|
210,600
(3)
|
105,300
(4)
|
105,300
(4)
|
0
|
|
|
Benefits
& Perquisites:
|
|
|
|
|
|
|
Health
and Welfare Benefits
|
19,800
|
-
|
-
|
-
|
|
|
Life
Insurance Proceeds
|
-
|
-
|
1,000,000
(5)
|
-
|
|
|
Accrued
Vacation Pay
|
12,500
|
12,500
|
12,500
|
12,500
|
|
|
Total
|
$1,353,100
|
$
117,800
|
$1,117,800
|
$
12,500
|
|
Cynthia
Poehlman, Chief Financial Officer
|
Salary
|
$
300,000
(6)
|
$
0
|
$
0
|
$
0
|
|
Short-term
Incentive Compensation
|
57,300
(2)
|
0
|
0
|
0
|
|
|
Long-Term
Incentive Compensation:
|
|
|
|
||
|
Stock
Options
|
623,700
(3)
|
311,900
(4)
|
311,900
(4)
|
0
|
|
|
Benefits
& Perquisites:
|
|
|
|
||
|
Health
and Welfare
Benefits
|
19,800
|
0
|
0
|
0
|
|
|
Life
Insurance
Proceeds
|
0
|
0
|
0
|
0
|
|
|
Accrued
Vacation Pay
|
6,500
|
6,500
|
6,500
|
6,500
|
|
|
Total
|
$
1,007,300
|
$
318,400
|
$
318,400
|
$
6,500
|
|
|
David
Sorrells, Chief Technology Officer
(7)
|
Salary
|
$
826,900
(1)
|
$
0
|
$
0
|
$
0
|
|
Short-term
Incentive Compensation
|
86,000
(2)
|
0
|
0
|
0
|
|
|
Long-Term
Incentive Compensation:
|
|||||
|
Stock
Options
|
244,300
(3)
|
122,150
(4)
|
122,150
(4)
|
0
|
|
|
Benefits
& Perquisites:
|
|||||
|
Health
and Welfare
Benefits
|
19,800
|
||||
|
Life
Insurance
Proceeds
|
|
1,000,000
(5)
|
|||
|
Accrued
Vacation Pay
|
11,500
|
11,500
|
11,500
|
11,500
|
|
|
Total
|
$1,188,500
|
$133,650
|
$1,133,650
|
$11,500
|
| (1) |
Under
the change in control severance policy approved by the compensation
committee on March 6, 2007, Messrs. Parker and Sorrells are entitled
to
receive three times their annual base salary upon termination following
a
change of control as defined in the
agreement.
|
| (2) |
Under
the change in control severance policy approved by the compensation
committee on March 6, 2007, each executive is entitled to receive
payment
upon termination equal to the greater of (i) the amount of bonus
and
annual incentive compensation earned by the executive during the
last full
fiscal year prior to the change in control or (ii) the average
of the
bonus and annual incentive compensation earned by the executive
during the
prior three full fiscal years.
|
| (3) |
Under
the terms of the individual option agreements, any unvested and
outstanding options will automatically accelerate upon a change
in control
event. The amount reflected in the table represents the intrinsic
value of
options subject to accelerated vesting using the December 29, 2006
closing
price of the Company’s common stock of
$11.15.
|
| (4) |
Under
the terms of the individual option agreements, one half of any
unvested
and outstanding options will automatically accelerate upon death
or
disability of the executive. The amount reflected in the table
represents
the intrinsic value of options subject to accelerated vesting using
the
December 29, 2006 closing price of the Company’s common stock of
$11.15.
|
| (5) |
Represents
proceeds payable by a third-party insurance carrier on a company-paid
life
insurance policy for the benefit of the
executive.
|
| (6) |
Under
the change in control severance policy approved by the compensation
committee on March 6, 2007, Ms. Poehlman is entitled to receive
1.5 times
her annual base salary upon termination following a change of control
as
defined in the agreement.
|
| (7) |
Mr.
Sorrells’ employment agreement with the Company expired on March 6, 2007.
As such, payments upon termination under that agreement are not
included
in the table.
|
Compensation
Committee Report
The
Compensation Committee of the Board of Directors oversees our company’s
compensation programs on behalf of the Board. In fulfilling its oversight
responsibilities, the Compensation Committee reviewed and discussed with
management the Compensation Discussion and Analysis set forth in this Form
10-K.
Based upon the review and discussions referred to above, the Compensation
Committee recommended to the Board that the Compensation Discussion and Analysis
be included in this Form 10-K.
Submitted
by the Compensation Committee:
Nam
Suh
(Chair)
William
Sammons
Papken
der Torossian
Compensation
of Outside Directors
The
Compensation Committee is responsible for establishing outside directors’
compensation. In 2005, the Committee engaged Cook to compile benchmark data
for
non-employee board compensation using the same peer group companies that were
used for executive compensation. Our current director compensation program
was
implemented in June 2005 based on the Committee’s review of the benchmark data
and best practices. The program changes included the elimination of per meeting
fees and the addition of cash retainers for committee service. The committee
retainers were structured in such a way as to provide distinction between
compensation for committee members and chairpersons and between the
responsibilities of the various committees.
Our
non-employee directors’ compensation plan currently provides for an annual cash
retainer of $25,000 for board service. In addition, the plan provides for
annual
cash retainers for committee participation as follows:
|
Audit
Committee
|
Compensation
Committee
|
Nominating
Committee
|
|||||
|
Chair
|
Member
|
Chair
|
Member
|
Chair
|
Member
|
||
|
$15,000
|
$7,500
|
$10,000
|
$5,000
|
$5,000
|
$2,500
|
||
All
annual retainers are paid in quarterly installments at the end of each fiscal
quarter. The plan also provides for an annual stock option award for our
directors including an option grant of 40,000 shares upon initial election
to
the board and 10,000 shares annually following each subsequent year of service.
The director options vest at the end of a year of board service. Historically,
the directors’ options were granted in June each year following the year of
board service. In 2006, the board revised its grant procedures such that
the
options for the 2006-2007 board year were granted at the first meeting following
the 2006 annual shareholders meeting and vest one year from the date of grant.
All
board
members are reimbursed for reasonable expenses incurred in attending meetings.
In addition, the Company reimburses its board members for all or a portion
of
costs, including travel, for relevant director’s education.
The
following table summarizes the compensation of our non-employee directors for
the year ended December 31, 2006. Directors who are named executive officers
do
not receive separate compensation for their service as a director.
| (1) |
The
amount reported in column (d) above represents the compensation expense
related to director stock option awards as recognized under FAS123R.
As of
December 31, 2006, the number of options outstanding for each of
our
directors was as follows:
|
|
Name
|
Number
of securities underlying outstanding options
|
|
|
(#)
exercisable
|
(#)
unexercisable
|
|
|
Papken
der Torossian
|
135,000
|
10,000
|
|
William
Hightower
|
182,500
|
10,000
|
|
John
Metcalf
|
60,000
|
10,000
|
|
William
Sammons
|
160,000
|
10,000
|
|
Robert
Sterne
|
137,500
|
40,000
|
|
Nam
Suh
|
120,000
|
10,000
|
|
Richard
Kashnow
|
135,000
|
-
|
The
unexercisable shares for each director shall vest in September
2007.
| (2) |
Messrs.
Hightower, Metcalf, Sammons, Suh and der Torossian each received
two stock
option awards in 2006 as follows:
|
|
The
June 2006 option award was for the 2005-2006 year of board service
and
therefore vested immediately. The September 2006 option award was
for the
2006-2007 year of board service and will vest one year from the
grant
date. In the event a director resigns or is removed from the board
for
cause prior to the vesting date, the option will be
forfeited.
|
| (3) |
Mr.
Kashnow did not stand for re-election in September
2006.
|
| (4) |
Mr.
Kashnow was granted 10,000 immediately exercisable share options
on June
23, 2006 for his 2005-2006 board service. These options were priced
at
market of $9.79 per share, expire seven years from the grant date
and had
an aggregate grant date fair value of
$68,800.
|
| (5) |
The
cash retainer for director’s fees for Mr. Metcalf is paid directly to
Tatum Board Services, LLC.
|
| (6) |
Mr.
Todd Parker resigned as an officer and employee of the Company
effective September 1, 2006 but remained on the board of directors.
Mr. Parker’s compensation as an officer during his employment in 2006 is
reflected in the executive Summary Compensation Table. The outside
director’s fees earned by Mr. Parker since his resignation are reflected
in this table.
|
| (7) |
Mr.
Sammons has waived receipt of any cash director’s fees. The amounts earned
by Mr. Sammons are accrued by the Company and, at Mr. Sammons’ request,
distributed to charitable organizations of his
choosing.
|
| (8) |
In
2006, in connection with his initial election to the board of directors,
Mr. Sterne was granted 40,000 share options on September 7, 2006,
the date
of his election by the shareholders. These options were priced at
$6.17
per share which reflects closing market price on the date of grant.
The
options vest one year from the grant date. In the event Mr. Sterne
resigns
or is removed from the board for cause prior to the vesting date,
these
options will be forfeited. The aggregate grant date fair value of
these
options is $172,400.
|
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
The
following table sets forth certain information as of February 28, 2007 with
respect to the stock ownership of (i) those persons or groups who beneficially
own more than 5% of our common stock, (ii) each of our director nominees,
(iii)
each executive officer whose compensation exceeded $100,000 in 2006, and
(iv)
all of our directors, director nominees and executive officers as a group
(based
upon information furnished by those persons).
|
Name
of Beneficial Owner
|
Amount
and Nature of
Beneficial
Ownership
|
Percent
of
Class
(1)
|
||
|
Jeffrey
L. Parker
|
3,119,520
|
(2)
|
12.47%
|
|
|
Todd
Parker
|
1,094,984
|
(3)
|
4.46%
|
|
|
David
F. Sorrells
|
749,497
|
(4)
|
2.98%
|
|
|
William
A. Hightower
|
207,500
|
(5)
|
0.84%
|
|
|
John
Metcalf
|
60,000
|
(6)
|
0.25%
|
|
|
William L.
Sammons
|
179,750
|
(7)
|
0.73%
|
|
|
Robert
G. Sterne
|
138,300
|
(8)
|
0.56%
|
|
|
Nam
P. Suh
|
120,000
|
(9)
|
0.49%
|
|
|
Papken
S. der Torossian
|
135,000
|
(10)
|
0.55%
|
|
|
Cynthia
Poehlman
|
156,379
|
(11)
|
0.64%
|
|
|
Wellington
Management Company, LLP
(13)
|
3,497,000
|
(12)
|
14.34%
|
|
|
Heartland
Value Fund
(14)
|
1,951,555
|
(13)
|
7.88%
|
|
|
All
directors, director nominees and executive officers as a group
(10
persons)
|
5,960,930
|
(14)
|
22.20%
|
|
______________________________
|
(1)
|
Percentage
includes all outstanding shares of common stock plus, for each
person or
group, any shares of common stock that the person or the group
has the
right to acquire within 60 days pursuant to options, warrants,
conversion
privileges or other rights.
|
|
(2)
|
Includes
620,991 shares of common stock issuable upon currently exercisable
options, 2,325,984 shares held by J-Parker Family Limited Partnership
and
66,989 shares owned of record by Mr. Parker’s three children over which he
disclaims ownership. Mr. Jeffrey L. Parker has sole voting and dispositive
power over the shares of common stock owned by the J-Parker Family
Limited
Partnership, as a result of which Mr. Jeffrey Parker is deemed to
be the
beneficial owner of such shares. Excludes 127,500 shares of common
stock
issuable upon options that may become exercisable in the
future.
|
|
(3)
|
Includes
137,896 shares of common stock issuable upon currently exercisable
options, 876,255 shares held by T-Parker Family Limited Partnership
and
10,100 shares owned of record by Mr. Parker’s spouse and child over which
he disclaims ownership. Mr. Todd Parker has sole voting and dispositive
power over the shares of common stock owned by the T-Parker Family
Limited
Partnership, as a result of which Mr. Todd Parker is deemed to be
the
beneficial owner of such shares.
|
|
(4)
|
Represents
749,497 shares of common stock issuable upon currently exercisable
options. Does not include 98,139 shares of common stock issuable
upon
options that may become exercisable in the
future.
|
|
(5)
|
Includes
182,500 shares of common stock issuable upon currently exercisable
options
and excludes 10,000 shares of common stock issuable upon options
that may
become exercisable in the future.
|
|
(6)
|
Includes
60,000 shares of common stock issuable upon currently exercisable
options
and excludes 10,000 shares of common stock issuable upon options
that may
become exercisable in the future.
|
|
(7)
|
Includes
160,000 shares of common stock issuable upon currently exercisable
options
and excludes 10,000 shares of common stock issuable upon options
that may
become exercisable in the future.
|
|
(8)
|
Represents
137,500 shares of common stock issuable upon currently exercisable
options
and excludes 40,000 shares of common stock issuable upon options
that may
become exercisable in the future.
|
|
(9)
|
Represents
120,000 shares of common stock issuable upon currently exercisable
options
and excludes 10,000 shares of common stock issuable upon options
that may
become exercisable in the future.
|
|
(10)
|
Represents
135,000 shares of common stock issuable upon currently exercisable
options
and excludes 10,000 shares of common stock issuable upon options
that may
become exercisable in the future.
|
|
(11)
|
Includes
156,379 shares of common stock issuable upon currently exercisable
options
and excludes 137,639 shares of common stock issuable upon options
that may
become exercisable in the future.
|
|
(12)
|
The
business address of Wellington Management Company, LLP (“Wellington
Management”) is 75 State Street, Boston, Massachusetts 02109. Wellington
Management, in its capacity as investment adviser, may be deemed
to have
beneficial ownership of the shares of common stock of the Company
that are
owned of record by investment advisory clients of Wellington Management.
As of February 28, 2007, Wellington Management has shared voting
authority
over 1,439,000 shares and non voting authority over 2,058,000 shares.
The
number of shares reported excludes shares underlying currently
exercisable
warrants as they are not outstanding and there is no vote.
|
|
(13)
|
The
address is Heartland Value Fund is 789 North Water Street, Suite
500,
Milwaukee, Wisconsin, 53202. Heartland Advisors, Inc. is the investment
advisor for Heartland Value Fund. The number of shares reported includes
375,000 shares underlying a currently exercisable warrant.
|
|
(14)
|
Includes
2,459,763 shares of common stock issuable upon currently exercisable
options held by directors and officers and excludes 453,278 shares
of
common stock issuable upon options that may vest in the future held
by
directors and officers (see notes 3, 4, 5, 6, 7, 8, 9, 10, 11, and
12
above).
|
Equity
Compensation Plan Information
The
following table gives the information about common stock that may be issued
upon
the exercise of options, warrants and rights under all of our existing equity
compensation plans as of December 31, 2006, including the 1993 Stock Plan,
the
2000 Performance Equity Plan and other miscellaneous plans.
|
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding
options,
warrants
and rights
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation plans
(excluding
securities
reflected
in column (a))
|
|
(a)
|
(b)
|
(c)
|
|
|
Equity
compensation plans
approved
by security holders
|
5,109,590
|
$20.38
|
895,093
|
|
Equity
compensation plans not
approved
by security holders
|
115,000
|
$23.25
|
0
|
|
Total
|
5,224,590
|
895,093
|
The
equity compensation plans reported upon in the above table that were not
approved by security holders include:
| · |
Options
to purchase 25,000 shares granted to two directors in March 1999
at
exercise prices of $23.25 per share. These options are vested and
expire
in March 2009.
|
| · |
Options
to purchase 100,000 shares granted to an employee in March 1999
at an
exercise price of $23.25. These options vested over five years,
ending on
May 26, 2004, and expire in May 2009. As of December 31, 2005,
options to
purchase 90,000 shares were subject to this agreement and 10,000
options
have been exercised.
|
Item
13. Certain Relationships and Related Transactions
Prior
to
June 2006, we leased our headquarters facility pursuant to a lease agreement
dated March 1, 1992 with Jeffrey L. Parker, our chief executive officer and
Barbara Parker, a related party. For each of the years ended December 31,
2006, 2005, and 2004, we incurred approximately $140,000, $280,000 and $280,000,
respectively, in rental expense under the lease. We believe that the terms
of
the lease were no less favorable to us than terms we could have obtained from
an
unaffiliated third party.
The
Company paid approximately $1,532,000, $1,921,000 and $1,519,000 in 2006, 2005
and 2004, respectively, for patent-related legal services to a law firm, of
which Robert Sterne, a Company director since September 2006, is a
partner.
Item
14. Principal Accountant Fees and Services
The
firm
of PricewaterhouseCoopers LLP acts as our principal accountants. The following
is a summary of fees paid to the principal accountants for services
rendered.
Audit
Fees.
For
the
years ended December 31, 2005 and December 31, 2006, the aggregate fees billed
for professional services rendered for the audit of our annual financial
statements, the review of our financial statements included in our quarterly
reports, and services provided in connection with regulatory filings were
approximately $617,827 and $390,000, respectively.
Audit
Related Fees.
For
the
years ended December 31, 2005 and December 31, 2006, there were no fees billed
for professional services by our principal accountants for assurance and
related
services.
Tax
Fees.
For
the
years ended December 31, 2005 and December 31, 2006, there were no fees billed
for professional services rendered by our principal accountants for tax
compliance, tax advice or tax planning.
All
Other Fees.
For
each
of the years ended December 31, 2005 and December 31, 2006, the aggregate
fees
billed for other professional services by our principal accountants were
approximately $1,500 for an annual license fee for accounting research
software.
All
the
services discussed above were approved by our audit committee. The audit
committee pre-approves the services to be provided by our principal accountants,
including the scope of the annual audit and non-audit services to be performed
by the principal accountants and the principal accountants’ audit and non-audit
fees. The audit committee also reviews and recommends to the board of directors
whether or not to approve transactions between the company and an officer
or
director outside the ordinary course of business.
PART
IV
Item
15. Exhibits, Financial Statement Schedules and Reports on Form
8-K
Exhibits
|
Exhibit
Number
|
Description
|
|
|
3.1
|
Articles
of Incorporation, as amended (incorporated by reference from Exhibit
3.1
of Registration Statement No. 33-70588-A)
|
|
|
3.2
|
Amendment
to Amended Articles of Incorporation dated March 6, 2000 (incorporated
by
reference from Exhibit 3.2 of Annual Report on Form 10-K for the
year
ended December 31, 1999)
|
|
|
3.3
|
Bylaws,
as amended (incorporated by reference from Exhibit 3.2 of Annual
Report on
Form 10-K for the year ended December 31, 1998)
|
|
|
3.4
|
Amendment
to Certificate of Incorporation dated July 17, 2000 (incorporated
by
reference from Exhibit 3.1 of Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000)
|
|
Exhibit
Number
|
Description
|
|
3.5
|
Certificate
of Designations of the Preferences, Limitations and Relative Rights
of
Series E Preferred Stock (incorporated by reference from Exhibit
4.02 of
Form 8-K dated November 21, 2005)
|
|
|
4.1
|
Form
of common stock certificate (incorporated by reference from Exhibit
4.1 of
Registration Statement No. 33-70588-A)
|
|
|
4.2
|
Purchase
Option between the Registrant and Tyco Sigma Ltd. dated May 22,
2000
(incorporated by reference from Exhibit 4.1 of Quarterly Report
on Form
10-Q for the quarter ended June 30, 2000)
|
|
|
4.3
|
Purchase
Option between the Registrant and Leucadia National Corporation
dated May
22, 2000 (incorporated by reference from Exhibit 4.2 of Quarterly
Report
on Form 10-Q for the quarter ended June 30, 2000)
|
|
|
4.4
|
Purchase
Option between the Registrant and David M. Cumming dated May 22,
2000
(incorporated by reference from Exhibit 4.3 of Quarterly Report
on Form
10-Q for the quarter ended June 30, 2000)
|
|
|
4.5
|
Purchase
Option between the Registrant and Peconic Fund Ltd. dated May 22,
2000
(incorporated by reference from Exhibit 4.4 of Quarterly Report
on Form
10-Q for the quarter ended June 30, 2000)
|
|
|
4.6
|
Purchase
Option between the Registrant and Texas Instruments, Inc. dated
March 8,
2001(incorporated by reference from exhibit 4.7 of Annual Report
on Form
10-K for the year ended December 31, 2000)
|
|
|
4.7
|
Form
of Warrant between the Registrant and each of the investors in
the March
2005 private placement who are the Selling Shareholders (incorporated
by
reference from Exhibit 4.7 of Annual Report on Form 10-K for the
year
ended December 31, 2004)
|
|
4.8
|
Form
of Warrant between the Registrant and each of the investors in the
February 2006 private placement who are the Selling Shareholders
(incorporated by reference from Exhibit 10.2 of Form 8-K dated February
3,
2006)
|
|
|
4.9
|
Shareholder
Protection Rights Agreement between the Registrant and American Stock
Transfer & Trust Company, as Rights Agent (incorporated by reference
from Exhibit 4.01 of Form 8-K dated November 21,
2005)
|
|
Exhibit
Number
|
Description
|
|
4.10
|
Form
of Rights Certificate pursuant to Shareholder Protection Rights
Agreement
(incorporated by reference from Exhibit 4.03 of Form 8-K dated
November
21, 2005)
|
|
|
4.11
|
Standard
Form of Employee Option Agreement*
|
|
|
10.1
|
1993
Stock Plan, as amended (incorporated by reference from the Company's
Proxy
Statement dated October 1, 1996)
|
|
|
10.2
|
Subscription
agreement between the Registrant and Tyco Sigma Ltd dated May 22,
2000
(incorporated by reference from Exhibit 10.1 of Quarterly Report
on Form
10-Q for the period ended June 30, 2000)
|
|
|
10.3
|
Subscription
agreement between the Registrant and Leucadia National Corporation
dated
May 22, 2000 (incorporated by reference from Exhibit 10.2 of Quarterly
Report on Form 10-Q for the period ended June 30, 2000)
|
|
|
10.4
|
Transfer
and registration rights agreement between the Registrant and Peconic
Fund
Ltd. dated May 22, 2000 (incorporated by reference from Exhibit
10.3 of
Quarterly Report on Form 10-Q for the period ended June 30,
2000)
|
|
|
10.5
|
Subscription
agreement between the Registrant and Texas Instruments, Inc. dated
March
8, 2001 (incorporated by reference fro the Exhibit 10.16 of the
Annual
Report on Form 10-K for the period ended December 31,
2000)
|
|
|
10.6
|
Stock
option agreement dated September 7, 2000 between Jeffrey Parker
and
Registrant (incorporated by reference from Exhibit 10.2
of
Quarterly Report on Form 10-Q for the period ended June 30,
2001)
|
|
|
10.7
|
Stock
option agreement dated September 7, 2000 between Jeffrey Parker
and
Registrant (incorporated by reference from Exhibit 10.3
of
Quarterly Report on Form 10-Q for the period ended June 30,
2001)
|
|
|
10.8
|
2000
Performance Equity Plan (incorporated by reference from Exhibit
10.11 of
Registration Statement No.
333-43452)
|
|
10.9
|
Form
of 2002 Indemnification Agreement for Directors and Officers (incorporated
by reference from Exhibit 10.1 of Quarterly Report on Form 10-Q for
the
period ended September 30, 2002)
|
|
|
10.10
|
Subscription
agreement between the Registrant and Leucadia National Corporation
dated
March 26, 2003 (incorporated by reference from Exhibit 10.24 of Annual
Report on Form 10-K for the period ended December 31,
2002)
|
|
Exhibit
Number
|
Description
|
|
10.11
|
Subscription
agreement between the Registrant and David Cumming dated March
26, 2003
(incorporated by reference from Exhibit 10.29 of Annual Report
on Form
10-K for the period ended December 31, 2002)
|
|
|
10.12
|
Asset
Purchase Agreement and related ancillary agreements, dated as of
February
25, 2004, among the Company, Thomson and Thomson Licensing (incorporated
by reference from Exhibits 2.1, 10.1, 10.2, 10.3, 10.4, 10.4 and
10.6 of
Current Report on Form 8-K for the event date of February 25, 2004)
|
|
|
10.13
|
Form
of Stock Purchase Agreement with each of the investors in the March
2005
private placement who are the Selling Stockholders (incorporated
by
reference from Exhibit 10.29 of Annual Report on Form 10-K for
the period
ended December 31, 2004)
|
|
|
10.14
|
List
of Investors for Subscription Agreement and Warrants dated March
10, 2005
(incorporated by reference from Exhibit 10.30 of Annual Report
on Form
10-K for the period ended December 31, 2004)
|
|
|
10.15
|
Form
of Stock Purchase Agreement with each of the investors in the February
2006 private placement who are the Selling Stockholders (incorporated
by
reference from Exhibit 10.1 of Form 8-K dated February 3,
2006)
|
|
|
10.16
|
List
of Investors for Subscription Agreement and Warrants dated February,
3
2006 (incorporated by reference from Exhibit 10.3 of Form 8-k dated
February 3, 2006)
|
|
|
10.17
|
Form
of Stock Purchase Agreement with each of the investors in the February
2007 private placement who are the Selling Stockholders (incorporated
by
reference from Exhibit 10.1 of Form 8-K dated February 23,
2007)
|
|
|
10.18
|
List
of Investors for Subscription Agreement dated February 23, 2007
(incorporated by reference from Exhibit 10.2 of Form 8-K dated
February
23, 2007)
|
|
|
10.19
|
Change
in Control Severance Policy dated March 6,
2007*
|
|
21.1
|
Table
of Subsidiaries (incorporated by reference from Exhibit 22.1 of Annual
Report on Form 10-K for the period ended December 31, 2004)
|
|
|
23.1
|
Consent
of PricewaterhouseCoopers LLP*
|
|
|
31.1
|
Rule
13a-14 and 15d-14 Certification of Jeffrey Parker*
|
|
|
31.2
|
Rule
13a-14 and 15d-14 Certification of Cynthia Poehlman*
|
|
|
32.1
|
Section
1350 Certification of Jeffrey Parker and Cynthia Poehlman*
|
|
|
99.1
|
Compensation
Committee Charter*
|
*
Filed
herewith
Financial
Statement Schedules
Schedule
II - Valuation and Qualifying Accounts
Reports
on Form 8-K
| 1. |
Form
8-K, dated February 23, 2007. Item 2.02 - Results of Operations
and
Financial Condition. Announcement of the completion of a private
placement. Item 3.02 - Unregistered Sales of Equity Securities.
Announcement of the sale of 992,441 shares of common stock for
aggregate
proceeds of $8.4 million and related registration requirements.
|
Signatures
In
accordance with Section 13 of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date:
March
7,
2007
PARKERVISION,
INC.
By:
/s/
Jeffrey L. Parker
Jeffrey L. Parker
Chief Executive Officer
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.
|
Signature
|
Title
|
Date
|
|
|
By:
|
/s/
Jeffrey L. Parker
|
Chief
Executive Officer and Chairman
|
March
7, 2007
|
|
Jeffrey
L. Parker
|
of
the Board (Principal Executive Officer)
|
||
|
By:
|
/s/ Cynthia L. Poehlman |
Chief
Financial Officer (Principal Accounting
|
March
7, 2007
|
|
Cynthia
L. Poehlman
|
Officer)
|
||
|
By:
|
/s/
David F. Sorrells
|
Chief
Technical Officer and Director
|
March
7, 2007
|
|
David
F. Sorrells
|
|||
|
By:
|
/s/ William A. Hightower |
Director
|
March
7, 2007
|
|
William
A. Hightower
|
|||
|
By:
|
/s/
John Metcalf
|
Director
|
March
7, 2007
|
|
John
Metcalf
|
|||
|
By:
|
/s/ Todd Parker |
Director
|
March
7, 2007
|
|
Todd
Parker
|
|||
|
By:
|
/s/
William L. Sammons
|
Director
|
March
7, 2007
|
|
William
L. Sammons
|
|||
|
By:
|
/s/ Robert G. Sterne |
Director
|
March
7, 2007
|
|
Robert
G. Sterne
|
|||
|
By:
|
/s/
Nam P. Suh
|
Director
|
March
7, 2007
|
|
Nam
P. Suh
|
|||
|
By:
|
/s/
Papken der Torossian
|
Director
|
March
7, 2007
|
|
Papken
der Torossian
|
PARKERVISION,
INC. AND SUBSIDIARY
VALUATION
AND QUALIFYING ACCOUNTS
SCHEDULE
II
|
Valuation
Allowance for
Income
Taxes
|
Balance
at
Beginning
of
Period
|
Provision
|
Write-Offs
|
Balance
at
End
of
Period
|
||||
|
Year
ended December 31, 2004
|
44,863,806
|
6,382,942
|
0
|
51,246,748
|
||||
|
Year
ended December 31, 2005
|
51,246,748
|
9,454,464
|
0
|
60,701,212
|
||||
|
Year
ended December 31, 2006
|
60,701,212
|
6,340,888
|
0
|
67,042,100
|
Index
to
Exhibits
|
4.11
|
Standard
Form of Employee Option Agreement
|
|
|
10.19
|
Change
in Control Severance Policy
|
|
|
23.1
|
Consent
of PricewaterhouseCoopers LLP
|
|
|
31.1
|
Rule
13a-14 and 15d-14 Certification of Jeffrey Parker
|
|
|
31.2
|
Rule
13a-14 and 15d-14 Certification of Cynthia Poehlman
|
|
|
32.1
|
Section
1350 Certification of Jeffrey Parker and Cynthia
Poehlman
|
|
|
99.1
|
Compensation
Committee Charter
|
82
