PARKERVISION, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1.
Description of Business
ParkerVision, Inc.
(“w
e”, the “Company”, or “ParkerVision”) is
in the business of innovating fundamental wireless technologies. We design, develop and market our proprietary radio frequency (“RF”) technologies and products for use in semiconductor circuits for wireless communication products. Our business is expected to include licensing of our intellectual property and/or the sale of integrated circuits based on our technology for incorporation into wireless devices designed by our customers. In addition, from time to time, we offer engineering consulting and design services to our customers, for a negotiated fee, to assist them in developing prototypes and/or products incorporating our technologies
.
2
. Liquidity and
Capital Resources
Our future business plans call for continued investment in sales, marketing, customer support and product development for our technologies and products, as well as investment in continued protection of our intellectual property including prosecution of new patents and defense of existing patents. Our ability to generate revenues sufficient to offset costs is subject to securing new product and licensing customers for our technologies, successfully supporting our customers in completing their product designs, and/or successfully protecting or defending our intellectual property.
We expect that revenue
, if any,
for 2014 will not be sufficient to cover our operational expenses for 2014, and that our expected continued losses and use of cash will be funded from available working capital. In addition, we expect that available working capital will be used for initial production start-up costs, including test programs and production tooling, and for litigation expenses to defend our intellectual property. Our current capital resources include cash and available for sale securities of approximately
$
21.8
million at
June 30
, 2014. These current capital resources are sufficient to
meet our working capital needs for 2014, but may not be sufficient to sustain our operations on a longer-term basis and we may require additional capital to fund our operations
.
The long-term continuation of our business plan beyond 2014 is dependent upon the generation of sufficient revenues from our technologies and/or 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 operating costs. Failure to generate sufficient revenues, raise additional capital through debt or equity financings, and/or reduce operating costs could have a material adverse effect on our ability to meet our long-term liquidity needs and achieve our intended long-term business objectives
.
3
.
Basis of Presentation
The accompanying unaudited financial statements
for the period ended
June 30
, 2014
were
prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Operating results for the three
and six
month
s
ended
June
3
0
, 2014
are not necessarily indicative of the results that may be expected for the year ending December 31, 20
1
4
or future years
.
All normal and recurring adjustments which, in the opinion of management, are necessary for a fair
presentation
of the financial condition and results of operations have been included.
The
year-end
balance sheet data was derived from audited financial statements, but does not include all disclosures required by
accounting principles
generally accepted
in the United States of America
.
These interim financial statements should be read in conjunction with
our
latest Annual Report on Form 10-K for the year ended December 31,
201
3
.
4
.
Accounting Policies
In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update 2013-11 Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”) to provide guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists thereby reducing diversity in practice. The amendments in ASU 2013-11 became effective for the Company on January 1, 2014 and did not have a material impact on the Company’s financial statements.
There have been no
other
changes in accounting policies from those stated in the Annual Report on Form 10-K for the year ended December 31, 201
3
.
5
. Loss per
Common
Share
Basic loss per
common
share is determined based on the weighted-average number of common shares outstanding during each period. Diluted loss per
common
share is the same as basic loss per
common
share as all common share equivalents are excluded from the calculation, as their effect is anti-dilutive.
The weighted average number of common shares outstanding for the three months ended
June 30
, 201
4
and 201
3
were
96,999,397
and
88,43
6
,532
, respectively
.
The weighted average number of common shares outstanding for the six months ended June 30, 2014 and 2013 were
95,359,994
and
85,905,873
, respectively
.
Options and warrants to
purchase
7,649,496
and
9,848,142
shares
of common stock were outstanding at
June 30
, 2014
and 201
3
,
respectively.
In addition, unvested restricted stock units (“RSUs”),
representing
1,714,825
and
950,136
shares
of common stock, were outstanding at
June 30
, 2014
and 201
3
, respectively. These options
, warrants and RSUs
were excluded from the computation of diluted
loss
per
common
share as the
ir
effect would have been anti-dilutive.
6
.
Intangible
Assets
Intangible assets consist of the following:
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|
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|
June 30, 2014
|
|
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Gross Carrying Amount
|
|
|
Accumulated Amortization
|
|
|
Net Book Value
|
Patents and copyrights
|
$
|
19,357,430
|
|
$
|
10,935,591
|
|
$
|
8,421,839
|
Prepaid licensing fees
|
|
574,000
|
|
|
572,444
|
|
|
1,556
|
|
$
|
19,931,430
|
|
$
|
11,508,035
|
|
$
|
8,423,395
|
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|
December 31, 2013
|
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|
Gross Carrying Amount
|
|
|
Accumulated Amortization
|
|
|
Net Book Value
|
Patents and copyrights
|
$
|
18,943,020
|
|
$
|
10,397,136
|
|
$
|
8,545,884
|
Prepaid licensing fees
|
|
574,000
|
|
|
567,452
|
|
|
6,548
|
|
$
|
19,517,020
|
|
$
|
10,964,588
|
|
$
|
8,552,432
|
|
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7
. Share-Based Compensation
On June 17, 2014, our shareholders approved amendments to our 2011 Long-Term Equity Incentive Plan (the “2011 Plan
”
) including an increase to the shares authorized for issuance under the plan from
5,000,000
to
12,000,000
shares. Upon approval of the amendments to our 2011 plan, we also amended our 2000 Performance Incentive Plan
(the “2000 Plan”)
such that no further awards
will
be granted under the 2000 Plan
.
There has been no material change in the assumptions used to compute the fair value of our equity awards, nor in the method used to account for share-based compensation from those stated in our Annual Report on Form 10-K for the year ended December 31, 201
3
.
The following table presents share-based compensation expense included in our statements of
comprehensive loss
for the three
and six
months ended
June 30
, 2014 and 2013
, respectively:
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Three months ended
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Six months ended
|
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June 30,
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June 30,
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2014
|
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2013
|
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|
2014
|
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|
2013
|
Research and development expense
|
$
|
349,409
|
|
$
|
343,246
|
|
$
|
733,484
|
|
$
|
704,841
|
Sales and marketing expense
|
|
69,574
|
|
|
70,191
|
|
|
143,752
|
|
|
143,857
|
General and administrative expense
|
|
1,028,170
|
|
|
1,868,836
|
|
|
2,393,938
|
|
|
3,192,819
|
Total share-based expense
|
$
|
1,447,153
|
|
$
|
2,282,273
|
|
$
|
3,271,174
|
|
$
|
4,041,517
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As of
June 30
, 2014
, we had
approximately
$
1.5
million in
unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation awards. This cost is expected to be recognized over a weighted average period of approximatel
y
1.
2
year
s
.
For the three-month periods ended
June 30
, 2014 and 2013, share-based compensation expense
above includes
approximately
$
158
,000
and
$
1,215
,000
, respectively, recognized upon vesting of RSUs granted to consultants.
For the six-month periods ended June 30, 2014 and 2013, share-based compensation expense
above includes
approximately
$633,000
and
$1,836,000
, respectively, recognized upon vesting of RSUs granted to consultants
.
As of
June 30
, 2014, we have an aggregate of
750,000
performance-based RSUs
awarded
to consultants that remain unvested. The
se
RSUs
vest only upon achievement of certain market conditions, as measured based on the closing price of our common stock during a period ending on the earlier of (i) December 31, 2015 or (ii) thirty days following termination of the related consulting agreement. Upon thirty days’ notice, the consulting agreements may be terminated and any unvested portion of the RSUs will be cancelled.
8
. Stock Authorization and Issuance
On
March 13, 2014
, we completed the sale of an aggregate of
2,666,666
shares of our common stock, at a price of $
4.50
per share, to
two
accredited investors in a private placement transaction pursuant to
Rule 506 of Regulation D under the Securities Act of 1933, as amended
. The offering represented
2.8
%
of our outstanding common stock on an after-issued basis.
The aggregate net proceeds from this offering, after deduction of offering costs which are recorded to additional
-
paid
-in-
capital in the accompanying balance sheets, were approximately
$
1
1.9
million
.
We filed a registration statement
on
April 7, 2014
to register the
resale of the
common stock issued in the private placement transaction. The
registration statement
became
effective on
May 1, 2014
(File No. 333-
195105
).
In the event the registration statement ceases to be effective for any continuous
period that exceeds
10 consecutive calendar days or more than an aggregate of fifteen calendar
days
during any 12-month period or any time during the six-month anniversary of the registration date
(a “Registration Default”), we shall pay the investors an amount in
cash equal to
1%
of the aggregate purchase price paid for each 30-day period of a Registration Default. The maximum penalty that we may incur under this arrangement is
6
%
of the aggregate purchase price, or
approximately
$
7
20,000
subject to reduction for shares sold or transferred and not held at the penalty determination date. We do not believe that payment under the registration payment arrangement is probable and therefore no related liability has been recorded in the accompanying financial statements.
9
. Fair Value Measurements
We have determined the estimated fair value amounts of our financial instruments using available market information. Our assets that are measured at fair value on a recurring basis include the following as of
June 30
, 2014
and December 31, 201
3
:
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Fair Value Measurements
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Total
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Quoted Prices in Active Markets (Level 1)
|
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Significant Other Observable Inputs (Level 2)
|
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Significant Unobservable Inputs (Level 3)
|
June 30, 2014:
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Cash and cash equivalents:
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Money market funds
|
$
|
83,154
|
|
$
|
83,154
|
|
$
|
0
|
|
$
|
0
|
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|
Available for sale securities:
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Municipal bond mutual funds
|
$
|
21,315,309
|
|
$
|
21,315,309
|
|
$
|
0
|
|
$
|
0
|
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|
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Fair Value Measurements
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Total
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Quoted Prices in Active Markets (Level 1)
|
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|
Significant Other Observable Inputs (Level 2)
|
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Significant Unobservable Inputs (Level 3)
|
December 31, 2013:
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Available for sale securities:
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Municipal bond mutual funds
|
$
|
16,957,489
|
|
$
|
16,957,489
|
|
$
|
0
|
|
$
|
0
|
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10
. Commitments and Contingencies
Legal Proceedings
From time to time, we are subject to legal proceedings and claims which arise in the ordinary course of our business, including those matters discussed below. We believe, based on advice from our outside legal counsel, that the final disposition of such matters will not have a material adverse impact on our financial position, results of operation or liquidity.
ParkerVision vs. Qualcomm, Inc.
On July 20, 2011, we filed a patent infringement action in the United States District Court of the Middle District of Florida against Qualcomm Incorporated (“Qualcomm”) seeking unspecified damages and injunctive relief for infringement of several of our patents related to radio-frequency receivers and the down-conversion of electromagnetic signals. Qualcomm filed a counterclaim against us alleging
invalidity and unenforceability of each of our patents. In October 2013, a jury awarded us $172.7 million in damages for Qualcomm’s direct and indirect infringement of eleven claims of four of our patents. The jury also found that Qualcomm did not prove its claims of invalidity for any of the eleven claims of the four patents in the case, and furthermore found that we did not prove our claims of willfulness, which would have allowed enhancement of the jury-awarded damages. On June 20, 2014, a final district court ruling was issued in which the court denied Qualcomm’s motion to overturn the jury’s verdict regarding validity of the patents but granted Qualcomm’s motion to overturn the jury’s verdict of infringement. On June 25, 2014, we filed a notice of appeal with the court to appeal the decision of non-infringement to the U.S. Court of Appeals for the Federal Circuit. The collection of damages from Qualcomm, if any, will be dependent upon the final disposition of this case.
ParkerVision vs. Qualcomm and HTC
On May 1, 2014, we filed a complaint against Qualcomm, Qualcomm Atheros, Inc., HTC Corporation and HTC America, Inc. seeking unspecified damages and injunctive relief for infringement of
seven
of our patents related to RF up-conversion, systems for control of multi-mode, multi-band communications, baseband innovations including control and system calibration, and wireless protocol conversion. The complaint was filed in the United States District Court of the Middle District of Florida and service of the complaint on the defendants is pending.
RPX and Farmwald vs. ParkerVision
In June 2014, RPX Corporation and Michael Farmwald (collectively, the “Petitioners”) filed petitions for
Inter Partes
review (“IPR”) with the United States Patent and Trademark Office (“USPTO”) related to
three
of the four patents in our July 2011 district court case against Qualcomm. In July 2014, the Petitioners filed an additional IPR petition for the
fourth
patent in the July 2011 district court case against Qualcomm. The USPTO will review the petitions within six months of the filing date and determine whether or not to institute
an
IPR.
Maxtak Capital Advisors LLC vs. ParkerVision
On December 28, 2011, Maxtak Capital Advisors LLC, Maxtak Partners LP and David Greenbaum (the “Plaintiffs”) filed a complaint in the United States District Court of New Jersey against us, our chief executive officer, Jeffrey Parker and one of our directors, Robert Sterne, alleging common law fraud and negligent misrepresentation of material facts concerning the effectiveness of our technology and our success in securing customers. The Plaintiffs
we
re seeking unspecified damages, including attorneys’ fees and costs. In October 2012, the court granted our motion to transfer the case to the Middle District of Florida
where discovery commenced
.
In July 2014, we conducted a demonstration of our d2p technology for the Plaintiffs. As a result of the demonstration and the discovery conducted to date, the parties entered into a confidential resolution of this action. In connection with the resolution, the Plaintiffs stated that they agree and acknowledge that the d2p technology works in a manner consistent with our representations during the period covered by the litigation. The Plaintiffs further agreed and acknowledged that their allegations with regard to the efficacy of the d2p technology and all statements in their complaint attributed to or based upon the pvnotes website, Michael Farmwald, Barbara Paldus, Alfred Riddle, Steven Cripps and Joy Laskar with regard to the efficacy of our d2p technology are without merit. The financial terms of the confidential resolution will have no impact on our financial position, results of operations or liquidity.
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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, within the meaning of the Private Securities Litigation Reform Act of 1995, including, in particular, statements about our future plans, objectives, and expectations contained in this Item. When used in this report and in future filings by us
with
the Securities and Exchange Commission (“SEC”), the words or phrases
“expects”,
“will likely result”, “will continue”, “is anticipated”, “estimated” or similar expressions are intended to identify “forward-looking statements.” 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 results and those presently anticipated or projected, including the risks and uncertainties identified in our annual report on Form 10-K for the fiscal year ended December 31, 201
3 (the “Annual Report”)
and in
this
Item 2 of
Part I of
this
quarterly
report. Examples of such risks and uncertainties include general economic and business conditions, competition, unexpected changes in technologies and technological advances, the timely development and commercial acceptance of new products and technologies, reliance on key business and sales relationships, reliance on our intellectual property, the outcome of
our intellectual property
litigation and the ability to obtain adequate financing in the future. 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.
Corporate Website
We
webcast
our
earnings calls and certain events
we
participate
in or host
with members of the investment community in the investor relations section of
our
website. Additionally,
we announce
investor information, including news and commentary about
our
business, financial performance and related matters, SEC filings, notices of investor events, and
our
press and earnings releases, in the investor relations section of
our
website
(
http://ir.parkervision.com
). Investors and others can receive notifications of new information posted in the investor relations section in real time by signing up for email alerts and/or RSS feeds. Further corporate governance information, including our governance guidelines, board committee charters, and code of conduct, is also available in the investor relations section of
our
website under the heading “Corporate Governance.” The content of
our
website
is
not incorporated by reference into this quarterly report
or in any
other
report or document
we
file with the
SEC
, and any references to
our
website are intended to be inactive textual references only.
Overview
We are in the business of innovating fundamental wireless technologies. We design, develop and market our proprietary radio frequency (“RF”) technologies and products for use in semiconductor circuits for wireless communication products.
We have a three-part growth strategy that includes intellectual property licensing and/or product ventures, intellectual property enforcement, and product and component development, manufacturing and sales. We have launched a licensing/product venture campaign to explore licensing and joint product development opportunities with wireless communications companies that make, use or sell chipsets and/or products that incorporate RF technology. In February 2014, we engaged the intellectual property firm of 3LP Advisors, LLC (“3LP”) to assist in managing our licensing operations. We believe there are a number of wireless communications companies that can benefit from the use of the RF technologies we have developed, whether through a license or, in certain cases, a joint product venture that would include licensing rights. We will pay 3LP success fees as a percentage of net proceeds received by us for licensing and licensing-related transactions. During the first 12 months of the term of their engagement,
we will also pay 3LP a monthly retainer, one-half of which will be offset against success fees earned by 3LP.
From time to time we expect to be involved in litigation in order to protect or defend our intellectual property rights. Since 2011, we have been involved in patent infringement litigation against Qualcomm Incorporated (“Qualcomm”) for their unauthorized use of our receiver technology. In October 2013, a jury awarded us $172.7 million in past damages for Qualcomm’s infringement of four of our patents. In June 2014, the district court issued its final ruling overturning the jury’s infringement decision. We have appealed this decision to the U.S. Court of Appeals. In May 2014, we filed a second patent infringement litigation action against Qualcomm, as well as their customer, HTC, for their infringement of seven patents related to different technologies of ours. In June 2014, RPX Corporation and Michael Farmwald filed petitions for
Inter Partes
review with the U.S. Patent and Trademark Office challenging the four patents in our initial Qualcomm infringement case.
Refer to “Legal Proceedings” in Note 10 to our financial statements included in Item 1 for a complete discussion of the proceedings in these matters. Litigation is inherently uncertain, and as such, we cannot predict the ultimate outcome of these matters. The unfavorable resolution of one or more of these matters could adversely affect our future business plans.
The law firm of McKool Smith is representing us in both Qualcomm infringement actions on a partial contingency basis. We believe there are funding opportunities available to us for financing our portion of the litigation fees for the May 2014 patent infringement action in return for an additional contingent share of any damages awarded in the case, should we determine that such financing is prudent. We expect to continue to incur a portion of the legal costs related to the initial Qualcomm case, including the fees and costs for appellate counsel, and legal costs to defend against the IPR actions.
Our product development and marketing efforts are focused on our RF technologies in mobile and other communications industries that use RF. We have developed and are actively marketing a number of RF component products to industries that presently use less highly integrated semiconductors than would typically be found in mobile wireless applications. These are applications such as industrial, infrastructure, and military devices. In addition, we are working on the continued development and marketing of RF integrated circuits that function with VIA Telecom’s baseband products for mobile handset customers.
Since 2005, we have generated no product or royalty revenue from our wireless technologies. We have made significant investments in developing and protecting our technologies and products, the returns on which are dependent upon the generation of future revenues for realization.
Liquidity and Capital Resources
On March 13, 2014, we completed the sale of an aggregate of 2,666,666 shares of our common stock, at a price of $4.50 per share, to two accredited investors in a private placement transaction pursuant to Rule 506 of Regulation D under the Securities Act of 1933, as amended. The offering represented 2.8
%
of our outstanding common stock on an after-issued basis. The aggregate net proceeds from this offering, after deduction of offering costs, were approximately
$
11.9 million and will be used for general working capital purposes.
We filed a registration statement on April 7, 2014 to register the resale of the common stock issued in the private placement transaction. The registration statement became effective on May 1, 2014 (File No. 333-195105).
As of
June 30, 2014
, we had working capital of approximately
$
20.7
million which represented an increase of approximately
$
5.5
million from working capital at December 31, 201
3
. This increase in
working capital is a result of approximately $11.9 million in net proceeds from the March 2014 offering and approximately $
1.7
million in proceeds from the exercise of stock options and warrants, less approximately $
8.6
million to fund operations and approximately $0.
5
million used for patents and fixed assets during the first
six
months of 2014.
Our future business plans call for continued investment in sales, marketing, customer support and product development for our technologies and products, as well as investment in continued protection of our intellectual property
,
including
the
prosecution of new patents and defense of existing patents. Our ability to generate revenues sufficient to offset costs is subject to our ability to successfully support our customers in completing their initial product designs incorporating our technologies, our ability to secure a reasonable share of the market through additi
onal product offerings with our
customers
, our ability to secure new
customers
for our products or technologies
, and
/or
our ability to defend our intellectual property.
Revenue generated from technology licenses and/or the sale of RF chipsets or component products, if any, in 2014 may not be sufficient to cover our operational expenses, and we expect that our continued losses and use of cash will be funded from available working capital. In addition, we expect that available working capital will be used for initial production start-up costs, including test programs and production tooling, and for litigation expenses to defend our intellectual property.
We believe o
ur current capital resources are sufficient to support our currently projected liquidity requirements
through 2014 and beyond
.
The long-term continuation of our business plan is dependent upon the generation of sufficient revenues from our technologies and/or 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 operating costs. Failure to generate sufficient revenues, raise additional capital through debt or equity financings, and/or reduce operating costs could have a material adverse effect on our ability to meet our long-term liquidity needs and achieve our intended long-term business objectives.
Results of Operations for Each of the Three
and Six M
onths Ended
June 30, 2014 and 2013
Revenue and Gross Margin
We had no product or royalty revenue for the three
and six
months ended
June 30, 2014 and 2013
.
Revenue from litigation awards, including settlements, if any, will be recognized upon final disposition of the litigation, including the outcome of any settlement discussions and/or appeals. Refer to
“Legal Proceedings”
in note 10 for further discussion of our patent infringement litigation against Qualcomm and others.
Research and Development Expenses
Research and development expenses consist primarily of engineering and related management and support personnel costs; fees for outside engineering design services which we use from time to time to supplement our internal resources; amortization and depreciation expense related to our patents and other assets used in product development; prototype production and materials costs, which represent the fabrication and packaging costs for prototype integrated circuits, as well as the cost of supporting components for prototype board development; software licensing and support costs, which represent the annual licensing and support maintenance for engineering design and other software tools; and rent and other overhead costs for our engineering design facility. Personnel costs include share-based compensation amounts which have been determined based on the grant date fair value of equity-based awards to our employees and then recorded to expense over the vesting period of the award.
Our research and development expenses
dec
reased approximately $
335,
000, or
13
%, during the three months ended
June 30, 2014
when compared to the same period in 201
3
. This
de
crease is primarily due
to a decrease in fees for outside design and development services of approximately $284,000 and a decrease in travel expenses of approximately $61,000.
Our research and development expenses
dec
reased approximately $
436,
000, or
9
%, during the
six
months ended
June 30, 2014
when compared to the same period in 201
3
. This
de
crease is primarily due
to a
decrease in fees for outside design and development services of approximately $321,000, a decrease in travel expenses of approximately $69,000, and a decrease in prototype costs of approximately $61,000.
The decrease in outside design and development services and prototype costs for the three and six month periods
is
a result of the timing of development projects. The decrease in travel costs for the three and six month periods is primarily the result of a decline in international travel related to development projects. We expect a significant percentage of our current working capital will continue to be invested in our research and product development activities. However, cash expenditures for research and product
development activities
will fluctuate on a quarter to quarter basis depending on the timing of various projects.
Marketing and Selling Expenses
Marketing and selling expenses consist primarily of marketing and sales personnel costs, including share-based compensation and travel costs, and outside professional fees. Marketing and selling expenses
increased approximately $362,000, or 85% during the three
months ended
June 30, 2014
when compared to the same period in 201
3.
Marketing and selling expenses
increased approximately $622,000, or 76% during the six
months ended
June 30, 2014
when compared to the same period in 201
3. These increases are primarily due to increases in outside professional fees as a result of certain business development activities, including those related to licensing operations and component products,
of approximately $316,000 and $523,000 during the three and six months ended June 30, 2014, respectively.
General and Administrative Expenses
General and administrative expenses consist primarily of executive, director, finance and administrative personnel costs, including share-based compensation, and costs incurred for insurance, shareholder relations and outside professional services, including litigation and other legal services.
General and administrative expenses decreased approximately $1,302,000, or 31%,
during the three months ended June 30, 2014 when compared to the same period in 2013, primarily as a result of a decrease in share-based compensation of approximately $841,000 and a decrease in litigation fees and expenses of approximately $454,000. General and administrative expenses decreased approximately $2,141,000, or 27%, during the six months ended June 30, 2014 when compared to the same period in 2014, primarily as a result of a decrease in share-based compensation of approximately $799,000 and a decrease in litigation fees and expense of approximately $1,315,000. The decrease in share-based compensation is primarily related to a decrease in performance-based RSUs vesting during the three and six months ended June 30, 2014 when compared to the same period in 2013. Litigation fees and expenses declined substantially following the conclusion of the patent infringement jury trial against Qualcomm in October 2013.
Net Loss and Net Loss per Common Share
Our net loss
de
creased approximately $
1,286,000
, or
18
%, during the three months ended
June 30, 2014
when compared to the same period in 201
3
. This
de
crease is primarily the result of a
n
$835,000 decrease in share-based compensation expense and a $454,000 decrease in litigation expenses
. On a per share basis, our net loss
decreased $0.02 per common share, or 25%, for the three months ended June 30, 2014
when compared to the same period in 201
3
as a result of
a
$1,275,000 decrease in operating expenses and a 9.7
% increase in the weighted average shares outstanding for the period.
Our net loss
de
creased approximately $
1,976,000
, or
15
%, during the
six
months ended
June 30, 2014
when compared to the same period in 201
3
. This
de
crease is primarily the result of
a $770,000 decrease in share-based compensation expense and a $1,315,000 decrease in litigation expenses
. On a per share basis, our net loss
decreased $0.04 per common share, or 25%, for the six months ended June 30, 2014
when compared to the same period in 201
3
as a result of
a
$1,955,000 decrease in operating expenses and an 11.0
% increase in the weighted average shares outstanding for the period.
Off-Balance Sheet Transactions, Arrangements and Other Relationships
As of
June 30, 2014
, we had outstanding warrants to purchase
1,399,204
shares of common stock that were issued in connection with the sale of equity securities in
a
private place
ment transaction
in
November
2010. These warrants have
an
exercise price
of
$0.54 per share
and a remaining
contractual life of approximately
1
.
4
years. The estimated
grant date
fair value of these warrants of $
355,778
is included in shareholders’ equity in our balance sheets.
Critical Accounting Policies
In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2013-11 Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”) to provide guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists thereby reducing diversity in practice. The amendments in ASU 2013-11 became effective for the Company on January 1, 2014 and did not have a material impact on the Company’s financial
statements
.
There have been no
other
changes in critical accounting policies from those stated in our Annual Report.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
For the three and six months ended June 30, 2014, there were no material changes from the market risk information disclosed under Item 7A of Part II of our Annual Report
.
ITEM 4. Controls and Procedures
.
Evaluation of Disclosure Controls and Procedures
As of
June 30, 2014, our management,
with the participation of
our
Chief Executive Officer and Chief Financial Officer,
evaluated the
effectiveness of our “disclosure controls and procedures
,
” as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934
, as amended (the “Exchange Act”
). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of
June 30, 2014
.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting
identified in connection with the evaluation required by
Rule 13a-15(e) under the Exchange Act that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
Refer
ence is made
to
the section entitled
“Legal Proceedings” in Note 1
0
to our
unaudited
financial statements for a discussion of current legal proceedings
, which discussion is incorporated herein by reference
.
ITEM 1A. Risk Factors.
There have been no material changes from the risk factors disclosed in Item 1A of Part I of our Annual Report
.
In addition to the information in this
quarterly
report, the risk factors disclosed in our Annual Report 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.
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
None.
ITEM 3.
Defaults Upon Senior Securities.
None.
ITEM 4. Mine Safety Disclosures.
Not applicable.
ITEM 5. Other Information.
On August 11, 2014, we issued a press release announcing our results of operations and financial condition for the three and six months ended June 30, 2014. The press release is attached hereto as Exhibit 99.1.
The foregoing information, including the exhibit related thereto, is furnished in response to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any disclosure document of the Registrant, except as shall be expressly set forth by specific reference in such document.
ITEM 6. Exhibits
.
|
|
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)
|
|
|
3.
5
|
Certificate of Designations of the Preferences, Limitations, and Relative Rights of Series E Preferred Stock, dated November 21, 2005 (incorporated by reference from Exhibit 4.02 of Form 8-K filed November 21, 2005)
|
|
|
3.6
|
Amended and Restated
Bylaws (incorporated by reference from Exhibit 3.1 of Current Report on Form 8-K filed August 1
4
, 200
7
)
|
|
|
3.7
|
Articles of Amendment to Articles of Incorporation, dated October 3, 2012 (incorporated by reference from Exhibit 3.1
of Current Report on Form 8-K filed October 4, 2012)
|
|
|
3.8
|
Articles of Amendment to Articles of Incorporation, dated July 11, 2013 (incorporated by reference from Exhibit 3.1 of Current Report on Form 8-K filed July 12, 2013)
|
|
|
31.1
|
Section 302 Certification of Jeffrey L. Parker, CEO*
|
|
|
31.2
|
Section 302 Certification of Cynthia Poehlman, CFO*
|
|
|
32.1
|
Section 906 Certification*
|
|
|
99.1
|
Earnings Press Release*
|
|
|
101.INS
|
XBRL Instance Document*
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema*
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase*
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase*
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase*
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase*
|
*
Filed
herewith
.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ParkerVision, Inc.
Registrant
|
|
August 11, 2014
|
By
:
/s/Jeffrey L. Parker
|
|
Jeffrey L. Parker
|
|
Chairman and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
|
|
August 11, 2014
|
By:
/s/Cynthia L. Poehlman
|
|
Cynthia L. Poehlman
|
|
Chief Financial Officer
|
|
(Principal Financial Officer and Principal
|
|
Accounting Officer)
|
EXHIBIT INDEX
10.
|
|
31.1
|
Section 302 Certification of Jeffrey L. Parker, CEO
|
31.2
|
Section 302 Certification of Cynthia Poehlman, CFO
|
32.1
99.1
|
Section 906 Certification
Earnings Press Release
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|