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EX-32.1 - PARKERVISION INC | fp0001487_ex32-1.htm |
EX-23.1 - PARKERVISION INC | fp0001487_ex23-1.htm |
EX-31.1 - PARKERVISION INC | fp0001487_ex31-2.htm |
EX-31.1 - PARKERVISION INC | fp0001487_ex31-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-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, 2009
( ) |
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.)
|
7915
Baymeadows Way, Suite 400
Jacksonville,
Florida 32256
(Address
of Principal Executive Offices)
Registrant’s
telephone number, including area code: (904) 732-6100
Securities
registered pursuant to Section 12(b) of the Act:
Title of Each Class
|
Name of Each Exchange on Which
Registered
|
|
Common
Stock, $.01 par value
|
The
Nasdaq Global Market
|
|
Common
Stock Rights
|
The
Nasdaq Global Market
|
Securities
registered pursuant to Section 12(g) of the Act:
None
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 Securities Exchange 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 whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such file).
Yes
( ) 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, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Securities Exchange
Act. (Check one):
Large
accelerated filer ( )
|
Accelerated
filer (X)
|
|
Non-accelerated
filer ( )
|
Smaller
reporting company ( )
|
|
(Do
not check if a smaller reporting company)
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Securities Exchange Act). Yes ( ) No
(X)
As of
June 30, 2009, the aggregate market value of the registrant’s common stock, $.01
par value, held by non-affiliates of the registrant was approximately
$90,138,931 (based upon $3.06 share closing price on that date, as reported by
The Nasdaq Global Market).
As of
March 10, 2010, 41,192,550 shares of the Issuer's Common Stock were
outstanding.
2
TABLE OF
CONTENTS
INTRODUCTORY
NOTE
|
4
|
|
PART
I
|
||
Item
1.
|
Business
|
4
|
Item
1A.
|
Risk
Factors
|
8
|
Item
1B.
|
Unresolved
Staff Comments
|
11
|
Item
2.
|
Properties
|
11
|
Item
3.
|
Legal
Proceedings
|
11
|
Item
4.
|
Reserved
|
11 |
PART
II
|
||
Item
5.
|
Market
for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
12
|
Item
6.
|
Selected
Financial Data
|
13
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
14
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
21
|
Item
8.
|
Consolidated
Financial Statements and Supplementary Data
|
22
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
44
|
Item
9A.
|
Controls
and Procedures
|
44
|
Item
9B.
|
Other
Information
|
45
|
PART
III
|
||
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
45
|
Item
11.
|
Executive
Compensation
|
49
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
62
|
Item
13.
|
Certain
Relationships and Related Transactions and Director
Independence
|
64
|
Item
14.
|
Principal
Accountant Fees and Services
|
65
|
PART
IV
|
||
Item
15.
|
Exhibits,
Financial Statement Schedule and Reports on Form 8-K
|
66
|
SIGNATURES
|
70
|
|
SCHEDULE
|
71
|
|
EXHIBIT
INDEX
|
72
|
3
INTRODUCTORY
NOTE
Unless
the context otherwise requires, in this Annual Report on Form 10-K (“Annual
Report”) “we”, “us”, “our” and the “Company” mean ParkerVision,
Inc.
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 Annual Report. When used in this Annual Report
and in future filings by the Company with the Securities and Exchange Commission
(“SEC”), 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 results 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.
We were
incorporated under the laws of the state of Florida on August 22,
1989. We are in the business of designing, developing and selling 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. Our business also
includes the joint development and marketing of wireless radio modules that
incorporate our technologies. In addition, from time to time, we
provide engineering consulting and design services to our customers, for a
negotiated fee, to assist them in developing prototypes and/or products
incorporating our technologies.
Our
business operates under a single segment. Refer to Item 6 to this
Annual Report for select financial data including our net losses from operations
and total assets. We are primarily focused on incorporating our technologies
into mobile handsets, but our technologies are applicable to other wireless
products that are related to networks serving mobile handsets such as data
cards, femtocells, machine-to-machine (M2M) and embedded
applications. Our technology can also be applied to non-cellular
radio applications such as military radios.
Recent
Developments
On
November 16, 2009, we closed an offering for the sale of 8,000,000 shares of our
common stock under a shelf registration statement for aggregate gross proceeds
of $16 million. Piper Jaffray & Co. (“Piper Jaffray”) acted as
the sole underwriter and manager of the offering. The net proceeds
from the offering, after underwriter discounts and commissions and other
offering expenses were approximately $14.6 million and will be used for general
working capital purposes.
General Development of
Business
In 2005,
we began educating prospective customers about the benefits of our technologies,
with a primary
4
focus on
our RF transmit, or d2p™, technology and its unique ability to address certain
high-priority market needs related to mobile handset applications. In
2006, we completed our first d2p integrated circuit (“IC”) which embodied many
of the advancements of our technology and enabled us to begin demonstrating
partially-integrated prototypes. Throughout 2006, 2007 and 2008, we
continued to further advance our prototype ICs and increased the level of
prototype integration while cultivating potential customer
relationships. Our sales-related activities during this period
included prototype demonstrations of our d2p platform, support of in-depth
technical due-diligence by prospective customers, analysis of prospective
customer product requirements, delivery of initial proposals and terms, and
ultimately, negotiations of proposed business relationships. We
currently have three customers for our technology.
ITT
Corporation (“ITT”) entered into both a licensing and an engineering services
agreement with us in 2007. During 2007, ITT engaged us under
the engineering services agreement to analyze and evaluate the architectural
design alternatives for incorporation of our technology into RF circuits based
on various product specifications provided by ITT. In addition,
in 2008, we delivered a development/demonstration platform to ITT for their use
in product development and demonstration to their customers. In late
2008 and early 2009, ITT marketed our technology, based on our commercial
designs, to a number of their customers and in October 2009, ITT was awarded a
government contract for the demonstration of our technology in a highly
integrated transceiver application for military products. ITT in
turn, engaged us as a subcontractor to incorporate our commercial ICs into an
existing highly integrated transceiver platform. The services related
to this product demonstration are expected to be completed in the first quarter
of 2010. Under our licensing agreement with ITT, we will collect a
royalty on a per unit basis for any products sold by them that incorporate our
technology.
Late in
2007, we also entered into a licensing and engineering services agreement with a
global baseband chipset supplier whose name remains confidential under the terms
of our agreement with them (“Confidential Licensee”). During 2008,
our product development efforts were largely focused on advancing our ICs from
prototype to production-ready samples for this and other potential
customers. We delivered production-ready d2p silicon samples that met
or exceeded all critical functional and performance requirements under our
agreement to our Confidential Licensee late in 2008. During 2009, we
worked with our Confidential Licensee and other vendors on further refining our
d2p silicon samples for specific mobile phone standards and on developing
various packaging designs and production test programs. We also
worked with our customer to co-develop sample 3G mobile handsets for the purpose
of verifying the technology in a working implementation, testing the technology
in actual network operation and creating sales samples for our Confidential
Licensee. In October 2009, our customer tested and accepted delivery of the
initial sample handsets. We are currently working with our customer
to market this product to their customers and to set up the manufacturing
arrangements for volume production. Under the terms of our licensing
agreement this customer has the right to manufacture devices based on the
licensed technology for a royalty on a per unit basis or we may sell such
devices directly to third parties.
In
December 2008, we entered into a Product and Market Development Agreement (the
“LGI Agreement”) with LG Innotek Co., Ltd. (“LGI”), a division of the LG
Group. The agreement provides for a cooperative working relationship
between us and LGI for the development and marketing of RF modules that
incorporate our technologies for use in mobile applications such as wireless
handsets and data cards. The agreement provides for a supplier
relationship between us and LGI whereby we would sell LGI tested, unpackaged
integrated circuits for incorporation into modules. The agreement
initially contemplates modules designed for commercial HEDGE
applications. HEDGE is an acronym for applications that
incorporate support for 2G, 2.5G and 3G waveform standards including GSM, EDGE,
WCDMA, and HSPA. During 2009, we worked closely with LGI on
both product development and joint marketing activities. We are also
exploring applications for modules that more closely align with the 3G offering
of our Confidential Licensee in order to generate more near-term revenue
opportunities for LGI, our Confidential Licensee and us.
To date,
we have generated no royalty or product revenue from our d2p
technology. 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 and our ability to secure a reasonable
market share through product offerings with our current customers and/or the
addition of new customers and/or products. We
believe our technology
5
has
substantial advantages over competing technologies, especially in the third
generation, or 3G, mobile handset market and generations that are evolving
beyond 3G, such as 4G mobile handset standards and applications.
Technology and
Products
Our
wireless technologies represent unique, proprietary methods for processing RF
waveforms in wireless applications. The technology applies to the
transmit (baseband data to 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 baseband data 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 a baseband data
signal. Although our primary sales efforts were focused on
commercialization of our d2p technology solutions, both of the agreements with
customers in the commercial handset market contemplate future incorporation of
our d2d technology as well.
We have
completed engineering prototypes of our d2p-based ICs targeted at certain mobile
handset applications. The ICs which incorporate the core RF
technology were produced using a Silicon Germanium (“SiGe”) process through a
fabrication relationship with IBM Microelectronics
(“IBM”). Late in 2008, we completed the integration of the
digital engine that controls our RF transmit IC and interfaces to the mobile
phone baseband processor. This digital engine was produced through a
third-party fabrication relationship using a Taiwan Semiconductor Manufacturing
Company Limited (“TSMC”) CMOS semiconductor process. These ICs are
utilized to verify that our technology can be highly integrated in silicon and
to demonstrate the benefits of the technology to target customers.
Our
current prototypes support functionality that is multi-band (meaning multiple
frequencies) and multi-mode (meaning multiple cellular standards and
corresponding modulation formats). Our ICs support multiple bands of cellular
and PCS (Personal Communications Service) 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 and LTE
standards with our current ICs, although we utilize the cellular and PCS
frequencies for such demonstrations.
Our
unique technologies process the RF waveform in a more optimal manner than
traditional technologies, thereby allowing the creation of handsets that have
extended battery life, more easily incorporate multiple air interface standards
and frequencies in smaller form factors, and reduce manufacturing
costs. Our technologies provide such attractive benefits, in
part, because of their unique integrated circuit architecture which enables
creation of highly accurate RF waveforms that use less power than traditional
linear transmitter architectures and components thereby extending battery life,
reducing heat and enabling certain packaging advantages.
Marketing and
Sales
When we
targeted the cellular industry in 2005, our initial target customer base was
focused on the top tier mobile handset manufacturers. However, in
2006 and 2007, mobile handset manufacturers were shifting RF innovation and
developments to their chipset providers. Accordingly, we expanded our
target customer base to include not only the mobile handset manufacturers, but
also their component suppliers. Our Confidential Licensee and
LGI are both component suppliers to mobile handset OEMs (Original Equipment
Manufacturers) and/or ODMs (Original Design Manufacturers).
Although
our primary target market is the mobile handset industry, we have also explored
potential relationships outside this target market to the extent that the
requirements of the prospective customers are in concert with the needs of our
primary target market. This exploration resulted in our
licensing agreement with ITT.
6
Our
marketing and sales activities are currently focused on developing and
capitalizing on relationships in the mobile handset
industry. Although we believe our direct customers will likely
be the chipset suppliers in this industry, we continue to cultivate our
relationships with the mobile handset manufacturers who, at a minimum, exert
major influence on their chipset suppliers. In addition, our market
awareness campaign includes network providers who exert significant influence on
the OEMs in the mobile handset industry.
Our sales
and sales support activities include prototype demonstrations of both
semi-integrated and highly-integrated circuits that showcase the benefits of our
technology, support of detailed technology due-diligence discussions and
testing, analysis of potential customer product roadmaps and integration
alternatives, negotiations of specific terms of potential business
relationships, and both technical and sales support of customers during their
design process.
We
believe the sales cycle, from the initial customer meeting to the consummation
of a business arrangement, can vary from six to twenty-four
months. The length of the sales cycle is a result of many factors,
including the unique nature of our technology, our lack of tenure in the
cellular industry, the variety of integration decisions that must be evaluated
by the customer in order to assess the specific value proposition for their
needs, and the intense technology evaluation and due-diligence required by
target customers. The intense technology evaluation and due-diligence
efforts are a result of the complex nature of RF technology, the complexity of
the cellular specifications, and the unit volumes contemplated. We
believe the average sales cycle will shorten significantly as our technologies
gain adoption in this market.
We
executed our first two customer contracts in 2007 and an additional customer
arrangement in 2008. Our current sales and marketing focus is on
assisting our customers to achieve design wins and to obtain orders from their
customers. We believe that the rate of adoption of our technology
will increase as shipments of products incorporating our technologies
commence. Future sales may be influenced by the terms negotiated with
our customers and our ability to expand internal resources to support multiple
customers.
Competition
We
operate in a highly competitive industry against companies with substantially
greater financial, technical, and sales and marketing
resources. Our technologies, which are currently being marketed
in the mobile handset industry, face competition from incumbent providers of
transceivers and power amplifiers including companies such as Anadigics,
Infineon, Freescale, Qualcomm, RF Microdevices, Skyworks, and ST Ericsson, among
others. Each of our competitors, however, also has the
potential of becoming a customer for our technologies. We may
also compete against RF engineering groups within the research and development
organizations of our target customers, although we do not have such competition
today within the confines of our existing three customers. To date,
we are unaware of any competing or emerging RF technologies that provide all the
simultaneous benefits that our technology enables.
Hurdles
to the adoption of our technologies include entrenchment of existing
technologies, the disruptive nature of our technology, and our lack of tenure in
the markets we are targeting. We believe we can gain 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 (“IP”) portfolio. Our circuit architecture is capable of
being compliant with all current mobile phone standards and can be configured to
accept all standard baseband data inputs. In addition, we believe
that one or more of our technology’s abilities to provide improved power
efficiencies, highly accurate RF carrier waveforms, smaller form factors and
better manufacturing yields, provides a solution to existing problems in
applications for 3G standards and beyond that the mobile handset industry is
seeking to solve.
Production and
Supply
Our
current business strategy is focused largely on the incorporation of our
technology into mobile handsets and data devices that operate on wide area
mobile networks. In instances where our customer is a licensee of
7
our IP,
the production capacity risk shifts to that customer. Under our
agreement with LGI, we will be supplying unpackaged, tested
ICs. Those ICs will be produced for us under various foundry
relationships. We currently have a fabrication relationship with IBM
for the production of our prototype ICs on a SiGe process. We have
also produced ICs through TSMC using a CMOS semiconductor process. We
believe IBM and TSMC have 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.
Patents and
Trademarks
We
consider our IP, including patents, patent applications, trademarks, and trade
secrets 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. We currently have
obtained 94 U.S. and 59 foreign patents related to our RF
technologies. In addition, we have approximately 54 U.S. and 25
foreign patent applications pending. We estimate the economic lives
of our patents to be fifteen to twenty years.
In
addition, from time to time, we obtain licenses from others for standard
industry circuit designs that are integrated into our own ICs as supporting
components that are peripheral to our core technologies. We believe
there are multiple sources for these types of standard circuits and we estimate
the economic lives of the licenses to be two to five years based on estimated
technological obsolescence.
Research and
Development
For the
years ended December 31, 2009, 2008 and 2007, we spent approximately $13.5
million, $14.6 million, and $10.7 million, respectively, on company-sponsored
research and development activities. Our research and development
efforts have been, and are expected to continue to be, devoted to the
development and advancement of RF technologies, including the development of
prototype ICs for proof of concept purposes and production-ready silicon samples
and reference designs for our customers.
Employees
As of
December 31, 2009, we had 51 full-time employees, of which 31 are employed in
engineering research and development, 8 in sales and marketing, and 12 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
annual reports on Forms 10-K, quarterly reports on Forms 10-Q, proxy statements
and other reports, including any amendments thereto, electronically with the
SEC. The SEC maintains an Internet site (http://www.sec.gov)
where these reports may be obtained at no charge. Copies of these reports 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 at no
charge from the Company’s website (http://www.parkervision.com) via the link
“SEC filings”. We also will provide copies of the annual report on
Form 10-K and the quarterly reports on Forms 10-Q filed during the current
fiscal year, including any amendments thereto, upon written request to us at
ParkerVision, Inc, Investor Relations, 7915 Baymeadows Way, Suite 400,
Jacksonville, Florida, 32256. These reports will be provided at no
charge. Exhibits to these reports may be obtained at a cost of $.25
per page plus $5.00 postage and handling.
Item
1A. Risk Factors.
In
addition to other risks and uncertainties described in this Annual Report, the
following risk factors should be carefully considered in evaluating our business
because such factors may have a significant impact on our
8
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.
We
have had a history of losses which may ultimately compromise our ability to
implement our business plan and continue in operation.
We have
had losses in each year since our inception in 1989, and continue to have an
accumulated deficit which, at December 31, 2009, was approximately $212
million. The net loss for 2009 was approximately $21.5
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 2010 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 cash equivalents at December 31, 2009 of $13.5 million are
expected to sustain operations through 2010. Thereafter,
unless we increase revenues to a level that covers 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 shareholders’ 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,
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 2009 and 2008, we spent
approximately $13.5 million and $14.6 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 ability to do business 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
9
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. As a result, 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 Anadigics, Infineon, Freescale,
Qualcomm, RF Microdevices, Skyworks, and ST Ericsson, 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
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 technologies into
their products and/or market products based on our technologies. The
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 these 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
rely, in large part, on the ability of key customers to successfully develop and
sell products incorporating our technologies, the failure of which will have an
adverse impact on our business opportunities.
The
successful commercialization of our products will depend, in part, on the
success and timing of our customers’ product development and sales activities
which may be impacted by factors outside of our control. Delays in or
failure of our customers’ product development or sales activities will hinder
the commercialization of our products which will have an adverse impact on our
ability to generate revenues and recover development expenses.
We
are highly dependent on Mr. Jeffrey Parker as our chief executive
officer. If his services were lost, it would have an adverse impact
on our leadership and on how we are perceived within the industry and by
investors.
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 his
services might be seen as an impediment to the execution of our business
plan. If Mr. Parker were no longer available to the company,
investors might experience an adverse impact on their investment. We
currently have an employment agreement with Mr. Parker and we maintain
key-employee life insurance for our benefit on Mr. Parker.
If
we are unable to attract or retain key executives and other highly skilled
employees, we will not be able to execute our current business
plans.
Our
business is very specialized, and therefore it is dependent on having skilled
and specialized key executives and other employees to conduct our research,
development and customer support activities. The inability to obtain
or retain these key executives and other specialized employees would have an
adverse impact on the research, development and technical customer support
activities that our products require. These activities are
instrumental to the successful execution of our business plan.
10
Our
outstanding options and warrants may affect the market price and liquidity of
the common stock.
At
December 31, 2009, we had 41,160,335 shares of common stock outstanding and had
5,628,723 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, 2010 and 2011, respectively, there will be
5,873,454 and 5,958,242 currently exercisable options and warrants (assuming no
new grants, exercises, terminations or forfeitures since December 31,
2009). All of the underlying common stock of these securities
is 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
shareholders’ ownership.
Provisions
in the certificate of incorporation and by-laws could have effects that conflict
with the interest of shareholders.
Some
provisions in our certificate of incorporation and by-laws could make it more
difficult for a third party to acquire control of us. For example,
the board of directors has the ability to issue preferred stock without
shareholder approval, and there are pre-notification provisions for director
nominations and submissions of proposals from shareholders to a vote by all the
shareholders 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 shareholders.
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,
of 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 shareholders may find more advantageous than a negotiated
transaction. A negotiated transaction may not be in the best
interests of the shareholders.
Item
1B. Unresolved Staff Comments.
None.
Item
2. Properties.
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. 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. Reserved.
11
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 sale prices of
the common stock for the last two fiscal years, as reported by
Nasdaq.
2009
|
2008
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
Quarter
ended March 31
|
$ | 3.22 | $ | 1.55 | $ | 16.12 | $ | 4.80 | ||||||||
Quarter
ended June 30
|
4.00 | 1.68 | 12.35 | 7.40 | ||||||||||||
Quarter
ended September 30
|
4.90 | 2.55 | 13.69 | 8.35 | ||||||||||||
Quarter
ended December 31
|
4.10 | 1.41 | 10.99 | 2.00 |
Holders
As of
February 12, 2010, we had 133 holders of record and we believe there are
approximately 3,000 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
None.
Issuer Repurchase of Equity
Securities
None.
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, 2009. The total shareholder returns assumes
the investment on December 31, 2004 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.
12
COMPARISON
OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among
ParkerVision, Inc., The NASDAQ Composite Index,
The
NASDAQ Telecommunications Index And The NASDAQ Electronic Components
Index
*$100
invested on 12/31/04 in stock or index, including reinvestment of
dividends.
Fiscal
year ending December 31.
The data
points for the performance graph are as
follows:
12/04
|
12/05
|
12/06
|
12/07
|
12/08
|
12/09
|
||
ParkerVision,
Inc.
|
100.00
|
102.25
|
125.28
|
177.75
|
27.75
|
20.56
|
|
NASDAQ
Composite
|
100.00
|
101.33
|
114.01
|
123.71
|
73.11
|
105.61
|
|
NASDAQ
Telecommunications
|
100.00
|
91.66
|
119.67
|
132.55
|
77.09
|
107.17
|
|
NASDAQ
Electronic Components
|
100.00
|
107.81
|
101.44
|
116.92
|
59.73
|
97.30
|
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.”
13
For
the years ended December 31,
|
||||||||||||||||||||
(in
thousands, except per share amounts)
|
2009
|
2008
|
2007
|
2006
|
2005
|
|||||||||||||||
Consolidated
Statement of Operations Data:
|
||||||||||||||||||||
Revenues,
net
|
$ | 64 | $ | 0 | $ | 284 | $ | 0 | $ | 996 | ||||||||||
Gross
margin
|
10 | 0 | 32 | 0 | (2,041 | ) | ||||||||||||||
Operating
expenses
|
21,559 | 23,432 | 19,122 | 16,866 | 21,362 | |||||||||||||||
Total
interest and other income
|
20 | 358 | 876 | 1,051 | 304 | |||||||||||||||
Net
loss from continuing operations
|
(21,530 | ) | (23,074 | ) | (18,213 | ) | (15,816 | ) | (23,099 | ) | ||||||||||
Basic
and diluted net loss per common share from continuing
operations
|
(0.65 | ) | (0.88 | ) | (0.74 | ) | (0.68 | ) | (1.14 | ) | ||||||||||
Consolidated
Balance Sheet Data:
|
||||||||||||||||||||
Total
assets
|
$ | 25,545 | $ | 17,976 | $ | 26,577 | $ | 26,675 | $ | 23,832 | ||||||||||
Long
term obligations
|
155 | 238 | 344 | 433 | 5 | |||||||||||||||
Shareholders’
equity
|
23,883 | 16,110 | 24,414 | 25,183 | 22,400 | |||||||||||||||
Working
capital
|
12,577 | 4,043 | 12,611 | 13,313 | 10,833 |
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 selling our proprietary RF
technologies and devices for use in semiconductor circuits for wireless
communication products. We currently have three customer contracts
for the incorporation of our technologies into wireless chipsets, modules and
products. Two of the three customer agreements represent licensing arrangements
whereby our customers will incorporate our IP into their own wireless
semiconductor circuits and/or radio products. We also have engineering services
agreements in place with these two customers whereby we will provide engineering
services on a time and materials basis as requested by our
customers. The third contract represents a joint development and
marketing agreement for the development of RF modules for incorporation into
wireless products. This agreement contemplates, upon completion of
development, the negotiation of a supply agreement whereby we would supply our
technology in the form of tested, unpackaged integrated circuits, also referred
to as “known good die” or “KGD”, for incorporation into complete modules by our
customer.
The two
licensing customers include ITT and the Confidential Licensee. The
Confidential Licensee is a fabless supplier of chipsets that support 2G, 2.5G
and 3G mobile standards with engineering design and sales locations in both
North America and Asia. The Confidential Licensee designs and
supplies chipsets, and related handset reference designs, predominantly to
handset OEMs and ODMs for incorporation into mobile handsets. Our
joint development and marketing agreement is with LGI for the development of
wireless radio modules for mobile handset and data card
applications.
Since
exiting our wireless retail product business in 2005, we have generated no
product or royalty revenue from our wireless RF technologies. We have
recognized service revenue in 2007 and 2009 resulting from engineering design
services provided to ITT. We anticipate initial royalty and/or
product revenue from one or more of these customer arrangements to commence in
2010.
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 and expand our market
opportunities through additional product offerings with our current customers
and/or the addition of new customers.
We believe our technology has
substantial advantages over competing technologies, especially in the 3G mobile
handset market and generations that are likely to evolve beyond 3G, such as 4G
mobile handset standards and applications. We have made
significant investments in developing our technologies and
14
products, the returns on which are
dependent upon the generation of future revenues for
realization. Since we have not yet generated revenues
sufficient to offset our operating expenses, we have mostly relied on proceeds
from the sale of equity securities to fund our operations. We intend
to continue to use our working capital to support future marketing, sales,
research and development and general operations.
Critical Accounting
Policies
We
believe that the following are the critical accounting policies affecting the
preparation of our consolidated financial statements:
Intangible
Assets
Patents,
copyrights and other intangible assets are amortized using the straight-line
method over their estimated period of benefit. We estimate the
economic lives of our patents and copyrights to be fifteen to twenty
years. We estimate the economic lives of other intangible assets,
including licenses, based on estimated technological obsolescence, to be two to
five years, which is generally shorter than the contractual
lives. Periodically, we evaluate the recoverability of our
intangible assets and take into account events or circumstances that may warrant
revised estimates of useful lives or that indicate impairment may exist
(“Triggering Event”). Based on our cumulative net losses and negative
cash flows from operations to date, we assess our working capital needs on an
annual basis. This annual assessment of our working capital is
considered to be a Triggering Event for purposes of evaluating the
recoverability of our intangible assets. As a result of our
evaluation, and the significant excess of our market capitalization over our net
book value at December 31, 2009, we determined that no impairment exists with
regard to our intangible assets.
Accounting for Share-Based
Compensation
We
calculate the fair value of share-based equity awards, including restricted
stock, stock options and restricted stock units (“RSUs”), on the date of grant
and recognize the calculated fair value, net of estimated forfeitures, as
compensation expense over the requisite service periods of the related awards.
The fair value of share-based awards is determined using various valuation
models which require the use of highly subjective assumptions and estimates
including (i) how long employees will retain their stock options before
exercising them, (ii) the volatility of our common stock price over the expected
life of the equity award, and (iii) the rate at which equity awards will be
ultimately be forfeited by the recipients. Changes in these
subjective assumptions can materially affect the estimate of fair value of
share-based compensation and consequently, the related amount recognized as
expense in the consolidated statements of operations.
Revenue
Recognition
We did
not recognize any product or royalty revenue in 2009, 2008 or 2007.
We
account for service revenue when there is persuasive evidence of an arrangement,
services have been rendered, the fee is fixed or determinable, and collection of
the resulting receivable is reasonably assured.
We use
the percentage-of-completion method of accounting for cost reimbursement-type
contracts which specify a certain billable fee amount. Revenues are
recognized as costs are incurred assuming that collection is reasonably
assured. Our cost of sales includes the direct labor costs of
personnel providing services under these contracts, as well as indirect costs
such as depreciation, amortization and allocated facilities costs.
Income
Taxes
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
15
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.
On
January 1, 2007 we adopted the provisions for the accounting for uncertainty in
income taxes. This standard prescribes a more-likely-than-not
threshold for financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. This standard also provides
guidance on recognition and classification of income tax assets and liabilities,
accounting for interest and penalties associated with tax positions, accounting
for income taxes in interim periods and income tax disclosures.
Recent Accounting
Pronouncements
On
September 30, 2009, we adopted the new Accounting Standards Codification (“ASC”)
as issued by the Financial Accounting Standards Board (“FASB”). The ASC has
become the source of authoritative U.S. GAAP recognized by the FASB to be
applied by nongovernmental entities. The ASC is not intended to change or alter
existing GAAP. The adoption of the ASC did not have a material impact on our
consolidated financial statements. Unless needed to clarify a point to readers,
we will refrain from citing specific section references when discussing
application of accounting principles or addressing new or pending accounting
rule changes.
On June
30, 2009, we adopted the FASB guidance for subsequent events which requires
public entities to evaluate subsequent events through the date that the
financial statements are issued.
On
January 1, 2009, we adopted the FASB guidance related to fair value measurements
for nonfinancial assets and liabilities. Adoption of this guidance did not have
an effect on our operating income or net earnings.
On
January 1, 2009, we adopted the FASB guidance for the determination of the
useful life of intangible assets which amends the factors that should be
considered in developing the renewal or extension assumptions used to determine
the useful life of a recognized intangible asset. The new guidance also requires
expanded disclosure regarding the determination of intangible asset useful
lives. Adoption of this guidance did not have an impact on our consolidated
financial statements.
On
January 1, 2009, we adopted the FASB guidance on determining whether instruments
granted in share-based payment transactions are participating securities. This
guidance requires companies to treat unvested share-based payment awards that
have non-forfeitable rights to dividends or dividend equivalents as
participating securities when computing earnings per share, pursuant to the
two-class method. Our awards do not have non-forfeitable rights to dividends or
dividend equivalents and, therefore, the adoption of this guidance did not have
any impact on our financial statements.
Results of Operations for
Each of the Years Ended December 31, 2009, 2008 and 2007
Revenues and Gross
Margins
We had no
product or royalty revenues for the years ended December 31, 2009, 2008 or
2007.
In
October 2009, we were engaged by ITT under a fixed-price service contract to
incorporate our d2p commercial integrated circuits into a highly integrated
transceiver for purposes of demonstrating the performance of the device to one
of ITT’s military customers. The service contract is valued at
approximately $130,000. For the year ended December 31, 2009, we
recognized $64,000 in service revenue and approximately $10,000, or 15% in gross
margin related to this contract. We recorded an additional $51,000
billed under this contract to deferred revenue at December 31,
2009. We expect to recognize the remaining revenue under this
contract in the first quarter of 2010.
For the
year ended December 31, 2007, we recognized approximately $284,000 in service
revenue and
16
approximately
$32,000, or 11%, in gross margin related to engineering consulting services
provided to ITT. These services included analysis and
evaluation of architectural design alternatives for incorporation of our d2p
technology into RF circuits based on various product specifications provided by
ITT.
Cost of
sales for engineering services includes the direct labor costs, as well as
overhead and other indirect costs including depreciation, amortization and
allocated facilities costs. Indirect costs are allocated to
cost of sales on a direct labor hour basis.
We
anticipate initial royalty and/or product revenue from one or more of our
customer arrangements to commence in 2010.
Research and Development
Expenses
Research
and development expenses decreased by approximately $1.1 million, or 7.6%, from
2008 to 2009. This decrease was primarily due to decreases in
outside engineering design and consulting fees and software development tools
and related maintenance costs. Our personnel costs, including wages,
taxes, benefits, recruitment and travel costs, also decreased from 2008 to 2009,
however these decreases were offset by increases in share-based compensation
expense. We also experienced an increase in amortization costs
related to our patents and licenses.
Outside
engineering design services are utilized to supplement our internal engineering
resources and the related fees are generally project-based and vary based on the
magnitude and timing of those projects. Overall, these fees decreased
from 2008 to 2009 by approximately $940,000 as a result of the completion of
certain development programs late in 2008, offset by new programs initiated in
the second half of 2009 which were largely focused on the HEDGE development
project. Software support and related maintenance costs
decreased by approximately $265,000 from 2008 to 2009 as a result of
re-negotiation of fees with various software providers as part of our
cost-reduction measures implemented in late 2008 as well as changes in the
software tools necessary to support our product designs.
Research
and development personnel expenses, excluding share-based compensation,
decreased approximately $240,000 from 2008 to 2009. This is primarily
due to a decrease in cash incentive payments to employees, reduced travel
expenses, and a reduction in recruiting costs. This decrease was
offset by an increase of $270,000 in our share-based compensation expense for
the same period. The increase in share-based compensation expense is
a result of new equity awards to non-executive employees to offset the impact of
the reduced cash incentive programs, as well as the continued attribution of
expense for engineering executive and other employee RSU awards made in
2008.
Our
patent and license amortization cost increased from 2008 to 2009 by
approximately $180,000 due to continued additions to our patent portfolio and
the purchase of licenses in 2008 and 2009 related to our product development
activities.
Our
research and development expenses increased approximately $3.9 million, or
36.6%, from 2007 to 2008. This increase was primarily due to
increases in personnel costs, including employee share-based compensation
expense, outside engineering design and consulting fees, prototype production
costs, and software development tools and related maintenance
costs.
From 2007
to 2008, our charges for outside design services increased approximately
$1,710,000. These increases were a result of projects that were
largely completed by the end of 2008. Software maintenance and
support costs for engineering design software increased approximately $230,000
from 2007 to 2008 due to additional software tools and related maintenance costs
required for IC design work.
From 2007
to 2008, research and development personnel and related costs, excluding
share-based compensation expense, increased approximately $580,000 as a result
of compensation increases for existing engineering staff, the addition of
personnel, and increased travel expense, offset by decreases in cash incentive
bonuses from 2007 to 2008. Employee share-based compensation
increased by approximately
17
$995,000
from 2007 to 2008, primarily due to the noncash expense related to restricted
shares and RSUs issued to engineering executives and other employees in 2008 as
long-term incentive compensation and in lieu of cash incentive
bonuses.
Prototype
IC production costs increased approximately $305,000 from 2007 to 2008 largely
due to the addition of a second foundry, TSMC, for prototype runs. We
maintain a fairly regular cycle of prototype chip runs; however, the fabrication
costs may vary from period to period based on the materials specified and the
number of variants requested on each 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 we
anticipate decreases in our research and development expenses in 2010,
particularly with regard to outside design services, we are committed to
continue investing in our technology and product development and therefore we
anticipate that we will use a substantial portion of our working capital for
research and development activities in 2010.
Marketing and Selling
Expenses
Marketing
and selling expenses decreased by approximately $0.5 million, or 19.3%, from
2008 to 2009. This decrease is primarily due to decreases in outside
professional services and personnel and related expenses, partially offset by an
increase in share based compensation.
Outside
professional services include various consulting and legal fees related to sales
and marketing activities. These fees decreased from 2008 to 2009 by
approximately $360,000 as a result of a reduction in public relations and other
technical marketing services rendered, coupled with a re-negotiation of fees
early in 2009 with certain sales consultants.
Marketing
and sales personnel costs, excluding share-based compensation, decreased from
2008 to 2009 by approximately $165,000, primarily as a result of reduced
employee head count, the elimination of cash incentive programs, and reduced
travel expenses. This was somewhat offset by an increase in
share-based compensation expense of approximately $35,000 for the same period as
a result of new equity awards made to employees in 2009 to offset the impact of
the elimination of the cash incentive program as well as the continued
attribution of expense related to equity awards made in 2008.
Marketing
and selling expenses decreased by approximately $0.1 million or 3.7%, from 2007
to 2008. This decrease was primarily due to decreases in personnel
and related costs and non-employee share-based compensation, partially offset by
an increase in employee share-based compensation expense and outside
professional services.
Marketing
and sales personnel costs, excluding share-based compensation, decreased from
2007 to 2008 by approximately $160,000, primarily due to a reduction in employee
cash bonuses, partially offset by increases in sales and marketing employee
travel costs. Non-employee share-based compensation decreased
approximately $135,000 from 2007 to 2008 primarily as a result of the reversal
of previously recognized compensation expense on performance-based options which
expired unvested in 2008. These decreases were partially offset by
increases in employee share-based compensation expense of approximately $205,000
primarily due to the noncash expense related to RSUs issued to sales and
marketing executives and other employees in 2008 as long-term incentive
compensation. In addition, fees for outside professional services
increased from 2007 to 2008 by approximately $65,000.
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.
18
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 approximately $0.3 million, or 4.1%, from
2008 to 2009. This decrease is due primarily to decreases in cash fees to
outside directors along with decreases in corporate travel costs, outside
professional fees, and insurance costs. These decreases were
partially offset by increases in share-based compensation expense.
Our
outside director cash compensation decreased approximately $250,000 from 2008 to
2009 as a result of non-employee directors waiving their cash director fees in
favor of equity compensation for 2009. This decrease in directors’
cash fees was offset by an increase in share-based compensation of approximately
$445,000 from 2008 to 2009. The increase in share-based compensation
is a result of approximately $325,000 in share-based compensation expense
related to the value of nonqualified stock options issued to our non-employee
directors as payment for director and committee fees in 2009. In
addition, we granted an aggregate of 150,000 share options to two outside
consultants resulting in an increase in non-employee share-based compensation of
approximately $155,000.
Our
outside professional fees decreased by approximately $140,000 from 2008 to 2009
due to a reduction in outside legal services incurred for the
period. In addition, the cost of our directors’ and officers’
liability insurance decreased by approximately $35,000 from 2008 to 2009 due to
general market conditions. Our corporate travel costs decreased approximately
$110,000 from 2008 to 2009 due to specific measures taken to reduce costs,
including the sale of a fractional ownership in an aircraft in January
2009.
Our
general and administrative expenses increased by approximately $0.5 million, or
8.6%, from 2007 to 2008. This increase was primarily due to increases
in share-based compensation expense partially offset by decreases in other
personnel and related costs, insurance and corporate travel costs.
Share-based
compensation expense increased approximately $825,000 from 2007 to 2008, largely
due to RSUs issued to named executives and other employees in 2008 as long-term
incentive compensation. Our other personnel costs
decreased approximately $140,000 from 2007 to 2008 primarily due to a reduction
in cash incentive payments to named executives and other
employees. In addition, our corporate travel costs decreased
approximately $75,000 from 2007 to 2008 and the cost of our directors’ and
officers’ liability insurance decreased by approximately $85,000 from 2007 to
2008 due to general market conditions.
Interest and Other
Income
Interest
and other income consist of interest earned on our investments, net gains
recognized on the sale of investments, and other miscellaneous income. Interest
and other income decreased approximately $0.3 million from 2008 to 2009 and
approximately $0.5 million from 2007 to 2008. These decreases are
primarily the result of declining interest rates due to market conditions and
more conservative investments, as well as lower average cash balances during the
respective periods.
Interest
Expense
Interest
expense represents interest incurred on capital lease obligations as well as
interest incurred in connection with a state property tax filing in
2009.
Loss and Loss per Common
Share
Our net
loss decreased approximately $1.5 million, or $0.23 per share, from 2008 to
2009. This decrease is primarily a result of a $1.9 million, or 8%,
reduction in operating expenses along with a 25% increase in weighted shares
outstanding for the period.
19
Our net
loss increased by approximately $4.9 million, or $0.14 per share, from 2007 to
2008. This increase is primarily due to a $4.3 million or 22.5%
increase in operating expenses, primarily related to research and development
activities, offset by a 7% increase in weighted average shares outstanding for
the period.
Liquidity and Capital
Resources
At
December 31, 2009, we had working capital of approximately $12.6 million, which
included $13.5 million in cash and cash equivalents. This represents
an increase of approximately $8.6 million over working capital of $4.0 million
at December 31, 2008. The increase in working capital is a result of
approximately $24.3 million in proceeds from the sale of equity securities in
2009, less $14.8 million used for operations and $1.0 million used as payment
for patents, licenses and fixed assets used in the business during
2009. Our use of cash in 2009 was offset by $0.2 million proceeds
from the sale of property and equipment. At December 31, 2009, we
were not subject to any significant commitments to make additional capital
expenditures.
For the
year ended December 31, 2008, we used cash of approximately $17.1 for operations
and $1.8 million as payments for patent costs, licenses and fixed assets used in
operations. This cash usage was partially offset by $8.9 million in
proceeds from the March 2008 sale of equity securities and approximately $1.3
million in proceeds received from the exercise of options and warrants in
2008.
For the
year ended December 31, 2007, we received approximately $8.4 million in proceeds
from the sale of equity securities and approximately $6.7 million in proceeds
from the exercise of approximately 800,000 options and
warrants. These proceeds were offset by the use of approximately
$13.5 million in cash for operating activities and approximately $1.4 million
for the purchase of property and equipment and for payment of patent costs in
2007.
Our
future business plans call for continued investment in sales, marketing,
customer support and product development for our technologies and
products. 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 and our ability to
secure a reasonable share of the market through additional product offerings
with our current customers and/or the addition of new customers. We
expect that revenue for 2010 will not be sufficient to cover our operational
expenses for 2010, and that our expected continued losses and use of cash will
be funded from available working capital. We assessed our short-term
liquidity needs based on the assumption that our working capital must be
sufficient to cover our operational expenses for 2010 with an assumption of
minimal revenue.
We expect
our overall operating costs in 2010 will be less than those incurred in 2009 as
a result of the elimination and/or deferral of certain expenditures related to
product development activities and other cost-reduction measures implemented by
us. We believe our current capital resources and our 2010 cost
reduction efforts will be sufficient to support our liquidity requirements
through 2010. In the event that sufficient working capital is not
available to meet our 2010 liquidity needs, we believe additional liquidity
could be obtained through the surrender of key-man life insurance policies for
their cash value and/or additional cost reduction measures. In
addition, we may be able to meet future liquidity needs through the issuance of
equity securities under our outstanding shelf registration statements or through
short or long-term debt financing, although there can be no assurance that such
financing will be available to us. We currently have no significant
long-term debt obligations.
The
long-term continuation of our business plan through 2010 and beyond is dependent
upon the generation of sufficient revenues from our technologies and 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 further reduce operating costs. Failure to
generate sufficient revenues, raise additional capital through debt or equity
financings, and/or further 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.
20
Off-Balance Sheet
Transactions, Arrangements and Other Relationships; Contractual
Obligations
As of
December 31, 2009, we have outstanding warrants to purchase 2,190,139 shares of
common stock that were issued in connection with the sale of equity securities
in various private placement transactions in 2000, 2001, 2005, 2006 and
2009. These warrants have exercise prices ranging from $1.88 to
$56.66 per share with a weighted average exercise price of $32.16 and a weighted
average remaining contractual life of approximately 2 years. The
estimated fair value of these warrants at their date of issuance of $17,767,663
is included in shareholders’ equity in our consolidated balance sheets.
During the year ended December 31, 2009, warrants to purchase 20,000 shares of
common stock were exercised at a weighted average exercise price of $1.88,
resulting in proceeds of $37,500. 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
contractual obligations and commercial commitments at December 31, 2009 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
|
|||||||||||||||
Capital
leases
|
$ | 60,000 | $ | 23,000 | $ | 37,000 | $ | 0 | $ | 0 | ||||||||||
Operating
leases
|
833,000 | 582,000 | 251,000 | 0 | 0 |
Item
7A. Quantitative and Qualitative Disclosures about Market
Risk.
Market
risk is the risk of loss arising from adverse changes in market and economic
conditions and is directly influenced by the volatility and liquidity in the
markets in which an asset trades. Our cash equivalents which are
primarily comprised of highly liquid money market instruments are subject to
interest rate risk. We are averse to principal loss and seek to
ensure the safety and preservation of our invested funds by limiting market
risk.
21
Item
8. Consolidated Financial Statements and Supplementary Data.
Index to
Consolidated Financial Statements
Page
|
|
REPORT
OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
|
23
|
CONSOLIDATED
FINANCIAL STATEMENTS:
|
|
Consolidated
Balance Sheets - December 31, 2009 and 2008
|
24
|
Consolidated
Statements of Operations - for the years ended December 31, 2009, 2008 and
2007
|
25
|
Consolidated
Statements of Shareholders’ Equity - for the years ended December 31,
2009, 2008 and 2007
|
26
|
Consolidated
Statements of Cash Flows - for the years ended December 31, 2009, 2008 and
2007
|
27
|
Notes
to Consolidated Financial Statements - December 31, 2009, 2008 and
2007
|
28
|
FINANCIAL
STATEMENT SCHEDULE:
|
|
Schedule
II – Valuation and Qualifying Accounts
|
71
|
Schedules
other than those listed have been omitted since they are either not
required, not applicable or the information is otherwise
included.
|
22
Report of Independent
Registered Certified Public Accounting Firm
To the
Board of Directors and Shareholders of ParkerVision, Inc.:
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, 2009 and
December 31, 2008, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2009 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. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of
December 31, 2009, based on criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). The Company's management is responsible
for these financial statements and financial statement schedule, for maintaining
effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in
Management's Annual Report on Internal Control over Financial Reporting
appearing under Item 9A. Our responsibility is to express opinions on
these financial statements, on the financial statement schedule, and on the
Company's internal control over financial reporting based on our integrated
audits. We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the financial
statements included 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. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our
opinions.
As
discussed in Note 7 to the consolidated financial statements, the Company
changed the manner in which it accounts for uncertain tax positions in
2007.
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.
Jacksonville,
Florida
March 15,
2010
23
PARKERVISION,
INC. AND SUBSIDIARY
CONSOLIDATED
BALANCE SHEETS
DECEMBER
31, 2009 AND 2008
2009
|
2008
|
|||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$ | 13,490,612 | $ | 4,814,659 | ||||
Accounts
receivable
|
101,305 | 0 | ||||||
Prepaid
expenses and other
|
493,157 | 855,253 | ||||||
Total
current assets
|
14,085,074 | 5,669,912 | ||||||
PROPERTY
AND EQUIPMENT, net
|
835,963 | 1,376,582 | ||||||
INTANGIBLE
ASSETS, net
|
10,078,439 | 10,398,521 | ||||||
OTHER
ASSETS
|
545,945 | 530,884 | ||||||
Total
assets
|
$ | 25,545,421 | $ | 17,975,899 | ||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable
|
$ | 264,059 | $ | 811,381 | ||||
Accrued expenses: | ||||||||
Salaries
and wages
|
269,630 | 265,117 | ||||||
Professional
fees
|
749,864 | 277,422 | ||||||
Other
accrued expenses
|
60,014 | 168,847 | ||||||
Deferred
rent, current portion
|
113,282 | 104,458 | ||||||
Deferred
revenue
|
50,733 | 0 | ||||||
Total
current liabilities
|
1,507,582 | 1,627,225 | ||||||
LONG
TERM LIABILITIES
|
||||||||
Capital
lease, net of current portion
|
37,495 | 0 | ||||||
Deferred
rent, net of current portion
|
117,038 | 238,470 | ||||||
Total
long term liabilities
|
154,533 | 238,470 | ||||||
Total
liabilities
|
1,662,115 | 1,865,695 | ||||||
COMMITMENTS
AND CONTINGENCIES (Notes
8, 9 and 11)
|
||||||||
SHAREHOLDERS'
EQUITY:
|
||||||||
Common
stock, $.01 par value, 100,000,000 shares authorized,
41,160,335 and 26,716,080 shares issued
and outstanding at December 31, 2009 and 2008,
respectively
|
411,603 | 267,161 | ||||||
Warrants
outstanding
|
17,767,663 | 17,335,777 | ||||||
Additional
paid-in capital
|
217,919,771 | 189,193,386 | ||||||
Accumulated
deficit
|
(212,215,731 | ) | (190,686,120 | ) | ||||
Total
shareholders' equity
|
23,883,306 | 16,110,204 | ||||||
Total
liabilities and shareholders' equity
|
$ | 25,545,421 | $ | 17,975,899 | ||||
The
accompanying notes are an integral part of these consolidated financial
statements.
24
PARKERVISION,
INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE
YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
2009
|
2008
|
2007
|
||||||||||
Engineering
services revenue
|
$ | 64,412 | $ | 0 | $ | 283,675 | ||||||
Cost
of sales
|
54,440 | 0 | 251,314 | |||||||||
Gross
margin
|
9,972 | 0 | 32,361 | |||||||||
Research
and development expenses
|
13,504,799 | 14,618,903 | 10,700,181 | |||||||||
Marketing
and selling expenses
|
2,092,148 | 2,594,010 | 2,692,887 | |||||||||
General
and administrative expenses
|
5,962,309 | 6,219,188 | 5,729,136 | |||||||||
Total
operating expenses
|
21,559,256 | 23,432,101 | 19,122,204 | |||||||||
Interest
and other income
|
36,085 | 358,204 | 876,421 | |||||||||
Interest
expense
|
(16,412 | ) | 0 | 0 | ||||||||
Total
interest and other income
|
19,673 | 358,204 | 876,421 | |||||||||
Net
loss
|
$ | (21,529,611 | ) | $ | (23,073,897 | ) | $ | (18,213,422 | ) | |||
Basic
and diluted net loss per common share
|
$ | (0.65 | ) | $ | (0.88 | ) | $ | (0.74 | ) | |||
The
accompanying notes are an integral part of these consolidated financial
statements.
25
PARKERVISION,
INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE
YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
2009
|
2008
|
2007
|
||||||||||
Common
shares – beginning of year
|
26,716,080 | 25,182,892 | 23,387,566 | |||||||||
Issuance
of common stock upon exercise of options and
warrants
|
20,000 | 185,143 | 802,885 | |||||||||
Issuance
of common stock in public and private offerings
|
14,244,963 | 1,240,199 | 992,441 | |||||||||
Share-based
compensation
|
179,292 | 107,846 | 0 | |||||||||
Common
shares – end of year
|
41,160,335 | 26,716,080 | 25,182,892 | |||||||||
Par
value of common stock – beginning of year
|
$ | 267,161 | $ | 251,829 | $ | 233,876 | ||||||
Issuance
of common stock upon exercise of options and
warrants
|
200 | 1,852 | 8,029 | |||||||||
Issuance
of common stock in public and private offerings
|
142,449 | 12,402 | 9,924 | |||||||||
Share-based
compensation
|
1,793 | 1,078 | 0 | |||||||||
Par
value of common stock – end of year
|
$ | 411,603 | $ | 267,161 | $ | 251,829 | ||||||
Warrants
outstanding – beginning of year
|
$ | 17,335,777 | $ | 17,492,097 | $ | 20,290,878 | ||||||
Exercise
of warrants
|
(21,000 | ) | (156,320 | ) | (2,798,781 | ) | ||||||
Issuance
of warrants in connection with public offering
|
452,886 | 0 | 0 | |||||||||
Warrants
outstanding – end of year
|
$ | 17,767,663 | $ | 17,335,777 | $ | 17,492,097 | ||||||
Additional
paid-in capital – beginning of year
|
$ | 189,193,386 | $ | 174,282,736 | $ | 154,056,663 | ||||||
Issuance
of common stock upon exercise of options and
warrants
|
58,300 | 1,561,857 | 9,534,984 | |||||||||
Issuance
of common stock in public and private offerings
|
23,676,222 | 8,921,299 | 8,390,324 | |||||||||
Share-based
compensation
|
4,991,863 | 4,427,494 | 2,300,765 | |||||||||
Additional
paid-in capital – end of year
|
$ | 217,919,771 | $ | 189,193,386 | $ | 174,282,736 | ||||||
Accumulated
deficit – beginning of year
|
$ | (190,686,120 | ) | $ | (167,612,223 | ) | $ | (149,398,801 | ) | |||
Net
loss
|
(21,529,611 | ) | (23,073,897 | ) | (18,213,422 | ) | ||||||
Accumulated
deficit – end of year
|
$ | (212,215,731 | ) | $ | (190,686,120 | ) | $ | (167,612,223 | ) | |||
Total
shareholders’ equity – beginning of year
|
$ | 16,110,204 | $ | 24,414,439 | $ | 25,182,616 | ||||||
Issuance
of common stock upon exercise of options and
warrants
|
37,500 | 1,407,389 | 6,744,232 | |||||||||
Issuance
of common stock and warrants in private and
public offerings
|
24,271,557 | 8,933,701 | 8,400,248 | |||||||||
Share-based
compensation
|
4,993,656 | 4,428,572 | 2,300,765 | |||||||||
Net
loss
|
(21,529,611 | ) | (23,073,897 | ) | (18,213,422 | ) | ||||||
Total
shareholders’ equity – end of year
|
$ | 23,883,306 | $ | 16,110,204 | $ | 24,414,439 | ||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
26
PARKERVISION,
INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR THE
YEARS ENDED DECEMBER 31, 2009, 2008 and 2007
2009
|
2008
|
2007
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$ | (21,529,611 | ) | $ | (23,073,897 | ) | $ | (18,213,422 | ) | |||
Adjustments
to reconcile net loss to net cash used in operating activities:
|
||||||||||||
Depreciation
and amortization
|
1,741,199 | 1,620,550 | 1,649,014 | |||||||||
Share-based
compensation
|
4,993,656 | 4,243,494 | 2,327,522 | |||||||||
Impairment
loss on asset held for sale
|
0 | 30,700 | 0 | |||||||||
(Gain)
loss on sale of equipment and other assets
|
(1,332 | ) | 24,756 | 17,860 | ||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Accounts
receivable
|
(101,305 | ) | 0 | 0 | ||||||||
Prepaid
and other assets
|
347,035 | 115,986 | 8,212 | |||||||||
Accounts
payable and accrued expenses
|
(201,851 | ) | 43,093 | 750,663 | ||||||||
Deferred
rent
|
(112,608 | ) | (96,710 | ) | (81,276 | ) | ||||||
Deferred
revenue
|
50,733 | 0 | 0 | |||||||||
Total
adjustments
|
6,715,527 | 5,981,869 | 4,671,995 | |||||||||
Net
cash used in operating activities
|
(14,814,084 | ) | (17,092,028 | ) | (13,541,427 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase
of property and equipment
|
(74,878 | ) | (141,521 | ) | (469,916 | ) | ||||||
Purchase
of licenses
|
(100,000 | ) | (694,000 | ) | 0 | |||||||
Payment
for patent costs
|
(818,369 | ) | (941,986 | ) | (957,833 | ) | ||||||
Proceeds
from sale of property and equipment
|
185,977 | 0 | 0 | |||||||||
Net
cash used in investing activities
|
(807,270 | ) | (1,777,507 | ) | (1,427,749 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Net
proceeds from issuance of common stock in public
and private offerings
|
24,271,557 | 8,933,701 | 8,400,248 | |||||||||
Proceeds from exercise of options and warrants
|
37,500 | 1,349,661 | 6,744,232 | |||||||||
Principal payments on capital lease obligation
|
(11,750 | ) | 0 | 0 | ||||||||
Net
cash provided by financing activities
|
24,297,307 | 10,283,362 | 15,144,480 | |||||||||
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
8,675,953 | (8,586,173 | ) | 175,304 | ||||||||
CASH
AND CASH EQUIVALENTS, beginning of year
|
4,814,659 | 13,400,832 | 13,225,528 | |||||||||
CASH
AND CASH EQUIVALENTS, end of year
|
$ | 13,490,612 | $ | 4,814,659 | $ | 13,400,832 | ||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
27
PARKERVISION,
INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009, 2008 and 2007
1.
THE COMPANY AND NATURE OF
BUSINESS
We were
incorporated under the laws of the state of Florida on August 22, 1989 and
currently operate in a single segment - wireless technologies and
products.
We are in
the business of designing, developing and selling 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. Our business also includes the joint development and
marketing of wireless radio modules that incorporate our
technologies. In addition, from time to time, we provide 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
We
operate in a highly competitive industry with rapidly changing and evolving
technologies. Many of our potential competitors have substantially
greater financial, technical and other resources. 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
incurred losses from operations and negative cash flows in every year since
inception and have utilized the proceeds from the sale of our equity securities
to fund our operations. For the year ended December 31, 2009,
we incurred a net loss of approximately $21.5 million and negative cash flows
from operations of approximately $14.8 million. At December 31, 2009,
we had an accumulated deficit of approximately $212.2 million and working
capital of approximately $12.6 million.
We expect
that revenue for 2010 will not be sufficient to cover our operational expenses
for 2010, and that our expected continued losses and use of cash will be funded
from available working capital. We assessed our short-term liquidity
needs based on the assumption that our working capital must be sufficient to
cover our operational expenses for 2010 with an assumption of minimal
revenue.
We expect
our overall operating costs in 2010 will be less than those incurred in 2009 as
a result of the elimination and/or deferral of certain expenditures related to
product development activities and other cost-reduction measures implemented by
us. We believe our current capital resources and our 2010 cost
reduction efforts will be sufficient to support our liquidity requirements
through 2010. In the event that sufficient working capital is not
available to meet our 2010 liquidity needs, we believe additional liquidity
could be obtained through the surrender of key-man life insurance policies for
their cash value and/or additional cost reduction measures. In
addition, we may be able to meet future liquidity needs through the issuance of
equity securities under our outstanding shelf registration statements or through
short or long-term debt financing, although there can be no assurance that such
financing will be available to us. We currently have no significant
long-term debt obligations.
The
long-term continuation of our business plan through 2010 and beyond is dependent
upon the generation of sufficient revenues from our technologies and 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 further reduce operating costs. Failure to
generate sufficient revenues, raise additional capital through debt or equity
financings, and/or further reduce operating costs could have a material adverse
28
effect on
our ability to meet our long-term liquidity needs and achieve our intended
long-term business objectives.
3. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis
of Consolidation
We 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
balances.
Basis
of Presentation
Our
financial statements are prepared in accordance with generally accepted
accounting principles. Certain reclassifications have been made
to the 2008 and 2007 consolidated financial statements in order to conform to
the 2009 presentation.
Use
of Estimates in the Preparation of Financial Statements
The
preparation of financial statements in conformity with generally accepted
accounting principles requires us 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 us include the
volatility, forfeiture rate and estimated 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, the amortization periods for
intangible and long-lived assets, and the valuation allowance for deferred
taxes. Actual results could differ from the estimates
made. We periodically evaluate 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
We
consider 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. Our financial
assets at December 31, 2009 consist of money market securities, which are
included in cash and cash equivalents in the accompanying balance sheets (see
note 14).
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.
Long-lived
assets to be sold are classified as held for sale in the period in which there
is an approved plan for sale of the assets within one year, and it is unlikely
that the plan will be withdrawn or changed. Long-lived
29
assets
held for sale are recorded at the lower of their carrying amount or fair value
less estimated costs to sell.
Intangible
Assets
Patents,
copyrights and other intangible assets are amortized using the straight-line
method over their estimated period of benefit. We estimate the
economic lives of our patents and copyrights to be fifteen to twenty
years. We estimate the economic lives of other intangible assets,
including licenses, based on estimated technological obsolescence, to be two to
five years, which is generally shorter than the contractual
lives. Management evaluates the recoverability of intangible
assets periodically and takes into account events or circumstances that may
warrant revised estimates of useful lives or that may indicate impairment
exists.
Accounting
for Share-Based Compensation
We have
various share-based compensation programs, which provide for equity awards
including stock options and restricted stock. We calculate the fair value of
share-based equity awards on the date of grant and recognize the calculated fair
value, net of estimated forfeitures, as compensation expense over the requisite
service periods of the related awards. We estimate the fair value of
each equity award on the date of grant using the Black-Scholes option valuation
model or the Monte Carlo simulation fair value model for awards that contain
market conditions. These valuation models require the use of highly
subjective assumptions and estimates including (i) how long employees will
retain their stock options before exercising them, (ii) the volatility of our
common stock price over the expected life of the equity award, and (iii) the
rate at which equity awards will be ultimately be forfeited by the
recipients. Such estimates, and the basis for our conclusions
regarding such estimates, are outlined in detail in Note 8. Estimates
of fair value are not intended to predict actual future events or the value
ultimately realized by persons who receive equity awards.
We
elected to adopt the alternative short cut method for determining the beginning
balance of the additional paid-in-capital pool (“APIC pool”) related to the tax
effects of employee share-based compensation and to determine the subsequent
impact on the APIC pool and consolidated statements of cash flows for the income
tax effects of employee share-based compensation awards that were outstanding
upon the adoption of ASC 718.
Revenue
Recognition
We did
not recognize any product or royalty revenue in 2009, 2008 or 2007.
We
account for service revenue using the percentage-of-completion method of
accounting for cost reimbursement-type contracts which specify a certain
billable fee amount. Revenues are recognized as costs are incurred
assuming that collection is reasonably assured. Our cost of sales
includes the direct labor costs of engineering staff providing services under
these contracts, as well as indirect costs including depreciation and allocated
facilities costs.
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 an
allocated portion of facilities costs.
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, 2009, 2008 and 2007, was
32,963,816, 26,341,213, and 24,620,727, respectively. Options and warrants to
purchase 6,019,121, 5,620,339, and 6,631,255 shares of common stock that were
outstanding at December 31, 2009, 2008 and 2007 respectively, were excluded from
the computation of diluted earnings per share as the effect of these options and
warrants would have been anti-dilutive.
Leases
Our
facilities are leased under operating leases. For those leases that
contain rent escalations or rent
30
concessions,
we record the total rent payable during the lease term on a straight-line basis
over the term of the lease 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
In July
2009, we purchased office equipment under a capital lease and recorded a
corresponding capital lease obligation of approximately $72,000. The
lease has a three-year term with monthly payments of approximately
$2,400. The principal payments are reflected as cash outflows from
financing activities in the accompanying statements of cash flows.
From time
to time, we have issued equity awards in the form of options, RSUs, and
restricted stock awards as compensation to our employees, outside consultants
and non-executive directors (see Note 8).
In
connection with one of the offerings of shares of our common stock on March 3,
2009, we issued warrants to purchase 431,320 shares of common stock (see Note
9). These warrants were recorded at their relative fair value of
approximately $453,000.
We
maintain key-man life insurance policies on two of our named executive
officers. In 2009, policy premiums, totaling an aggregate of
approximately $46,000, were paid through the use of the annual policy dividends
and a loan against the cash surrender value of one policy for approximately
$9,000. The cash surrender value of these policies as
determined by the insurance carrier is approximately $524,000 and is recognized
in our other assets on our balance sheet.
Income
Taxes
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.
On
January 1, 2007 we adopted the provisions for the accounting for uncertainty in
income taxes. This standard prescribes a more-likely-than-not
threshold for financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. This interpretation also
provides guidance on recognition and classification of income tax assets and
liabilities, accounting for interest and penalties associated with tax
positions, accounting for income taxes in interim periods and income tax
disclosures.
Recent
Accounting Pronouncements
On
September 30, 2009, we adopted the new Accounting Standards Codification (“ASC”)
as issued by the Financial Accounting Standards Board (“FASB”). The ASC
has become the source of authoritative U.S. GAAP recognized by the FASB to be
applied by nongovernmental entities. The ASC is not intended to change or alter
existing GAAP. The adoption of the ASC did not have a material impact on our
consolidated financial statements. Unless needed to clarify a point to readers,
we will refrain from citing specific section references when discussing
application of accounting principles or addressing new or pending accounting
rule changes.
On June
30, 2009, we adopted the FASB guidance for subsequent events which requires
public entities to evaluate subsequent events through the date that the
financial statements are issued.
On
January 1, 2009, we adopted the FASB guidance related to fair value measurements
for nonfinancial assets and liabilities. Adoption of this guidance did not have
an effect on our operating income or net earnings.
31
On
January 1, 2009, we adopted the FASB guidance for the determination of the
useful life of intangible assets which amends the factors that should be
considered in developing the renewal or extension assumptions used to determine
the useful life of a recognized intangible asset. The new guidance also requires
expanded disclosure regarding the determination of intangible asset useful
lives. Adoption of this guidance did not have an impact on our consolidated
financial statements.
On
January 1, 2009, we adopted the FASB guidance on determining whether instruments
granted in share-based payment transactions are participating securities. This
guidance requires companies to treat unvested share-based payment awards that
have non-forfeitable rights to dividends or dividend equivalents as
participating securities when computing earnings per share, pursuant to the
two-class method. Our awards do not have non-forfeitable rights to dividends or
dividend equivalents and, therefore, the adoption of this guidance did not have
any impact on our financial statements.
4. PREPAID EXPENSES AND
OTHER
Prepaid
expenses and other assets consisted of the following at December 31, 2009 and
2008:
2009
|
2008
|
|||||||
Prepaid
insurance
|
$ | 363,036 | $ | 425,771 | ||||
Other
prepaid expenses
|
126,109 | 424,020 | ||||||
Other
current assets
|
4,012 | 5,462 | ||||||
$ | 493,157 | $ | 855,253 | |||||
5. PROPERTY AND EQUIPMENT,
NET
Property
and equipment, at cost, consisted of the following at December 31, 2009 and
2008:
2009
|
2008
|
|||||||
Equipment
and software
|
$ | 8,506,363 | $ | 8,697,497 | ||||
Leasehold
improvements
|
779,343 | 779,343 | ||||||
Aircraft
(held for sale)
|
0 | 200,550 | ||||||
Furniture
and fixtures
|
494,561 | 494,561 | ||||||
9,780,267 | 10,171,951 | |||||||
Less
accumulated depreciation and amortization
|
(8,944,304 | ) | (8,795,369 | ) | ||||
$ | 835,963 | $ | 1,376,582 | |||||
Depreciation
expense related to property and equipment was $502,748, $562,119, and $718,476,
in 2009, 2008, and 2007, respectively. Depreciation expense for 2009
included $6,063 related to our capital lease obligation for office
equipment.
In
October 2008, we entered into a firm commitment to sell our ownership percentage
in an aircraft. The net carrying value of this asset was written down
to approximately $185,000, representing the quoted selling price of the asset
less the estimated costs to sell. An impairment loss of $30,700
was included in the accompanying statement of cash flows and in general and
administrative expenses in the accompanying statement of operations for the year
ended December 31, 2008. We completed the sale of this asset in
January 2009 and the proceeds from the sale are included in the accompanying
statement of cash flows for the year ended December 31, 2009.
32
6. INTANGIBLE
ASSETS
Intangible
assets consisted of the following at December 31, 2009 and 2008:
2009
|
||||||||||||
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Value
|
||||||||||
Patents
and copyrights
|
$ | 16,109,140 | $ | 6,351,237 | $ | 9,757,903 | ||||||
Prepaid
licensing fees
|
794,000 | 473,464 | 320,536 | |||||||||
$ | 16,903,140 | $ | 6,824,701 | $ | 10,078,439 |
2008 | ||||||||||||
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Value
|
||||||||||
Patents
and copyrights
|
$ | 15,290,771 | $ | 5,414,668 | $ | 9,876,103 | ||||||
Prepaid
licensing fees
|
1,399,000 | 876,582 | 522,418 | |||||||||
$ | 16,689,771 | $ | 6,291,250 | $ | 10,398,521 | |||||||
Periodically,
we evaluate the recoverability of our intangible assets and take into account
events or circumstances that may warrant revised estimates of useful lives
or that may indicate impairment exists (“Triggering
Event”). Based on our cumulative net losses and negative cash flows
from operations to date, we assess our working capital needs on an annual basis.
This annual assessment of our working capital is considered to be a
Triggering Event for purposes of evaluating the recoverability of our intangible
assets. As a result of our evaluation, and the significant excess of
our market capitalization over our net book value at December 31, 2009, we
determined that no impairment exists with regard to our intangible
assets.
Patent
costs represent legal and filing costs incurred to obtain patents and trademarks
for product concepts and methodologies that we have developed. Capitalized
patent costs are being amortized over the estimated lives of the related
patents, ranging from fifteen to twenty years. Prepaid licensing fees
represent costs incurred to obtain licenses for use of certain technologies in
future products. Prepaid license fees are being amortized over their
estimated economic lives, generally two to five years.
Amortization
expense for the years ended December 31, 2009, 2008 and 2007 is as
follows:
Amortization
Expense
|
|||||||||||||||
Weighted
average estimated life
(in
years)
|
2009
|
2008
|
2007
|
||||||||||||
Patents
and copyrights
|
17 | $ | 936,569 | $ | 886,849 | $ | 831,788 | ||||||||
Prepaid
licensing fees
|
2 | 301,882 | 171,582 | 98,750 | |||||||||||
Total amortization
|
$ | 1,238,451 | $ | 1,058,431 | $ | 930,538 | |||||||||
Future
estimated amortization expenses for other assets that have remaining unamortized
amounts as of December 31, 2009 were as follows:
2010
|
$1,237,407
|
|
2011
|
966,186
|
|
2012
|
916,558
|
|
2013
|
888,082
|
|
2014
|
865,609
|
|
2015
and thereafter
|
5,204,597
|
33
7. INCOME TAXES AND TAX
STATUS
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,
2009, 2008 and 2007 is as follows:
2009
|
2008
|
2007
|
||||||||||
Tax
benefit at statutory rate
|
$ | (7,320,067 | ) | $ | (7,845,125 | ) | $ | (6,192,563 | ) | |||
State
tax benefit
|
(753,536 | ) | (807,586 | ) | (637,470 | ) | ||||||
Increase
in valuation allowance
|
8,216,530 | 6,707,907 | 6,276,369 | |||||||||
Research
and development credit
|
(375,401 | ) | 1,782,165 | 118,540 | ||||||||
Other
|
232,474 | 162,639 | 435,124 | |||||||||
$ | 0 | $ | 0 | $ | 0 | |||||||
Our
deferred tax assets and liabilities relate to the following sources and
differences between financial accounting and the tax bases of our assets and
liabilities at December 31, 2009 and 2008:
2009
|
2008
|
|||||||
Gross
deferred tax assets:
|
||||||||
Net
operating loss carryforward
|
$ | 73,496,231 | $ | 68,465,225 | ||||
Research
and development credit
|
7,041,183 | 6,739,863 | ||||||
Patents
and other
|
1,466,849 | 1,285,415 | ||||||
Stock
compensation
|
2,895,368 | 2,066,316 | ||||||
Deferred
revenue
|
19,025 | 0 | ||||||
Accrued
liabilities
|
70,854 | 65,612 | ||||||
84,989,510 | 78,622,431 | |||||||
Less
valuation allowance
|
(84,972,698 | ) | (78,549,679 | ) | ||||
16,812 | 72,752 | |||||||
Gross
deferred tax liabilities:
|
||||||||
Fixed
assets
|
16,812 | 72,752 | ||||||
|
16,812 | 72,752 | ||||||
Net
deferred tax asset
|
$ | 0 | $ | 0 | ||||
No
current or deferred tax provision or benefit was recorded for 2009, 2008, and
2007 as a result of current losses and full deferred tax valuation allowances
for all periods. We have recorded a valuation allowance to state our
deferred tax assets at their estimated net realizable value due to the
uncertainty related to realization of these assets through future taxable
income. At December 31, 2009, we had cumulative net operating losses
(“NOL”) and research and development (“R&D”) tax credit carry-forwards for
income tax purposes of $199,578,661 and $7,041,183 respectively, which expire in
varying amounts from 2010 through 2029. The cumulative NOL
carry-forward is net of $3,698,341 in carry-forwards from 1993 and 1994 which
expired unused in 2008 and 2009. Our ability to benefit from the NOL and
R&D tax credit carry-forwards could be limited under certain provisions of
the Internal Revenue Code if ownership of ParkerVision changes by more than 50%,
as defined by Section 382 of the Internal Revenue Code of 1986 (“Section
382”).
Uncertain
Tax Positions
We file
income tax returns in the U.S. federal jurisdiction and various state
jurisdictions. We have identified our Federal and Florida tax returns as
our only major jurisdictions, as defined. The periods subject to
examination for those returns are the 1995 through 2009 tax
years.
During
2008 and 2009, we conducted a study of our NOL and R&D credit carry-forwards
since the Company’s formation under Section 382. Under Section
382, an ownership change may limit the amount of NOL and R&D credit
carry-forwards that can be used annually to offset future taxable income and
tax, respectively. In general, an ownership change, as defined by
Section 382, results from transactions increasing the ownership of certain
shareholders or public groups in the stock of a corporation by more than 50
34
percentage
points over a three-year period. Based on the results of our study, we
have determined that we do not have any ownership changes on or prior to
December 31, 2009 which would result in limitations of our NOL and R&D
credit carry-forwards under Section 382.
In
addition, during 2008, we conducted tax studies related to our R&D tax
credits from 1994 to 2007. Based on our findings, our qualified
research expenditures were overstated in prior periods resulting in an
adjustment to our cumulative R&D and cumulative NOL tax credit
carry-forwards. The adjustment, aggregating $4,452,021 million,
was recognized on our 2008 federal and state tax returns as a reduction in
R&D credit carry-forward with a corresponding increase to our cumulative NOL
carry-forward. This adjustment had no impact on our consolidated
financial statements.
At
December 31, 2009, we had an unrecognized tax benefit of approximately $1.4
million. A reconciliation of the amount recorded for unrecognized tax
benefits for the years ended December 31, 2009, 2008 and 2007 is as
follows:
For
the years ended December 31,
|
||||||||||||
|
2009
|
2008
|
2007
|
|||||||||
Unrecognized
tax benefits – beginning of year
|
$ | 1,369,614 | $ | 2,629,296 | $ | 1,841,995 | ||||||
Gross
increases – tax positions in prior period
|
0 | 3,192,339 | 787,301 | |||||||||
Gross
decrease – current period tax positions
|
0 | 0 | 0 | |||||||||
Change
in Estimate
|
0 | (4,452,021 | ) | 0 | ||||||||
Lapse
of statute of limitations
|
0 | 0 | 0 | |||||||||
Unrecognized
tax benefits – end of year
|
$ | 1,369,614 | $ | 1,369,614 | $ | 2,629,296 | ||||||
Future
changes in the unrecognized tax benefit will have no impact on the effective tax
rate due to the existence of a valuation allowance. Approximately
$0.47 million, net of tax effect, of the unrecognized tax benefit is related to
excess tax benefits related to share-based compensation which would be recorded
as an adjustment to equity rather than a decrease in retained earnings, if
reversed.
Our
policy is that we recognize interest and penalties accrued on any unrecognized
tax benefits as a component of our income tax expense. We do not have any
accrued interest or penalties associated with any unrecognized tax
benefits. For the years ended December 31, 2009, 2008 and 2007, we did not
incur any income tax-related interest income, expense or
penalties.
8. SHARE-BASED
COMPENSATION:
We did
not capitalize any expense related to share-based payments. The
following table presents share-based compensation expense included in our
consolidated statements of operations for the years ended December 31, 2009,
2008 and 2007, respectively:
Year
ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
Cost
of sales
|
$ | 0 | $ | 0 | $ | 20,627 | ||||||
Research
and development expense
|
1,967,780 | 1,695,265 | 701,042 | |||||||||
Sales
and marketing expense
|
576,539 | 543,083 | 423,675 | |||||||||
General
and administrative expense
|
2,449,337 | 2,005,146 | 1,182,178 | |||||||||
Total share-based expense | $ | 4,993,656 | $ | 4,243,494 | $ | 2,327,522 | ||||||
As of
December 31, 2009, there was $4,031,016 of total unrecognized compensation cost,
net of estimated forfeitures, related to all non-vested share-based compensation
awards. That cost is expected to be recognized over a
weighted-average period of 1.42 years.
35
Stock
Incentive Plans
1993
Stock Plan
We
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 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 were
exercisable for a period of five years from the date the options vested. Options
granted to directors under the 1993 Plan were exercisable immediately and expire
ten years from the date of grant.
2000
Performance Equity Plan
We
adopted a performance equity plan in July 2000 (the “2000 Plan”). The 2000 Plan
provides for the grant of options and other 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, stock appreciation rights, restricted share awards, stock bonuses and
various stock benefits or cash. Awards granted to employees and
consultants under the 2000 Plan generally vest over three to five
years. Awards granted to directors under the 2000 Plan are generally
exercisable within one year. Options awarded under the 2000 Plan are
generally exercisable for seven to ten years from the grant
date. Forfeited and expired options under the 2000 Plan become
available for reissuance. At December 31, 2009, 283,451 shares
of common stock were available for future grants.
2008
Equity Incentive Plan
We
adopted a performance equity plan in August 2008 (the “2008
Plan”). The 2008 Plan provides for the grant of stock-based awards to
employees (excluding named executives), directors and consultants, not to exceed
500,000 shares of common stock. The Plan provides for benefits in the
form of incentive stock options, nonqualified stock options, stock appreciation
rights, restricted share awards, and other stock based
awards. Forfeited and expired options under the 2008 Plan become
available for reissuance. At December 31, 2009, 312,890 shares of
common stock were available for future grants.
Restricted
Stock Awards
Restricted
stock awards are issued as executive and employee incentive compensation and as
payment for services to others. The value of the award is based on
the closing price of our common stock on the date of
grant. Restricted stock awards are generally immediately
vested. During 2009, we granted our employees an aggregate of
17,585 immediately vested shares of restricted stock under the 2008 Plan valued
at approximately $57,000. We had no unvested restricted stock
awards at December 31, 2009, 2008, or 2007 and no restricted stock awards were
forfeited during 2009.
Restricted
Stock Units
In 2008,
we implemented a RSU program to supplement our stock option compensation
programs. We have granted RSUs to employees and non-employee
directors under the 2000 Plan. Each RSU represents a right to one
share of our common stock, upon vesting. The RSUs are not entitled to
voting rights or dividends, if any, until vested. A summary of the
status of non-vested RSUs as of December 31, 2009, and changes during the year
ended December 31, 2009 is presented below:
Non-vested
Shares
|
||||||||
Shares
|
Weighted-Average
Grant-Date
Fair
Value
|
|||||||
Non-vested
at January 1, 2009
|
619,767 | $ | 10.80 | |||||
Granted
|
17,500 | 3.93 | ||||||
Vested
|
(164,207 | ) | 10.68 | |||||
Forfeited
|
(9,200 | ) | 10.13 | |||||
Non-vested
at December 31, 2009
|
463,860 | 10.60 | ||||||
36
The total
fair value of RSUs vested in 2009 is $1,752,963. The non vested RSUs
at December 31, 2009 include 240,000 RSUs awarded to named executives and other
officers in 2008 that vest on the earlier of (i) the third anniversary of the
grant date or (ii) such earlier date that the price of our common stock achieves
certain performance levels as defined in the agreements. As of
December 31, 2009, none of the price performance levels had been achieved and
therefore no vesting was accelerated.
The fair
value of RSU awards is determined using the closing price of our common stock on
the date of grant. Compensation expense related to RSUs is recognized
on a straight-line basis over the requisite service period, net of estimated
forfeitures. For service-based RSUs the requisite service period is
the vesting period, generally three years. For RSUs with market
conditions, the requisite service period was determined using a Monte Carlo
simulation model.
Stock
Options
The
following table presents a summary of option activity under the 1993, 2000, and
2008 Plans (collectively, the “Stock Plans”) for the year ended December 31,
2009:
Shares
|
Weighted-Average
Exercise
Price
|
Weighted-Average
Remaining Contractual Term
|
Aggregate
Intrinsic
Value ($) |
|||||||||||||
Outstanding
at beginning of year
|
3,726,520 | $ | 18.61 | |||||||||||||
Granted
|
534,850 | $ | 3.04 | |||||||||||||
Exercised
|
0 | - | ||||||||||||||
Forfeited
|
(401,274 | ) | $ | 39.09 | ||||||||||||
Expired
|
(81,114 | ) | $ | 19.73 | ||||||||||||
Outstanding
at end of year
|
3,778,982 | $ | 14.20 | 3.46 | $ | 2,000 | ||||||||||
Exercisable
at end of year
|
3,413,584 | $ | 15.17 | 3.19 | $ | 2,000 | ||||||||||
The
aggregate intrinsic value of options exercised under the Stock Plans during
2009, 2008, and 2007 was $0, $717,721, and $806,528,
respectively. The weighted average fair value of option shares
granted during the years ended December 31, 2009, 2008 and 2007 was $1.82,
$6.98, and $7.55, respectively. The total fair value of option shares
vested during the years ended December 31, 2009, 2008, and 2007 was $2,437,770,
$2,761,352, and $2,014,874, respectively.
On May
20, 2009, we granted stock options to purchase an aggregate of 100,000 shares of
our common stock at an exercise price of $2.98 per share to an outside
consultant under the 2000 Plan as compensation under a consulting
agreement. The options vest in equal monthly increments over
the fifteen month term of the agreement and any vested options are exercisable
for seven years from the grant date. Upon thirty days notice, the
consulting agreement may be terminated and any unvested options will be
cancelled. The fair value of this option is estimated at each
interim reporting date using the Black-Scholes option pricing
model. As of December 31, 2009, an aggregate of 46,669 option shares
were vested and the fair value of the option was determined using the
Black-Scholes option pricing model with an expected term equal to the remaining
contractual life of 6.4 years, volatility of 84.8% and a risk-free interest rate
of 3.4%. Expense related to this option was approximately $108,000
for the year ended December 31, 2009.
The fair
value of all other option grants under the Stock Plans for the years ended
December 31, 2009, 2008, and 2007 respectively, was estimated on the grant date
using the Black-Scholes option-pricing model with the following
assumptions:
37
Year
ended December 31,
|
|||||
2009
|
2008
|
2007
|
|||
Expected
option term 1
|
3
to 5.5 years
|
4
to 7 years
|
4
to 7 years
|
||
Expected
volatility factor 2
|
85.0%
to 91.1%
|
66.4%
to 70.9%
|
65.8%
to 74.0%
|
||
Risk-free
interest rate 3
|
1.3%
to 2.5%
|
1.5%
to 3.7%
|
3.6%
to 5.0%
|
||
Expected
annual dividend yield
|
0%
|
0%
|
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.
|
2
|
The
stock volatility for each grant is measured using the weighted average of
historical daily price changes of our 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.
|
Non-Plan
Options/Warrants
We have
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 or above 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, 2009 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
|
1,893,819 | $ | 31.21 | ||||||||||
Granted
|
481,320 | 2.02 | |||||||||||
Exercised
|
(20,000 | ) | 1.88 | $ | 21,700 | ||||||||
Forfeited
|
0 | - | |||||||||||
Expired
|
(115,000 | ) | 23.15 | ||||||||||
Outstanding
at end of year
|
2,240,139 | $ | 25.61 |
2.02
years
|
$ | 0 | |||||||
Exercisable
at end of year
|
2,215,139 | $ | 25.86 |
1.99
years
|
$ | 0 | |||||||
On July
1, 2009, we granted stock options to purchase an aggregate of 50,000 shares of
our common stock at an exercise price of $3.27 per share to an outside
consultant as compensation under a consulting agreement. These
options are for unregistered shares that have “piggy-back” registration rights
on subsequent registration statements. The options vest in equal
monthly increments over the twelve month term of the agreement and any vested
options are exercisable for five years from the grant date. Upon
ninety days notice, the consulting agreement may be terminated and any unvested
options will be cancelled. The fair value of this option is
estimated at each interim reporting date during the option term using the
Black-Scholes option pricing model. As of December 31, 2009, an
aggregate of 25,002 option shares were vested and the fair value of the option
was determined using the Black-Scholes option pricing model with an expected
term equal to the remaining contractual life of 4.5 years, volatility of 85.4%
and a risk-free interest rate of 2.7%. Expense related to this
38
option
was approximately $46,000 for the year ended December 31, 2009.
In
connection with one of the three offerings of shares of our common stock on
March 3, 2009, we issued warrants to purchase 431,320 shares of common stock
(see Note 9). These warrants were recorded at their relative fair
value of approximately $453,000.
The
aggregate intrinsic value of non-plan options and warrants exercised during
2009, 2008, and 2007 was $21,700, $71,488, and $2,805,211, respectively.
Of the non plan warrants and options outstanding at December 31, 2009, warrants
representing 2,190,139 shares were issued in connection with the sale of equity
securities in various public and private placement transactions in 2000, 2001,
2005, 2006, and 2009. The estimated fair value of these warrants at
the time of issuance of $17,767,663 is included in shareholders’ equity in the
consolidated balance sheets.
The
options and warrants outstanding at December 31, 2009 under all plans, including
the non-plan options and warrants, have exercise price ranges, weighted average
contractual lives, and weighted average exercise prices as follows:
Options Outstanding | Options Exercisable | |||||||||||||||||||||||||
Range
of
Exercise Prices
|
Number
Outstanding at December 31,
2009 |
Wtd.
Avg. Exercise Price
|
Wtd.
Avg. Remaining Contractual Life
|
Number
Exercisable at December 31, 2009
|
Wtd.
Avg. Exercise Price
|
Wtd.
Avg. Remaining Contractual Life
|
||||||||||||||||||||
$1.63 - $2.98 | 521,320 | $ | 2.08 | 4.56 | 467,989 | $ | 1.98 | 4.35 | ||||||||||||||||||
$2.99 - $4.66 | 542,640 | 3.31 | 6.02 | 300,515 | 3.42 | 5.83 | ||||||||||||||||||||
$4.67 - $7.08 | 538,960 | 5.73 | 3.91 | 528,960 | 5.70 | 3.89 | ||||||||||||||||||||
$7.25 - $10.98 | 1,865,435 | 8.97 | 2.65 | 1,832,218 | 8.94 | 2.62 | ||||||||||||||||||||
$11.10 - $17.50 | 264,865 | 12.46 | 4.35 | 213,140 | 12.58 | 4.16 | ||||||||||||||||||||
$18.94 - $29.96 | 824,217 | 23.61 | 1.48 | 824,217 | 23.61 | 1.48 | ||||||||||||||||||||
$31.00 - $48.00 | 932,209 | 38.18 | 1.50 | 932,209 | 38.18 | 1.50 | ||||||||||||||||||||
$56.66 - $56.66 | 529,475 | 56.66 | 2.14 | 529,475 | 56.66 | 2.14 | ||||||||||||||||||||
6,019,121 | 18.45 | 2.92 | 5,628,723 | 19.38 | 2.72 | |||||||||||||||||||||
Upon
exercise of options and warrants under all plans, we issue new registered shares
of our common stock. Cash received from option and warrant exercises
under all share-based payment arrangements for the years ended December 31,
2009, 2008, and 2007 was $37,500, $1,349,661, and $6,744,232,
respectively. No tax benefit was realized for the tax deductions from
exercise of the share-based payment arrangements for the years ended December
31, 2009, 2008 and 2007 as the benefits were fully offset by a valuation
allowance (see Note 7).
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, 2009, we had
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
We have
filed two shelf registration statements with the SEC for purposes of providing
flexibility to raise funds from the offering of various securities over a period
of three years, subject to market conditions.
39
Securities
offered under the shelf registration statements may be used to fund working
capital, capital expenditures, vendor purchases, and other capital
needs. The first shelf registration statement was filed on January 5,
2009 (File No. 333-156571) and declared effective on January 20, 2009 (“January
2009 Shelf”) for the offering of up to $25 million in securities. The
second shelf registration statement was filed on September 14, 2009 (File No.
333-161903) and was declared effective on September 30, 2009 (“September 2009
Shelf”) for the offering of up to $50 million in securities.
On
November 10, 2009, we entered into a purchase agreement for the sale of
8,000,000 shares of our common stock at a price of $2.00, par value $0.01 per
share, under the September 2009 Shelf. Piper Jaffray & Co.
(“Piper Jaffray”) acted as underwriter for the Company. The Underwriter agreed
to purchase the Shares from the Company pursuant to the Purchase Agreement at a
discount of $0.14 per share, representing 7.0% of the public offering price, for
an aggregate discount of $1,120,000. The aggregate net proceeds from
this offering after underwriter discounts, placement fees and other offering
expenses, was approximately $14.6 million which will be used for general working
capital purposes. This offering represented 19.4% of our outstanding
common stock on an after-issued basis.
On March
3, 2009, we closed three separate but concurrent offerings for the sale of an
aggregate of 5,994,963 shares of our common stock and 431,320 warrants under the
January 2009 Shelf and received aggregate proceeds, after underwriter discounts,
of approximately $9.6 million. Roth Capital Partners, LLC
(“Roth”), acted as underwriter for two of the three transactions. In
addition, on April 1, 2009, we consummated the sale of an additional 250,000
shares from Roth’s exercise of an over-allotment option for additional proceeds,
after underwriter discount, of approximately $0.4 million. The
aggregate net proceeds from these offerings, including the over-allotment, after
underwriter discounts, placement fees and other offering expenses, was
approximately $9.7 million which was used for general working capital
purposes.
Pursuant
to one underwriting agreement (the “Unit Underwriting Agreement”), we sold
2,156,600 shares of common stock and 431,320 warrants as units, each unit
consisting of one share of common stock and two-tenths of a warrant, at an
offering price of $1.875 per unit (the “Unit Offering”). The warrants
are exercisable, at an exercise price of $1.875 per share, commencing March 3,
2009 and expire on March 3, 2014. The underwriter purchased
units from us at a discount of $0.15 per unit, representing eight percent (8%)
of the public offering price. The shares of common stock and
the warrants comprising the units were issued separately and at all times have
traded separately. Consequently, no “units” were actually
issued. In addition, we granted the underwriter an option to
purchase additional shares of common stock and warrants, as units, to cover
over-allotments, if any. The over-allotment option expired
unexercised on March 27, 2009.
Pursuant
to the second underwriting agreement (the “Stock Underwriting Agreement”), we
sold 3,484,309 shares of common stock at a public offering price of $1.665 per
share (the “Common Stock Offering”). The underwriter purchased the
common stock at a discount of $0.1332 per share, representing eight percent (8%)
of the public offering price. In addition, we granted the
underwriter an option to purchase up to an additional 522,646 shares to cover
over-allotments, if any. On March 27, 2009, the underwriter exercised
its over-allotment option and purchased an additional 250,000 shares of Common
Stock. The sale of shares under the over-allotment option was
consummated on April 1, 2009.
In
connection with the Unit Offering and the Common Stock Offering, we also sold an
aggregate of 354,054 shares of our common stock at a price per share of $1.85 to
an affiliate of an executive officer and two directors of our company (the
“Management Offering”).
The
aggregate of the March 2009 offerings, including the over-allotment option
exercise, represented 18.9% of our outstanding common stock on an after-issued
basis.
On March
5, 2008, we completed the sale of an aggregate of 1,240,199 shares of our common
stock to a limited number of domestic institutional and other investors in a
private placement transaction pursuant to an offering exemption under the
Securities Act of 1933. Such shares represented 4.7% of our
outstanding common stock on an after-issued basis. 1,110,999 shares
were sold at a price of $7.50 per share, and 129,200 shares were sold to Mr.
Jeffrey Parker, our chief executive officer and chairman, at $7.74 per
share. The net
40
proceeds
of approximately $9 million were used for general working capital
purposes.
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 represented 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 were used for general
working capital purposes.
10. SHAREHOLDER PROTECTION
RIGHTS AGREEMENT
On
November 21, 2005, we 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. We
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 us to negotiate
with our 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 by ParkerVision will include an attached right.
The
rights initially are not exercisable and trade with the Common Stock of
ParkerVision. 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 us 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 us 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 we are not the surviving
corporation in a business combination, at an aggregate market price equal to
twice the Exercise Price.
We have
the right to substitute for any of our shares of Common Stock that we are
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 ParkerVision 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
We
entered into a lease agreement for our 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 are depreciated over the lease term. Deferred
rent is amortized as a reduction to lease expense over the lease
term.
We also
lease office space in Lake Mary, Florida for our wireless design
center. The lease term, as amended,
41
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 us
to pay pro-rated annual operating expenses for the properties. Rent
expense for properties, for the years ended December 31, 2009, 2008, and 2007
was $460,321, $465,820, and $517,188, respectively.
In
addition, we lease certain equipment, primarily for research and development
activities, under non-cancelable operating leases with lease terms of less than
one year. Equipment rental expense for the years ended December 31,
2009, 2008 and 2007 was $234,627, $211,112, and $220,169,
respectively.
Future
minimum lease payments under all non-cancelable operating leases and capital
leases that have initial or remaining terms in excess of one year as of December
31, 2009 were as follows:
Contractual
Obligations:
|
2010
|
2011
|
Total
|
|||||||||
Capital
leases
|
$ | 23,000 | $ | 37,000 | $ | 60,000 | ||||||
Operating
leases
|
582,000 | 251,000 | 833,000 |
On
January 1, 2007, we adopted the provisions for the accounting for uncertainty in
income taxes. The total amount of gross unrecognized tax benefits for
uncertain tax positions at December 31, 2009 was $1,369,614. Payment
of these obligations would result from settlements with taxing
authorities. Due to the difficulty in determining the timing of
settlements, these obligations are not included in the table above.
Legal
Proceedings
We are subject to legal proceedings and
claims which arise in the ordinary course of our business. We
believe, based upon advice from outside legal counsel, that the final
disposition of such matters will not have a material adverse effect on our
financial position, results of operations or
liquidity.
12.
RELATED-PARTY
TRANSACTIONS
On
November 16, 2009, the Parker Trust, a trust for the benefit of the dependents
of Jeffrey Parker, our chairman and chief executive officer, purchased 50,000
shares of our common stock in an offering underwritten by Piper
Jaffray. In addition, Stacie Wilf, sister to Jeffrey Parker,
purchased 155,000 shares in the same offering. The shares were
purchased at the offering price of $2.00 per share.
On March
3, 2009, we sold 354,054 shares of our common stock at a price per share of
$1.85 in a Management Offering. The Parker Trust purchased 270,272
shares of our common stock and Robert Sterne and Papken der Torossian, each a
director of ours, purchased 2,701 and 81,081 shares of our common stock,
respectively.
On March
5, 2008, we sold 129,200 shares of our common stock in a private placement
transaction to our chief executive officer, Jeffrey Parker at a price of $7.74
per share.
We paid
approximately $909,000, $1,160,000, and $1,129,000 in 2009, 2008, and 2007,
respectively, for patent-related legal services to a law firm, of which Robert
Sterne, one of our directors since September 2006, is a partner.
13. CONCENTRATIONS OF CREDIT
RISK
Financial
instruments that potentially subject us to a concentration of credit risk
principally consist of cash and cash equivalents. At December 31,
2009, we had cash balances on deposit with banks that exceeded the balance
insured by the F.D.I.C. We maintain our cash investments with what
management believes to be quality financial institutions and limit the amount of
credit exposure to any one institution.
42
14. FAIR VALUE
MEASUREMENTS
On
January 1, 2008, we adopted the FASB guidance that defines fair value,
establishes a framework for measuring fair value and establishes a fair value
hierarchy that prioritizes the inputs used to measure fair value. The
standard describes three levels of inputs that may be used to measure fair
value: (i) Level 1: Quoted prices in active markets for identical or similar
assets and liabilities; (ii) Level 2: Quoted prices for identical or similar
assets and liabilities in markets that are not active or observable inputs other
than quoted prices in active markets for identical or similar assets and
liabilities, and (iii) Level 3: Unobservable inputs that are supported by little
or no market activity and that are significant to the fair value of the assets
or liabilities.
We have
determined the estimated fair value amounts of our financial instruments using
available market information. Our financial assets and liabilities
are limited to money market securities. The value of those money
market securities at December 31, 2009 and 2008 is included in the
following:
Fair
Value Measurements Using
|
||||||||||||||||
Money
market securities value at
|
Quoted
prices in Active Markets (Level 1)
|
Significant
Other Observable Inputs
(Level
2)
|
Significant
Unobservable Inputs
(Level
3)
|
|||||||||||||
December
31, 2009
|
$ | 11,402,000 | $ | 11,402,000 | - | - | ||||||||||
December
31, 2008
|
4,584,000 | 4,584,000 | - | - | ||||||||||||
15. 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,
2009 |
June
30,
2009
|
September
30, 2009
|
December
31, 2009
|
December
31,
2009
|
||||||||||||||||
Revenues
|
$ | 0 | $ | 0 | $ | 0 | $ | 64 | $ | 64 | ||||||||||
Gross
margin
|
0 | 0 | 0 | 10 | 10 | |||||||||||||||
Net
loss
|
(5,142 | ) | (5,757 | ) | (5,746 | ) | (4,885 | ) | (21,530 | ) | ||||||||||
Basic
and diluted net loss per
common share
|
$ | (0.18 | ) | $ | (0.17 | ) | $ | (0.17 | ) | $ | (0.13 | ) | $ | (0.65 | ) | |||||
For
the three months ended
|
For
the year ended
|
|||||||||||||||||||
March
31,
2008 |
June
30,
2008
|
September
30, 2008
|
December
31, 2008
|
December
31,
2008
|
||||||||||||||||
Revenues
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
Gross
margin
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
Net
loss
|
(4,902 | ) | (5,831 | ) | (6,613 | ) | (5,728 | ) | (23,074 | ) | ||||||||||
Basic
and diluted net loss per common share
|
$ | (0.19 | ) | $ | (0.22 | ) | $ | (0.25 | ) | $ | (0.21 | ) | $ | (0.88 | ) | |||||
43
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, with the participation of our chief executive officer and our chief
financial officer, has 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 of December 31, 2009.
Based on
such evaluation, our chief executive officer and our chief financial officer
have concluded that as of December 31, 2009, our disclosure controls and
procedures were effective to ensure that the information we are required to
disclose in reports that we file or submit to the SEC is (1) recorded,
processed, summarized and reported within the time periods specified under the
rules and forms of the SEC and (2) accumulated and communicated to our
management, including our chief executive officer and our chief financial
officer, as appropriate to allow timely decisions regarding required
disclosures.
Management’s Annual Report
on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting and for the assessment of the effectiveness of
internal control over financial reporting. Under the rules of the SEC, “internal
control over financial reporting’’ is defined as a process designed to provide
reasonable assurance regarding the reliability of our financial reporting and
the preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of
America.
Internal
control over financial reporting includes maintaining records, that in
reasonable detail, accurately and fairly reflect our transactions and our
dispositions of assets; provide reasonable assurance that transactions are
recorded as necessary for preparation of our financial statements in accordance
with accounting principles generally accepted in the United States of America;
provide reasonable assurance that receipts and expenditures of company assets
are made only in accordance with management authorization; and provide
reasonable assurance regarding the prevention or the timely detection of the
unauthorized acquisition, use or disposition of company assets that could have a
material effect on our financial statements. Because of its inherent
limitations, internal control over financial reporting may not provide absolute
assurance that a misstatement of our financial statements would be prevented or
detected.
Management
conducted an evaluation of the effectiveness of our internal control over
financial reporting using the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal
Control—Integrated Framework . Based on this evaluation, management
concluded that the company’s internal control over financial reporting was
effective as of December 31, 2009.
Attestation Report of the
Independent Registered Certified Public Accounting Firm
PricewaterhouseCoopers
LLP, the independent registered certified public accounting firm that audited
the financial statements included in this Form 10-K, has attested to, and
reported on, the effectiveness of our internal control over financial
reporting. Their report is included in “Report of Independent Registered
Certified Public Accounting Firm” included in Item 8.
Changes in Internal Control
over Financial Reporting
For the
three month period ended December 31, 2009, there has been no change in our
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
44
Item
9B. Other Information.
None.
PART
III
Item
10. Directors, Executive Officers and Corporate
Governance.
Directors
Our
directors, including their ages, backgrounds and qualifications are as
follows:
Name,
Age
|
Director
Since
|
Background
|
Qualifications
|
|||
Jeffrey
Parker, 53
|
1989
|
|
· Our
Chairman of the Board and Chief Executive Officer since our inception in
1989
· Our President
from April 1993 to June 1998
· Holds 27 U.S.
patents
|
· One of our
founders
· As Chief
Executive Officer, has relevant insight into our operations,
our industry and related risks
· Experience
bringing disruptive technologies to market
|
||
David
Sorrells, 51
|
1997
|
· Our Chief
Technical Officer since 1996
· Our
Engineering Manager from 1990 to 1996
· Holds 101
U.S. patents
|
· One of the
leading inventors of our core technologies
· Has an
in-depth understanding of our technologies and their relevance to our
target markets
|
|||
William
Hightower, 66
|
1999
|
· Our President
from September 2003 to his retirement in November 2004.
· President,
Chief Operating Officer and a Director of Silicon Valley Group, Inc.,
(SVGI), (publicly-held designer and builder of semiconductor capital
equipment tools for chip manufacturers) from August 1997 to May
2001
· Chairman and
Chief Executive Officer of CADNET Corporation (privately held developer of
network software solutions for architectural industry) from January 1996
to August 1997
· President and
Chief Executive Officer of Telematics International, Inc. (networking and
communication products manufacturer) from August 1989 to January
1996)
|
· Extensive
experience as executive officer and operating officer for both public and
private companies in a number of industries, including
telecommunications.
· Longevity on
our board provides a historical perspective and a relevant understanding
of our target markets and industry
|
|||
John
Metcalf, 59
|
2004
|
· Chief
Financial Officer partner with Tatum LLC (executive services and
consulting firm) since November 2002
· 18 years
experience as a chief financial officer, most recently at Electro
Scientific Industries, Inc. (provider of high-technology manufacturing
equipment to the global electronics market) from July 2006 until his
retirement in September 2007 and at Siltronic (a silicon wafer
manufacturer) from June 2004 to July 2006
· Member of the
Board of Directors and Chairman of the Audit Committee for EnergyConnect
Group, Inc. from June 2007 to present
|
· Extensive
experience in the semiconductor industry
· In-depth
understanding of generally accepted accounting principles, financial
statements and SEC reporting requirements
· Satisfies the
audit committee requirement for financial
expertise
|
45
Name,
Age
|
Director
Since
|
Background
|
Qualifications
|
|||
William
Sammons, 89
|
1993
|
· President of
the North American operations of Carrier Corporation from 1981 until his
retirement in 1985
· Prior to
1981, held management and executive general management responsibilities in
all aspects of the air conditioning industry
· Graduate
degree in Electrical Engineering from Massachusetts Institute of
Technology
|
· Service on
our board of directors since our initial public offering brings a
historical perspective and a relevant understanding of our target markets
and industry
· Relevant
business experience with regard to the successful interaction between
small start-up companies and their significantly larger
customers
|
|||
Robert
Sterne, 58
|
2006
|
· Partner of
the law firm of Sterne, Kessler, Goldstein & Fox, PLLC (specializing
in patent and other intellectual property law) since 1978
· Also served
on our board from February 2000 to June 2003
|
· In-depth
knowledge of our intellectual property portfolio and patent
strategies
· Considered a
leader in best practices and board responsibilities concerning
intellectual property
|
|||
Nam
Suh, 73
|
2003
|
· President of
Korea Advanced Institute of Science and Technology since July
2006
· Member of the
faculty of Massachusetts Institute of Technology (MIT) since 1970 and held
many positions at MIT including director of MIT Laboratory for
Manufacturing and Productivity, head of the department of Mechanical
Engineering, director of the MIT Manufacturing Institute and director of
the Park Center for Complex Systems.
· Widely
published author of over 300 articles and seven books on topics related to
tribology, manufacturing, plastics and design
· Holds
approximately 50 U.S. and many foreign patents, some of which relate to
plastics, polymers and design
· Member of the
Board of Directors of:
- Integrated
Device Technology, Inc. (Nasdaq
company that develops mixed signal
semiconductor solutions) from 2005
to 2009
-
Therma-Wave, Inc. (Nasdaq company that manufactured process control
metrology systems for use in semiconductor manufacturing) from 2004 to
2007
|
· Significant
experience with technology innovation and the process of new
product introduction
· Relevant
network, particularly in the Korean community
· Relevant
experience with Korean culture and
commerce
|
46
Name,
Age
|
Director
Since
|
Background
|
Qualifications
|
|||
Papken
der Torossian, 71
|
2003
|
· Chief
Executive Officer of SVGI, (publicly-held designer and builder of
semiconductor capital equipment tools for chip manufacturers) from 1986 to
2001
· Prior to
SVGI, was President and Chief Executive Officer of ECS Microsystems
(communications and PC company acquired by Ampex Corporation) and
President of the Santa Cruz Division of Plantronics where he also served
as Vice President of the telephone products group.
· Has served as
a director on a number of private company boards including executive
chairman of Vistec Semiconductor Systems Group, chairman of TKO Software
and current director of Aceris-3D Inspection, Inc.
· Member of the
Board of Directors of:
-
Atmel Corporation (Nasdaq company that is a global leader in the design,
manufacturing and marketing of advanced semiconductors ) from July 2007 to
present
-
Therma-Wave, Inc. (Nasdaq company that manufactured process control
metrology systems for use in semiconductor manufacturing)
from 2003 to 2007
|
· Extensive
experience as chairman and chief executive of a number of semiconductor
and technology-based companies
· Relevant
network in technology community
· Relevant
operating experience with small, high growth
companies
|
Executive
Officers
In
addition to Jeffrey Parker, our Chief Executive Officer, and David Sorrells, our
Chief Technical Officer, who also serve on our board and whose backgrounds are
included in the Director table above, the following persons serve as our
executive officers:
Name,
Age,
|
Position
|
Background
|
||
Cynthia
Poehlman, 43
|
Chief
Financial Officer
|
· Our Chief
Financial Officer since June 2004
· Our Corporate
Secretary since August 2007
· Our
Controller and Chief Accounting Officer from March 1994 to June
2004
|
||
John
Stuckey, 39
|
Executive
Vice President of Corporate Strategy and Business
Development
|
· Executive
Vice President since June 2008
· Vice
President of Corporate Strategy and Business Development from July 2004 to
June 2008
|
Family
Relationships
There are
no family relationships among our officers or directors.
Audit Committee and
Financial Expert
We have
an audit committee that is comprised of independent directors as determined in
accordance with the rules of Nasdaq. Our audit committee is governed
by a board-approved charter which, among other things, establishes the audit
committee’s membership requirements and its powers and
responsibilities. The members of the audit committee are Messrs. John
Metcalf, William Sammons and Papken der Torossian. Mr. Metcalf serves
as chairman of the audit committee.
47
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 Nasdaq. 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, 2009,
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 applicable to all of our directors,
officers and employees that is designed to deter wrongdoing and to promote
ethical conduct, full, fair, accurate, timely and understandable disclosure in
reports that we file or submit to the SEC and others, compliance with applicable
government laws, rules and regulations, prompt internal reporting of violations
of the code and accountability for adherence to the code. A copy of
the code of ethics may be found on our website at www.parkervision.com.
48
Item
11. Executive Compensation.
Compensation Committee
Interlocks and Insider Participation
The
members of our compensation committee, all of whom are independent directors as
determined in accordance with the rules of Nasdaq, are Messrs. William Sammons,
Nam Suh and Papken der Torossian. Mr. Suh serves as chairman of the
compensation committee.
Compensation Committee
Report
The
compensation committee of the board of directors (referred to in this Item as
the “Committee”) oversees our compensation programs on behalf of the
Board. In fulfilling its oversight responsibilities, the 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 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 Discussion and
Analysis
Overview
of Compensation Program
Our
compensation program is designed to support our business objectives by
structuring compensation packages to retain, reward, motivate, and attract
employees who possess the required technical and entrepreneurial skills and
talent. The overall 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 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.
Comparative
Benchmarking
In
establishing our executive compensation policies, programs and awards, the
Committee periodically reviews a comparative peer group (“Peer Group”) for
compensation benchmarking data. Historically, the Committee utilized
an independent compensation consultant, Frederic W. Cook & Co., Inc.
(“Cook”) to assist in evaluating and benchmarking its executive compensation
plans, including recommending companies for inclusion in the Peer Group for
benchmarking purposes. In 2009, the Committee determined that
the Peer Group it historically had used had become largely irrelevant due to
changes in the company’s operations and target markets, as well as various
acquisitions and divestitures of companies in that group. The
Committee, with the assistance of our internal human resource management
personnel, reviewed and updated the Peer Group for benchmarking purposes
utilizing the same parameters as employed by Cook in prior periods.
The Peer
Group selection was based on (i) companies generally in the wireless
communications or communications equipment industries with an emphasis on
semiconductor providers in particular, (ii) companies that are similarly sized
in terms of market capitalization value, (iii) companies with similar growth and
performance potential and/or (iv) companies that are considered competitors of
ours in either the labor or capital markets. Financial metrics for
each of these companies were gathered including revenue, operating income,
employee count, and market capitalization. Market
capitalization was considered the most relevant data point in selecting the Peer
Group.
The
current Peer Group, as approved by the Committee in 2009, includes the following
fifteen companies: Anadigics, Inc., Anaren, Inc., California
Microdevices Corporation, Conexant Systems, Inc., DSP Group,
49
Inc.,
Emcore Corporation, GlobalStar, Inc., KVH Industries, Inc., MoSys, Inc., Oplink
Communications, Inc., Powerwave Technologies, Inc., SMART Modular Technologies,
Superconductor Technologies, Inc., TranSwitch Corporation, and Volterra
Semiconductor Corporation. We expect that it will be necessary as the
business evolves to update the Peer Group periodically in order to maintain a
list of relatively comparable companies for compensation evaluation
purposes. We anticipate that the Committee will continue to apply
consistent criteria in its selection of the Peer Group.
The
Committee reviewed all compensation elements for the Peer Group in 2009 as a
general indicator of relevant market conditions. The Committee
generally targets our executive compensation at the market average or 50th
percentile of the market. Based on its review of the Peer Group
data, the Committee did not make any changes to its executive compensation
programs in 2009.
Compensation
Components
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 of our employees. The amount of each
component is scaled according to the level of business responsibilities of each
individual. We do not target a specific weighting of these three
components or use a prescribed formula to establish pay
levels. Rather the Committee considers changes in the business,
external market factors, and our financial position each year when determining
pay levels and allocating between long-term and current compensation for our
named executive officers as defined in Item 402(a) of Regulation S-K (each an
“NEO”).
Each
component of the compensation program and the manner in which the Committee
determined each component for our 2009 fiscal year is discussed in detail
below. In addition to these components, we provide standard employee
benefits that include health benefits, life insurance, and tax-qualified savings
plans to all of our employees. We did not provide any special
employee benefits or perquisites in 2009 for executives other than supplemental
life insurance policies for the benefit of the executives and an automotive
allowance for Mr. Jeffrey Parker. We do not have pension or
other retirement benefits or any type of nonqualified deferred compensation
programs for our executives or other employees.
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 average base
salary for our Peer Group in order to allow us to compete in the market for
exceptional employees without placing an undue emphasis on fixed
compensation. Based on our 2009 Peer Group analysis, each of
our executive’s base salary was comparable to the Peer Group average base salary
for the same or similar position.
Annual
Performance Incentives – In an effort to preserve cash resources and as a
result of overall general economic conditions, the Committee did not implement a
formal annual performance incentive plan for 2009. The Committee
determined that it would discretionarily consider short-term equity-based
incentives at the end of the year based on corporate
achievements. Based on the company’s financial performance for 2009,
the Committee did not make any cash or equity short-term performance incentive
awards to its executives with the exception of a $5,000 discretionary cash bonus
awarded to the Chief Technology Officer for his exemplary contribution towards
the achievement of one of the company’s technological goals in
2009.
Prior to
2009, annual performance incentives were targeted based on the achievement of
corporate goals, 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. These corporate goals generally included sales, technical
customer support, product development and financial goals. Although
the annual performance incentive was generally intended to be distributed in the
form of a cash award, certain executive officers have historically elected to
take all or a portion of their performance incentive award in shares of our
common stock in order to preserve our cash for other business
purposes.
The
Committee has not approved, nor does it anticipate, any annual cash incentive
award programs for
50
executives
or other employees for 2010. The Committee may utilize equity-based
awards for short-term incentives although no such awards are currently being
contemplated.
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 our common
stock. Prior to 2008, stock options were used as the sole vehicle for
long-term equity compensation for all employees, including
executives. In 2008, the Committee reviewed our historical stock
option awards and concluded that these awards had, in many cases, failed to
provide the intended long-term incentive based on the significant volatility of
our stock given market conditions. In 2008, the Committee
determined that implementation of a RSU program would enable the long-term
incentive program to produce the intended results. RSUs, upon
vesting, represent an immediate value to the grantee and create immediate equity
ownership. Like stock options, RSUs are considered a strong
motivator for enhancing shareholder value through corporate
accomplishments. Furthermore, because the RSU has an inherent value
equal to the market value of our common stock, the Committee believes these
equity instruments have a higher perceived value to the executives in volatile
market conditions.
In 2008,
the Committee awarded RSUs as long-term incentive awards in connection with the
execution of executive employment agreements as more fully discussed
below. These awards provided for long-term incentives for 2008 and
2009. In determining long-term equity incentive award size, the
Committee used a Shareholder Value Transfer (“SVT”) Allocation
methodology. SVT refers to the aggregate value or expense of grants
as a percent of a company’s total market capitalization. For the 2008
long-term incentive awards, the Committee considered data compiled by Cook
regarding the average SVT rate and allocation percentages for the Peer
Group. The Committee targeted the 75th
percentile of the Peer Group data rather than the median. This target
was based on the determination that our historical stock performance had failed
to track the achievement of our corporate objectives, responding instead to
general market factors. Therefore, previously awarded stock options
had failed to provide an appropriate level of long-term incentive compensation,
as evidenced by a significant number of out-of-the-money share options held by
our NEOs, many of which had or were expected to soon expire
unexercised.
No other
long-term incentives were awarded by the Committee to executives in
2009. The Committee continues to evaluate the appropriate mix
of long-term pay elements in comparison to the market and in line with our
strategy. The Committee anticipates continuing to use a blend of
stock options and RSU awards in the future in order to continue to ensure that
our long-term incentive programs produce the intended results.
Equity
Grant Practices
Grants in
connection with new hires and job promotions are made on the 15th 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, except for
those awards, if any, which are made concurrent with the execution of executive
employment agreements, are generally 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 15th, May
15th,
August 15th and
November 15th, or,
if the 15th
falls on a non-trading day, the first trading day following such
date. The intent of this grant 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.
Stock
options are granted with an exercise price equal to the closing market value of
our common stock on the grant date. Options are never granted with
exercise prices below market value on the grant date.
Role
of Executive Officers in Determining Executive Pay
The
Committee makes all compensation decisions for all elements of compensation for
the chief executive officer and other NEOs and approves recommendations
regarding equity awards for all employees. Our chief
51
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 and makes
recommendations regarding their compensation to the Committee for its
consideration and determination. Human resource management provides
the Committee with market information regarding executive officers’ base pay and
annual performance incentives as requested. Executives do not
determine any element or component of their own pay package or total
compensation amount.
Executive
and Director Stock Ownership Requirements
We
currently do not have a policy with regard to minimum stock ownership for our
executives or non-employee directors.
Federal
Income Tax Consequences
Although
we consider the potential tax impact of our compensation programs in our
compensation planning, these impacts are not heavily weighted with regard to our
compensation decisions. The material federal income tax consequences
of our compensation programs, based on the current provisions of the Internal
Revenue Code (Code) include the following:
Section
162(m) of the Code limits the deductibility from U.S. taxable income of certain
types of compensation in excess of $1,000,000 paid by us to certain of our
NEOs. This limitation may apply to the realized value of awards made
under our equity award plans. Compensation that is determined to be
“performance-based” under the Code is not subject to this deduction
limit. For 2009, we did not pay compensation in excess of $1,000,000
to any executive and therefore we did not incur a deduction limitation under
Section 162(m).
Code
Section 409A generally governs the form and timing of nonqualified deferred
compensation payments and imposes sanctions on participants in nonqualified
deferred compensation plans that fail to comply with Section 409A
rules. Our compensation arrangements with our NEOs, as
discussed more fully below, are intended to be compliant with Section
409A.
In the
event of a change-in-control, our NEOs are entitled to certain severance
payments as more fully discussed under “Potential Payments upon Termination or
Change-in-Control” below. To the extent those payments exceed three
times the executive’s five-year average W-2 income, they may be deemed “excess
parachute payments,” subject to a 20 percent excise tax, and nondeductible.
Certain payments, such as reasonable compensation for non-compete agreements,
may be excluded from the excess parachute payment calculation.
Employment and Other
Agreements
We have
non-compete arrangements in place with all of our employees. The
non-compete agreements provide 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 our customers.
In June
2008, we entered into Executive Employment Agreements (“Agreements”) with each
of our NEOs including Jeffrey Parker, our chief executive officer, Cynthia
Poehlman, our chief financial officer, David Sorrells, our chief technology
officer, and John Stuckey, our executive vice-president of corporate strategy
and business development. We entered into similar agreements
with two additional senior management employees during 2008.
The
Agreements provide each executive with a base salary commensurate with his or
her position in the organization, an annual performance-based achievement bonus
and long-term equity incentive awards in the form of RSUs. The RSUs
awarded in connection with the Agreements include RSUs that vest in twelve equal
52
quarterly
increments from August 31, 2008 through May 31, 2011 (the “time-based RSUs”) as
well as RSUs that vest on the earlier of the three-year anniversary of the grant
date or such date that certain market conditions are met, as measured by the
price of our common stock (the “market-based RSUs”). The
time-based RSUs and market-based RSUs collectively represented the 2008 and 2009
long-term equity incentive awards for our NEOs. The Agreements allow
for additional equity awards at the discretion of the Committee although no
additional awards have been made or are currently contemplated.
The
Agreements also contain provisions for the protection of our intellectual
property and for severance benefits and non-compete restrictions in the event of
termination of the executive’s employment. Severance benefits
are payable to the executives under the terms of the Agreements in the event the
executive is terminated without cause, due to a change in control event, or for
“Good Reason” as defined in the Agreements. The severance package to
be paid under the Agreements includes (a) a multiple of base salary; (b) an
amount in lieu of annual bonus or incentive compensation; (c) continuation of
group health benefits and (d) acceleration of certain unvested and outstanding
equity awards. Amounts to be paid to each executive for various
termination events are included in the tables under “Potential Payments upon
Termination or Change-in-Control” below.
The
non-compete provisions of the Agreements remain in effect for up to three years
following the executive’s termination, provided that we compensate the executive
the equivalent of his or her base salary over the restriction period
(“Non-Compete Compensation). In the event of a termination due to a
change in control, the executive’s severance pay in excess of twelve months’
base salary is applied as a credit toward the Non-Compete Compensation.
Furthermore, in the event the executive is terminated for cause or resigns
without “Good Reason” as defined in the Agreements, all gains realized by the
executive from the sale of equity awards during the preceding twelve months, as
well as the value at the date of termination of all outstanding equity awards
will be credited towards the Non-Compete Compensation.
The
Agreements specifically comply with the applicable requirements of Section 409A
of Code. The Agreements also provide for excise tax gross-up on
certain severance benefits to the extent they result in “golden parachute
payments” under the Code. To the extent that the parachute
payments are within 110% of the defined “safe harbor” amount, the payments will
be cut back to bring them within the safe harbor.
The
Agreements have a three-year term with a provision for automatic annual renewal
thereafter unless ninety-day written intent not to renew is given either by us
or by the executive.
The
Committee did not enter into any new executive or other senior management
employment agreements during 2009.
53
Summary Compensation
Table
The
following table summarizes the total compensation paid to or earned by each of
our NEOs who served as executive officers during all or a portion of the years
ended December 31, 2009, 2008, and 2007. Given the complexity of
disclosure requirements concerning executive compensation, and in particular
with respect to the standards of financial accounting and reporting related to
equity compensation, there is a difference between the compensation that is
reported in this table versus that which is actually paid to and received by the
NEOs. The amounts in the Summary Compensation Table that reflect the
full grant date fair value of an equity award, do not necessarily correspond to
the actual value that has been realized or will be realized in the future with
respect to these awards.
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
Salary
|
Bonus
|
Stock
Awards 1 |
Option
Awards 2 |
Non-equity
Incentive
Plan Com-pensation 3 |
All
Other
|
Total
|
||
Name
and Principal Position
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
Jeffrey Parker, Chief | 2009 | $ | 325,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 29,690 | 5 | $ | 354,690 | ||||||||||||||||
Executive Officer and | 2008 | 325,000 | 0 | 1,701,514 | 0 | 0 | 31,600 | 2,058,114 | ||||||||||||||||||||||||
Chairman of the Board | 2007 | 325,000 | 0 | 0 | 1,079,811 | 225,000 | 4 | 14,365 | 1,644,176 | |||||||||||||||||||||||
Cynthia
Poehlman, Chief Financial Officer and Corporate Secretary
|
2009 | 225,000 | 0 | 0 | 0 | 0 | 2,750 | 7 | 227,750 | |||||||||||||||||||||||
2008 | 213,269 | 0 | 510,454 | 0 | 0 | 2,750 | 726,473 | |||||||||||||||||||||||||
2007 | 200,000 | 0 | 0 | 251,955 | 69,200 | 6 | 2,000 | 523,155 | ||||||||||||||||||||||||
David
Sorrells, Chief Technology Officer
|
2009 | 275,625 | 5,000 | 8 | 0 | 0 | 0 | 2,100 | 10 | 282,725 | ||||||||||||||||||||||
2008 | 275,625 | 31,612 | 9 | 1,153,486 | 0 | 0 | 2,100 | 1,462,823 | ||||||||||||||||||||||||
2007 | 275,625 | 0 | 0 | 0 | 100,000 | 0 | 375,625 | |||||||||||||||||||||||||
John
Stuckey, Executive Vice President, Corporate Strategy and Business
Development 12
|
2009 | 250,000 | 0 | 0 | 0 | 0 | 2,895 | 11 | 252,895 | |||||||||||||||||||||||
2008 | 250,000 | 0 | 510,454 | 0 | 0 | 3,748 | 764,202 |
1
|
The
amounts reported in column (e) represent the full grant date fair value of
stock awards in accordance with ASC 718, net of estimated forfeitures.
Refer to Note 8 of the consolidated financial statements included in Item
8 for the assumptions made in the valuation of stock
awards.
|
2
|
The
amounts reported in column (f) represent the full grant date fair value of
option awards in accordance with ASC 718, net of estimated
forfeitures. Refer to Note 8 of the consolidated financial
statements included in Item 8 for the assumptions made in the valuation of
stock awards.
|
3
|
The
amounts reported in column (g) represent the dollar amount of compensation
cost related to awards under non-equity incentive plans. Unless
otherwise specified, all amounts reported in this column were determined
and paid in the year reported. In certain cases, the named executive
elected to forego his or her cash compensation in lieu of an equity award
of equal dollar value. In these cases, the award value remains in
this column but will be separately footnoted as to the amount of award
distributed in equity.
|
54
4
|
In
2007, our chief executive officer elected to forego a $225,000 cash
performance incentive award in lieu of a stock award of 14,466 shares of
common stock. The value of the stock award, net of $63,415 in tax
withholdings, was $161,585 based on the closing market price of our common
stock on the grant date. Both the cash and equity portion of the
award was paid in 2008.
|
5
|
This
amount includes (i) the dollar value of premiums paid by us in 2009 for
life insurance for the benefit of Mr. Parker in the amount of $3,690, (ii)
the gross value of Mr. Parker’s automobile allowance of $24,000, and (iii)
the 2009 employer matching contribution to a defined-contribution 401k
plan of $2,000.
|
6
|
In
2007, our chief financial officer elected to forego a portion of her cash
performance incentive award in lieu of a stock award of 2,795 shares of
common stock. The value of the stock award, net of $15,135 in tax
withholdings, was $31,220 based on the closing market price of our common
stock on the grant date. Both the cash and equity portion of the
award was paid in 2008.
|
7
|
This
amount includes (i) the dollar value of premiums paid by us in 2009 for
life insurance for the benefit of Ms. Poehlman in the amount of $750 and
(ii) the 2009 employer matching contribution to a defined-contribution
401k plan of $2,000.
|
8
|
Mr.
Sorrells was awarded a cash bonus for 2009 in the amount of $5,000, which
was paid in 2010.
|
9
|
Mr.
Sorrells received a signing bonus with a value of $50,000 upon execution
of his executive employment agreement in June 2008. We had the
option to pay this bonus in cash or equity. A portion of the bonus
was paid in cash and is reflected in column (d) in the Summary
Compensation Table, and the remainder was paid with 1,642 shares of our
common stock. The value of the common stock awarded, or $18,388 is
included in column (e) in the Summary Compensation
Table.
|
10
|
This
amount represents the dollar value of premiums paid by us in 2009 for life
insurance for the benefit of Mr. Sorrells in the amount of
$2,100.
|
11
|
This
amount includes (i) the dollar value of premiums paid by us in 2009 for
life insurance for the benefit of Mr. Stuckey in the amount of $1,020 and
(ii) the 2009 employer matching contribution to a defined-contribution
401k plan of $1,875.
|
12
|
Mr.
Stuckey was promoted to Executive Vice President of Corporate Strategy and
Development in June 2008.
|
Grants of Plan-Based
Awards
There
were no grants of plan-based awards during the year for the named executive
officers.
Outstanding Equity Awards at
Fiscal Year End
The
following table summarizes the outstanding equity awards as of December 31, 2009
for each executive officer who served as an executive officer during all or a
portion of 2009.
Name
|
Option
Awards
|
Stock
Awards
|
||||
Number
of
securities
underlying
unexercised
options
(#)
exercisable
|
Number
of
securities underlying
unexercised options
(#)
unexercisable
|
Option
Exercise
price
($) |
Option
expiration date
|
Number
of Shares or Units of Stock That Have Not Vested
(#) |
Market
Value of
Shares or Units of Stock That Have Not Vested1 ($) |
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
Jeffrey
Parker
|
15,000
|
$19.99
|
2/26/12
|
37,500
2
|
$
68,625
|
|
75,000
|
5.77
|
8/9/12
|
75,000
3
|
137,250
|
||
10,908
|
8.91
|
12/20/12
|
||||
7,583
|
9.80
|
5/3/13
|
||||
90,000
|
8.81
|
10/12/13
|
||||
35,416
|
2,084
4
|
9.89
|
2/15/14
|
|||
32,291
|
5,209
5
|
10.82
|
5/15/14
|
|||
29,166
|
8,334
6
|
12.30
|
8/15/14
|
|||
26,041
|
11,459
7
|
10.36
|
11/15/14
|
55
Name
|
Option
Awards
|
Stock
Awards
|
||||
Number
of
securities
underlying
unexercised
options
(#)
exercisable
|
Number
of
securities underlying
unexercised options
(#)
unexercisable
|
Option
Exercise
price
($) |
Option
expiration date
|
Number
of Shares or Units of Stock That Have Not Vested
(#) |
Market
Value of
Shares or Units of Stock That Have Not Vested1 ($) |
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
Cynthia
Poehlman
|
12,000
|
20.00
|
1/15/11
|
11,250
2
|
20,588
|
|
25,000
|
5.77
|
8/9/12
|
22,500
3
|
41,175
|
||
4,563
|
8.91
|
12/20/12
|
||||
3,205
|
9.80
|
5/6/13
|
||||
25,000
|
8.81
|
10/12/13
|
||||
8,263
|
487
4
|
9.89
|
2/15/14
|
|||
7,534
|
1,216
5
|
10.82
|
5/15/14
|
|||
150,000
|
5.70
|
6/25/14
|
||||
6,805
|
1,945
6
|
12.30
|
8/15/14
|
|||
6,076
|
2,674
7
|
10.36
|
11/15/14
|
|||
David
Sorrells
|
200,000
|
48.00
|
12/31/10
|
28,754
2
|
52,620
|
|
125,000
|
9.00
|
11/21/12
|
42,500
3
|
77,775
|
||
25,000
|
5.77
|
8/9/12
|
||||
4,988
|
8.91
|
12/20/12
|
||||
3,898
|
9.80
|
5/3/13
|
||||
38,000
|
8.81
|
10/12/13
|
||||
John
Stuckey
|
25,000
|
5.77
|
8/9/12
|
11,250
2
|
20,588
|
|
5,133
|
8.91
|
12/20/12
|
22,500
3
|
41,175
|
||
3,394
|
|
9.80
|
5/3/13
|
|||
25,000
|
8.81
|
10/12/13
|
||||
8,263
|
487
4
|
9.89
|
2/15/14
|
|||
7,534
|
1,216
5
|
10.82
|
5/15/14
|
|||
107,875
|
4.67
|
7/18/14
|
||||
6,805
|
1,945
6
|
12.30
|
8/15/14
|
|||
6,076
|
2,674
7
|
10.36
|
11/15/2014
|
1
|
The market value of shares or units
reported in column (g) is computed based on the December 31, 2009 closing
price of our common stock of
$1.83.
|
2
|
These units represent unvested RSUs
awarded in connection with executive employment agreements in June
2008. The unvested RSUs vest in equal quarterly increments from
February 28, 2010 through May 31,
2011.
|
3
|
These units represent
unvested RSUs awarded in connection with executive employment agreements
in June 2008. The RSUs vest on the earlier of (a) the last day
of each quarterly period beginning August 31, 2008 during which certain
specified market price conditions have been met or (b) May 31,
2011. The achievement of the market price conditions is
determined based on the closing market price of our common stock meeting
or exceeding certain fixed price points for any five (5) consecutive
trading days (the “Price Target”). At Price Targets of $15.11,
$19.28, $23.45 and $27.10, 25%, 50%, 75% and 100%, respectively, of the
award shall be vested. In addition, upon the occurrence
of a change in control as defined in the RSU agreement, the market price
conditions will be assessed based on the greater of (a) the closing price
of our common stock on the date of the change in control event or (b) the
average per share acquisition price paid by the acquiring
party.
|
4
|
Option vests over the first three
years of the seven-year option term, with 33% vesting one year following
the grant date and the remaining 66% vesting in equal monthly increments
for 24 months thereafter. Option will be fully vested as of February 15,
2010.
|
5
|
Option
vests over the first three years of the seven-year option term, with 33%
vesting one year following the grant date and the remaining 66% vesting in
equal monthly increments for 24 months thereafter. Option will be fully
vested as of May 15, 2010.
|
6
|
Option
vests over the first three years of the seven-year option term, with 33%
vesting one year following the grant date and the remaining 66% vesting in
equal monthly increments for 24 months thereafter. Option will be fully
vested as of August 15, 2010.
|
7
|
Option vests over the first three
years of the seven-year option term, with 33% vesting one year following
the grant date and the remaining 66% vesting in equal monthly increments
for 24 months thereafter. Option will be fully vested as of November 15,
2010.
|
56
Option Exercises and Stock
Vested
The
following table summarizes the option exercises and vesting of stock awards for
the fiscal year ended December 31, 2009 for each NEO who served as an executive
officer during all or a portion of 2009.
Option
Awards
|
Stock
Awards
|
|||||||||||||||
Name
|
Number
of Shares Acquired on Exercise
(#)
|
Value
Realized on Exercise
($)
|
Number
of Shares Acquired on Vesting
(#)
|
Value
Realized on Vesting
($)
|
||||||||||||
Jeffrey
Parker
|
0 | $ | 0 | 25,000 | $ | 64,875 | ||||||||||
Cynthia
Poehlman
|
0 | 0 | 7,500 | 19,463 | ||||||||||||
David
Sorrells
|
0 | 0 | 19,164 | 49,731 | ||||||||||||
John
Stuckey
|
0 | 0 | 7,500 | 19,463 |
Potential Payments upon
Termination or Change-in-Control
The
Agreement with each of our NEOs provide for payments upon termination for
various events including, with or without cause termination by us, termination
due to death or disability of the executive, termination due to a
change-in-control event and termination by the executive for “Good Reason” as
defined in the Agreements.
Payments Made Upon Termination
- When an executive’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’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 Termination Due
to a Change in Control- In the event a NEO is terminated within two years
of a change-in-control event, in addition to the benefits listed under “Payments
Made Upon Termination” above, he or she is entitled to receive a multiple of his
or her base salary, an amount in lieu of annual bonus or incentive compensation,
continuation of group health benefits and acceleration of certain unvested and
outstanding equity awards. The base salary multiple varies by individual
but ranges from 150% to 300%. The amount in lieu of annual bonus or
incentive compensation is determined based on the greater of the bonus or annual
incentive compensation in the year prior to the change in control, the average
of the prior three year’s bonus or annual incentive compensation, or a prorated
amount of the current year’s bonus or annual incentive
compensation.
In
accordance with the terms of the executive’s individual equity agreements, the
executive would also be eligible for accelerated vesting of certain equity
awards in the event of a change-in-control. Any unvested stock
options will automatically vest upon a change-in-control. In
addition, in the event of a change-in-control which is not approved or
authorized by our board of directors, the executive’s time-based RSUs will
automatically vest. If the change-in-control occurrence is approved
by our board of directors, the board may, at its option, accelerate the vesting
of the time-based RSUs and repurchase them for a cash value as defined in
the
equity plan. Market-based RSUs will only accelerate in a
change-in-control situation if the defined Price Targets are achieved as
discussed in footnote 3 to the “Outstanding Equity Awards at Fiscal Year End”
table above.
Payments Made Upon Termination
Without Cause - In the event a NEO is terminated without cause and the
executive executes a release agreement with us, he or she is entitled to a
severance package. The severance package includes (i) a continuation
of base salary for a twelve month period following termination, (ii) payment of
a prorated portion of any incentive bonus for the year of termination, and (iii)
continuation of group health benefits. In the event a NEO terminates
for “Good Reason” as defined in the Agreement and executes a release agreement
with us, he or she is entitled to the same severance benefits as if he or she
was terminated without cause. Good Reason is defined in the
Agreement as a material diminution in the executive’s authority, duties or
responsibilities, a material diminution in the
57
executive’s
base compensation and benefits, except for reductions applicable to all
executives, a material relocation of the executive’s primary office or a
material breach of the Agreement by us.
Payments Made Upon Termination Due
to Disability - In the event an executive is terminated within six months
of becoming disabled, as defined in the Agreement, he or she will be entitled to
the benefits listed under “Payments Made upon Termination” and the severance
package listed under “Payments Made upon Termination without Cause”
above. If, however, the executive is terminated after six months of
becoming disabled, he or she becomes eligible for payments under a company-paid
long-term disability plan with a third-party carrier in which case, the
severance package is limited to the continuation of health
benefits. In addition, if an executive is terminated due to
disability, he or she receives an automatic acceleration of fifty percent of any
unvested options or RSUs in accordance with the terms of the individual equity
agreements.
Payments Made Upon Death -
Upon the death of a NEO, the executive’s beneficiaries shall receive the
proceeds from company-paid life insurance policies purchased for the benefit of
the executive. In addition, the executive’s beneficiaries shall
receive an acceleration of fifty percent of any unvested options or RSUs in
accordance with the terms of the individual equity agreements.
The
following tables reflect the estimated amount of compensation due to each of our
NEOs 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. For purposes of this disclosure, we assume the
triggering event for termination occurred on December 31,
2009. The intrinsic value of equity awards upon termination is
calculated based on the December 31, 2009 closing price of our common stock of
$1.83.
Jeffrey
Parker, Chairman and Chief Executive Officer
Benefit
and Payments Upon Separation
|
Change
in Control (Not Board Approved)
|
Change
in Control (Board Approved)
|
Without
Cause or for “Good Reason”
|
Disability
|
Death
|
|||||||||||||||
Salary
|
$ | 975,000 | 1 | $ | 975,000 | 1 | $ | 325,000 | $ | 325,000 | 3 | $ | 0 | |||||||
Short-term
Incentive Compensation
|
75,000 | 2 | 75,000 | 2 | 0 | 4 | 0 | 3,4 | 0 | |||||||||||
Long-term
Equity Compensation:
|
||||||||||||||||||||
Stock
Options
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
RSUs
(Time-Based)
|
68,625 | 0 | 0 | 34,313 | 34,313 | |||||||||||||||
RSUs
(Market-Based)
|
0 | 0 | 0 | 68,625 | 68,625 | |||||||||||||||
Benefits
& Perquisites
|
||||||||||||||||||||
Health
Benefits
|
24,419 | 24,419 | 24,419 | 24,419 | 24,419 | |||||||||||||||
Life
Insurance Proceeds
|
0 | 0 | 0 | 0 | 2,000,000 | 5 | ||||||||||||||
Accrued
Vacation Pay
|
12,500 | 12,500 | 12,500 | 12,500 | 12,500 | |||||||||||||||
Total
|
$ | 1,155,544 | $ | 1,086,919 | $ | 361,919 | $ | 464,857 | $ | 2,139,857 | ||||||||||
1
|
Under
the Agreement, Mr. Parker is entitled to three times his annual base
salary.
|
2
|
Under
the Agreement, Mr. Parker is entitled the greater of (i) an amount equal
to his bonus or annual incentive compensation in the year prior to the
change in control or (ii) the average of bonus and annual incentive
compensation for the three full fiscal years prior to the change in
control.
|
3
|
Assumes
termination occurs within first six months of executive becoming
disabled. Following a six month period, executive is not
entitled to salary continuation or short-term incentive compensation
payments.
|
4
|
Short
term incentive compensation is based on the established incentive target
for the year of termination. As no targets were established for
2009, executive is not entitled to short-term incentive payment under this
scenario.
|
5
|
Represents
proceeds payable by a third-party insurance carrier on a company-paid life
insurance policy for the benefit of the
executive.
|
58
Cynthia
Poehlman, Chief Financial Officer and Corporate Secretary
Benefit
and Payments Upon Separation
|
Change
in Control (Not Board Approved)
|
Change
in Control (Board Approved)
|
Without
Cause or for “Good Reason”
|
Disability
|
Death
|
|||||||||||||||
Salary
|
$ | 450,000 | 1 | $ | 450,000 | 1 | $ | 225,000 | $ | 225,000 | 3 | $ | 0 | |||||||
Short-term
Incentive Compensation
|
23,067 | 2 | 23,067 | 2 | 0 | 4 | 0 | 3,4 | 0 | |||||||||||
Long-term
Equity Compensation:
|
||||||||||||||||||||
Stock
Options
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
RSUs
(Time-Based)
|
20,588 | 0 | 0 | 10,294 | 10,294 | |||||||||||||||
RSUs
(Market-Based)
|
0 | 0 | 0 | 20,588 | 20,588 | |||||||||||||||
Benefits
& Perquisites
|
||||||||||||||||||||
Health
Benefits
|
24,419 | 24,419 | 24,419 | 24,419 | 24,419 | |||||||||||||||
Life
Insurance Proceeds
|
0 | 0 | 0 | 0 | 1,000,000 | 5 | ||||||||||||||
Accrued
Vacation Pay
|
4,958 | 4,958 | 4,958 | 4,958 | 4,958 | |||||||||||||||
Total
|
$ | 523,032 | $ | 502,444 | $ | 254,377 | $ | 285,259 | $ | 1,060,259 | ||||||||||
1
|
Under
the Agreement, Ms. Poehlman is entitled to two times her annual base
salary.
|
2
|
Under
the Agreement, Ms. Poehlman is entitled the greater of (i) an amount equal
to her bonus or annual incentive compensation in the year prior to the
change in control or (ii) the average of bonus and annual incentive
compensation for the three full fiscal years prior to the change in
control.
|
3
|
Assumes
termination occurs within first six months of executive becoming
disabled. Following a six month period, executive is not
entitled to salary continuation or short-term incentive compensation
payments.
|
4
|
Short
term incentive compensation is based on the established incentive target
for the year of termination. As no targets were established for
2009, executive is not entitled to short-term incentive payment under this
scenario.
|
5
|
Represents
proceeds payable by a third-party insurance carrier on a company-paid life
insurance policy for the benefit of the
executive.
|
David
Sorrells, Chief Technology Officer
Benefit
and Payments Upon Separation
|
Change
in Control (Not Board Approved)
|
Change
in Control (Board Approved)
|
Without
Cause or for “Good Reason”
|
Disability
|
Death
|
|||||||||||||||
Salary
|
$ | 826,875 | 1 | $ | 826,875 | 1 | $ | 275,625 | $ | 275,625 | 3 | $ | 0 | |||||||
Short-term
Incentive Compensation
|
51,667 | 2 | 51,667 | 2 | 5,000 | 5,000 | 3 | 0 | ||||||||||||
Long-term
Equity Compensation:
|
||||||||||||||||||||
Stock
Options
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
RSUs
(Time-Based)
|
52,620 | 0 | 0 | 26,310 | 26,310 | |||||||||||||||
RSUs
(Market-Based)
|
0 | 0 | 0 | 38,888 | 38,888 | |||||||||||||||
Benefits
& Perquisites
|
||||||||||||||||||||
Health
Benefits
|
24,419 | 24,419 | 24,419 | 24,419 | 24,419 | |||||||||||||||
Life
Insurance Proceeds
|
0 | 0 | 0 | 0 | 1,000,000 | 4 | ||||||||||||||
Accrued
Vacation Pay
|
11,536 | 11,536 | 11,536 | 11,536 | 11,536 | |||||||||||||||
Total
|
$ | 967,117 | $ | 914,497 | $ | 316,580 | $ | 381,778 | $ | 1,101,153 | ||||||||||
1
|
Under
the Agreement, Mr. Sorrells is entitled to three times his annual base
salary.
|
2
|
Under
the Agreement, Mr. Sorrells is entitled the greater of (i) an amount equal
to his bonus or annual incentive compensation in the year prior to the
change in control or (ii) the average of bonus and annual incentive
compensation for the three full fiscal years prior to the change in
control.
|
3
|
Assumes
termination occurs within first six months of executive becoming
disabled. Following a six month period, executive is not
entitled to salary continuation or short-term incentive compensation
payments.
|
4
|
Represents
proceeds payable by a third-party insurance carrier on a company-paid life
insurance policy for the benefit of the
executive.
|
59
John
Stuckey, Executive Vice President of Corporate Strategy and Business
Development
Benefit
and Payments Upon Separation
|
Change
in Control (Not Board Approved)
|
Change
in Control (Board Approved)
|
Without
Cause or for “Good Reason”
|
Disability
|
Death
|
|||||||||||||||
Salary
|
$ | 375,000 | 1 | $ | 375,000 | 1 | $ | 250,000 | $ | 250,000 | 3 | $ | 0 | |||||||
Short-term
Incentive Compensation
|
28,823 | 2 | 28,823 | 2 | 0 | 4 | 0 | 3,4 | 0 | |||||||||||
Long-term
Equity Compensation:
|
||||||||||||||||||||
Stock
Options
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
RSUs
(Time-Based)
|
20,588 | 0 | 0 | 10,294 | 10,294 | |||||||||||||||
RSUs
(Market-Based)
|
0 | 0 | 0 | 20,588 | 20,588 | |||||||||||||||
Benefits
& Perquisites
|
||||||||||||||||||||
Health
Benefits
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
Life
Insurance Proceeds
|
0 | 0 | 0 | 0 | 1,250,000 | 5 | ||||||||||||||
Accrued
Vacation Pay
|
5,787 | 5,787 | 5,787 | 5,787 | 5,787 | |||||||||||||||
Total
|
$ | 430,198 | $ | 409,610 | $ | 255,787 | $ | 286,669 | $ | 1,286,669 | ||||||||||
1
|
Under
the Agreement, Mr. Stuckey is entitled to one and one half times his
annual base salary.
|
2
|
Under
the Agreement, Mr. Stuckey is entitled the greater of (i) an amount equal
to his bonus or annual incentive compensation in the year prior to the
change in control or (ii) the average of bonus and annual incentive
compensation for the three full fiscal years prior to the change in
control.
|
3
|
Assumes
termination occurs within first six months of executive becoming
disabled. Following a six month period, executive is not
entitled to salary continuation or short-term incentive compensation
payments.
|
4
|
Short
term incentive compensation is based on the established incentive target
for the year of termination. As no targets were established for
2009, executive is not entitled to short-term incentive payment under this
scenario.
|
5
|
Represents
proceeds payable by a third-party insurance carrier on a company-paid life
insurance policy for the benefit of the
executive.
|
Compensation of Outside
Directors
The
Committee is responsible for establishing outside directors’
compensation. Our non-employee directors’ compensation plan currently
provides for an annual cash director fee of $25,000 for board service and
additional annual cash fees for committee participation. Committee
fees are structured in such a way as to provide distinction between compensation
for committee members and chairpersons and between the responsibilities of the
various committees. The committee fees are 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
|
The
annual board and committee fees earned are paid in quarterly installments at the
end of each fiscal quarter. In 2009, in order to help us preserve our
cash resources, the Board elected to forego their cash compensation for equity
in the form of nonqualified stock options. On May 15, 2009, we
granted an aggregate of 157,200 options to purchase shares of our common stock
at an exercise price of $2.99 per share to our non-employee
directors. The number of options granted to each director varied
based on their individual committee participation. Options to
purchase 39,300 shares vested upon grant and the remaining options vested in
three equal increments at the end of each fiscal quarter beginning June 30, 2009
through December 31, 2009.
The
directors’ compensation plan also provides for annual equity awards for our
directors. The annual equity award consists of a grant of 5,000 stock
options and 2,500 RSUs. On September 15, 2009, each of our
non-employee directors was granted options to purchase 5,000 shares of our
common stock at an exercise price of
60
$3.93 per
share and 2,500 RSUs. Both the options and RSUs vest one year after
the grant date. Upon grant, the directors may elect to defer
distribution of their vested RSUs until retirement from the board; otherwise,
the RSUs will be distributed upon vesting. Each option vests one year
from the grant date and expires seven years from the grant date.
The
directors’ compensation program also includes the grant of 40,000 share options
upon initial election to the Board for new board members. We did not
elect any new board members in 2009.
The
director equity awards are granted on the 15th day
of the first month following the directors’ election at the annual shareholders
meeting. In the event a director resigns or is removed from the
board for cause prior to the vesting date, any unvested equity awards will be
forfeited.
All board
members are reimbursed for reasonable expenses incurred in attending
meetings. In addition, we encourage board participation in relevant
educational programs and we reimburse our board members for all or a portion of
costs, including travel, for these purposes.
The
following table summarizes the compensation of our non-employee directors for
the year ended December 31, 2009. Directors who are named
executive officers do not receive separate compensation for their service as a
director.
Name
|
Fees
Earned or Paid in Cash
($) |
Stock
Awards1
($) |
Option
Awards2
($)
|
Total
($)
|
||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
||||||||||||
William
Hightower
|
$ | 0 | $ | 9,825 | $ | 51,979 | $ | 61,804 | ||||||||
John
Metcalf
|
0 | 9,825 | 72,756 | 82,581 | ||||||||||||
Todd
Parker 3
|
0 | 9,825 | 48,654 | 58,479 | ||||||||||||
William
Sammons
|
0 | 9,825 | 65,692 | 75,517 | ||||||||||||
Robert
Sterne
|
0 | 9,825 | 55,303 | 65,128 | ||||||||||||
Nam
Suh
|
0 | 9,825 | 62,783 | 72,608 | ||||||||||||
Papken
der Torossian
|
0 | 9,825 | 65,692 | 75,517 |
1
|
The
amount reported in column (c) above represents the full grant date fair
value related to the September 15, 2009 RSU awards as recognized under ASC
718, 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 awards.
|
2
|
The
amount reported in column (d) above represents the full grant date fair
value of director stock option awards for both the May 15 and September
15, 2009 grants as recognized under ASC 718, 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 awards.
|
3
|
Todd
Parker voluntarily resigned his Board position on January 5,
2010.
|
61
As of
December 31, 2009, the number of options and restricted stock units outstanding
for each of our directors was as follows:
Number
of securities underlying outstanding options
|
Number
of securities underlying RSU grants
|
||||||||||||
Name
|
(#)
Exercisable
|
(#)
Unexercisable 1
|
(#)
Unvested
1
|
||||||||||
William
Hightower
|
213,400 | 5,000 | 2,500 | ||||||||||
John
Metcalf
|
113,400 | 5,000 | 2,500 | ||||||||||
Todd
Parker 2
|
66,800 | 5,000 | 2,500 | ||||||||||
William
Sammons
|
140,000 | 5,000 | 2,500 | ||||||||||
Robert
Sterne
|
212,500 | 5,000 | 2,500 | ||||||||||
Nam
Suh
|
113,070 | 5,000 | 2,500 | ||||||||||
Papken
der Torossian
|
185,000 | 5,000 | 2,500 |
1
|
The
unexercisable options and RSUs for each director will vest in September
2010.
|
2
|
Todd
Parker voluntarily resigned his Board position on January 5, 2010 and as
such forfeited his unexercisable options and uvested RSUs as of January 5,
2010.
|
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
The
following table sets forth certain information as of March 5, 2010 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 directors and director nominees,
(iii) each of our NEOs, and (iv) all of our directors, director nominees and
NEOs as a group (based upon information furnished by those
persons).
Name
of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership
|
Percent
of Class1
|
||||||
Jeffrey
Parker 17
|
2,891,032 | 2 | 6.96 | % | ||||
Cynthia
Poehlman 17
|
265,815 | 3 | 0.64 | % | ||||
David
Sorrells 17
|
423,133 | 4 | 1.02 | % | ||||
John
Stuckey 17
|
208,262 | 5 | 0.50 | % | ||||
William
Hightower 17
|
250,900 | 6 | 0.61 | % | ||||
John
Metcalf 17
|
115,900 | 7 | 0.28 | % | ||||
William
Sammons 17
|
159,750 | 8 | 0.39 | % | ||||
Robert
Sterne 17
|
118,501 | 9 | 0.29 | % | ||||
Nam
Suh 17
|
115,570 | 10 | 0.28 | % | ||||
Papken
der Torossian 17
|
268,581 | 11 | 0.65 | % | ||||
Gem
Investment Advisors, LLC
|
2,275,809 | 12 | 5.52 | % | ||||
The
Pinnacle Fund, LP
|
2,884,706 | 13 | 7.00 | % | ||||
Southwell
Partners, LP
|
2,446,433 | 14 | 5.91 | % | ||||
Wellington
Management Company, LLP
|
4,501,670 | 15 | 10.93 | % | ||||
All
directors, director nominees and executive officers as a group (10
persons)
|
4,817,444 | 16 | 11.14 | % | ||||
*
|
Less
than one percent
|
62
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
329,741 shares of common stock issuable upon currently exercisable
options, 196,193 shares held by Mr. Parker directly, 2,172,584 shares held
by Jeffrey Parker and Deborah Parker Joint Tenants in Common, 48,400
shares held by J-Parker Family Limited Partnership, 75,000 shares held in
trust for the dependent children of Mr. Parker for which Mr. Parker serves
as the trustee, and 69,114 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 106,250 unvested RSUs and 18,750 shares
of common stock issuable upon options that may become exercisable in the
future.
|
3
|
Includes
250,391 shares of common stock issuable upon currently exercisable options
and excludes 31,875 unvested RSUs and 4,377 shares of common stock
issuable upon options that may become exercisable in the
future.
|
4
|
Includes
396,886 shares of common stock issuable upon currently exercisable options
and excludes 66,463 unvested
RSUs.
|
5
|
Includes
197,025 shares of common stock issuable upon currently exercisable options
and excludes 31,875 unvested RSUs and 4,377 shares of common stock
issuable upon options that may become exercisable in the
future.
|
6
|
Includes
213,400 shares of common stock issuable upon currently exercisable options
and excludes 2,500 unvested RSUs and 5,000 shares of common stock issuable
upon options that may become exercisable in the
future.
|
7
|
Includes
113,400 shares of common stock issuable upon currently exercisable options
and excludes 2,500 unvested RSUs and 5,000 shares of common stock issuable
upon options that may become exercisable in the
future.
|
8
|
Includes
140,000 shares of common stock issuable upon currently exercisable options
and excludes 2,500 unvested RSUs and 5,000 shares of common stock issuable
upon options that may become exercisable in the
future.
|
9
|
Includes
112,500 shares of common stock issuable upon currently exercisable options
and excludes 2,500 unvested RSUs and 5,000 shares of common stock issuable
upon options that may become exercisable in the
future.
|
10
|
Includes
113,070 shares of common stock issuable upon currently exercisable options
and excludes 2,500 unvested RSUs and 5,000 shares of common stock issuable
upon options that may become exercisable in the
future.
|
11
|
Includes
185,000 shares of common stock issuable upon currently exercisable options
and excludes 5,000 unvested RSUs and 5,000 shares of common stock issuable
upon options that may become exercisable in the
future.
|
12
|
Includes
2,141,810 shares held by Gem Partners LP (“GEM”), 67,999 shares held by
Flat Rock Partners LP (“FlatRock”), and 66,000 shares held by Mr. Daniel
Lewis personally as reported on a Form 13G amendment filed February 16,
2010. Gem Investment Advisors, LLC (“GEM Advisors”) is the
general partner of GEM and Flatrock, as a result of which Gem Advisors is
deemed to be beneficial owner of such shares. Daniel M. Lewis
(“Lewis”), as the controlling person of Gem Advisors is deemed to
beneficially own the shares held by them. The business address
for each of Gem Advisors, GEM, FlatRock and Mr. Lewis is 100 State Street,
Suite 2B, Teaneck, New Jersey
07666.
|
13
|
As
reported on a Form 13G amendment filed February 12, 2010. The
business address is 4965 Preston Park Blvd., Suite 240, Plano, Texas
75093. Pinnacle Advisers LP (“Advisors”) is the general partner
of Pinnacle Fund, LP (“Pinnacle”). Pinnacle Fund Management LLC
(“Management”) is the general partner of Advisors. Mr. Barry
Kitt is the sole member of Management and may be deemed to be the
beneficial owner of the shares beneficially owned by
Pinnacle.
|
14
|
As
reported on a Form 13G amendment filed February 12, 2010. The
business address is 1901 North Akard, Dallas, Texas 75201. Southwell
Management, L.P. (“Southwell Management”) is the general partner of
Southwell Partners, L.P. (“Southwell Partners”) and may be deemed to
beneficially own shares held by Southwell Partners. Southwell
Holdings, LLC (“Southwell Holdings”) as general partner of Southwell
Management and Mr. Wilson Jaeggli as managing director of Southwell
Holdings may each be deemed to beneficially own shares owned by Southwell
Management.
|
15
|
As
reported on a Form 13G amendment filed March 10, 2010. The
business address of Wellington Management Company, LLP is 75 State Street,
Boston, Massachusetts 02109. Wellington Management, in its
capacity as investment adviser, may be deemed to have beneficial ownership
of shares that are held of record by investment advisory clients of
Wellington Management.
|
16
|
Includes
2,051,413 shares of common stock issuable upon currently exercisable
options held by directors and officers and excludes 251,463 unvested RSUs
and 57,504 shares of common stock issuable upon options that may vest in
the future held by directors and officers (see notes 2, 3, 4, 5, 6, 7, 8,
9, 10, and 11 above).
|
17
|
The
person’s address is 7915 Baymeadows Way, Suite 400, Jacksonville, Florida
32256.
|
63
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, 2009.
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
|
3,778,982 | $ | 14.20 | 596,341 | ||||||||
Equity
compensation plans not approved
by security holders
|
50,000 | $ | 3.27 | 0 | ||||||||
Total
|
3,828,982 | 596,341 | ||||||||||
The
equity compensation plan reported in the above table that was not approved by
security holders includes options to purchase 50,000 shares granted to an
outside consultant for an exercise price of $3.27 per share. The
options vest in equal monthly increments over the twelve month term of the
agreement and any vested options are exercisable for five years from the grant
date.
Item
13. Certain Relationships and Related Transactions and Director
Independence.
Transactions with Related
Persons
On
November 16, 2009, the Parker Trust, a trust for the benefit of the dependents
of Jeffrey Parker, our chairman and chief executive officer, purchased 50,000
shares of our common stock in an offering underwritten by Piper
Jaffray. In addition, Stacie Wilf, sister to Jeffrey Parker,
purchased 155,000 shares in the same offering. The shares were
purchased at the offering price of $2.00 per share.
On March
3, 2009, we sold 354,054 shares of our common stock at a price per share of
$1.85 in a Management Offering. The Parker Trust purchased 270,272
shares of our common stock and Robert Sterne and Papken der Torossian, each a
director of ours, purchased 2,701 and 81,081 shares of our common stock,
respectively.
On March
5, 2008, we sold 129,200 shares of our common stock in a private placement
transaction to our chief executive officer, Jeffrey Parker at a price of $7.74
per share.
We paid
approximately $909,000, $1,160,000, and $1,129,000 in 2009, 2008, and 2007,
respectively, for patent-related legal services to a law firm, of which Robert
Sterne, one of our directors since September 2006, is a partner.
Review, Approval or
Ratification of Transactions with Related Persons
Our audit
committee, pursuant to its written charter, is responsible for reviewing and
approving related-party transactions to the extent we enter into such
transactions. In certain instances, the full board may review and
approve a transaction. The audit committee will consider all relevant
factors when determining whether to approve a related party transaction,
including whether the transaction is on terms no less favorable than terms
generally available to an unaffiliated third party under the same or similar
circumstances and the extent of the
64
related
party’s interest in the transaction. We require each of our directors
and executive officers to complete a questionnaire that elicits information
about related party transactions. These procedures are intended to
determine whether any such related party transaction impairs the independence of
a director or presents a conflict of interest on the part of a director, officer
or employee.
Director
Independence
Our
common stock is listed on Nasdaq, 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. William Hightower, John Metcalf, William Sammons, Robert Sterne, Nam
Suh, and Papken der Torossian are independent directors.
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, 2008 and December 31, 2009, 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 $446,300 and $640,500, respectively. The
fees for 2009 included services provided in connection with the underwritten
offering of securities in March 2009 and November 2009.
Audit Related
Fees. For the years ended December 31, 2008 and December 31,
2009, 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, 2008 and December 31, 2009, 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 the years ended December 31, 2008 and 2009, there
were no fees billed for other professional services by our principal
accountants.
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.
65
PART
IV
Item
15. Exhibits and Financial Statement Schedules.
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)
|
|
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)
|
66
Exhibit
Number
|
Description
|
||
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)
|
||
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 (incorporated by reference from Exhibit
4.11 of Annual Report on Form 10-K for the year ended December 31,
2006)
|
||
4.12
|
2008
Equity Incentive Plan (Non-Named Executives), as amended (incorporated by
reference from Exhibit 4.1 of Form S-8 dated October 24,
2008)
|
||
4.13
|
Form
of Warrant Certificate (incorporated by reference from Exhibit 4.1 of Form
8-K dated February 26, 2009)
|
||
4.14
|
Form
of Warrant Agreement between Registrant and American Stock Transfer and
Trust Company, LLC (incorporated by reference from Exhibit 4.2 of Form
8-K/A dated February 26, 2009)
|
||
10.1
|
1993
Stock Plan, as amended (incorporated by reference from the Company's Proxy
Statement dated October 1, 1996)
|
||
10.2
|
2000
Performance Equity Plan (incorporated by reference from Exhibit 10.11 of
Registration Statement No. 333-43452)
|
||
10.3
|
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)
|
||
10.4
|
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)
|
67
Exhibit
Number
|
Description
|
||
10.5 |
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)
|
||
10.6
|
Form
of Stock Purchase Agreement with each of the investors in the February
2007 private placement who are the Selling Shareholders (incorporated by
reference from Exhibit 10.1 of Form 8-K dated February 23,
2007)
|
||
10.7
|
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)
|
||
10.8
|
Engineering
Services Agreement, dated May 2, 2007, between Registrant and ITT
Corporation (incorporated by reference from Exhibit 10.1 on Form 10-Q for
the period ended June 30, 2007)
|
||
10.9
|
License
Agreement, dated May 2, 2007, between Registrant and ITT Corporation
(incorporated by reference from Exhibit 10.2 on Form 10-Q for the period
ended June 30, 2007)
|
||
10.10
|
License
and Engineering Service Agreement dated December 21, 2007 between
Registrant and a mobile handset chip supplier (incorporated by reference
from Exhibit 10.14 of Annual Report on Form 10-K for the period ended
December 31, 2007)
|
||
10.11
|
Form
of Stock Purchase Agreement with each of the investors in the March 2008
private placement who are the Selling Shareholders (incorporated by
reference from Exhibit 10.1 of Form 8-K dated March 5,
2008)
|
||
10.12
|
List
of Investors for Subscription Agreement dated March 5, 2008 (incorporated
by reference from Exhibit 10.2 of Form 8-K dated March 5,
2008)
|
||
10.13
|
Employment
Agreement between Registrant and Jeffrey Parker dated June 4, 2008
(incorporated by reference from Exhibit 10.1 on Form 8-K dated June 4,
2008)
|
||
10.14
|
Employment
Agreement between Registrant and Cynthia Poehlman dated June 4, 2008
(incorporated by reference from Exhibit 10.2 on Form 8-K dated June 4,
2008)
|
||
10.15
|
Employment
Agreement between Registrant and David Sorrells dated June 4, 2008
(incorporated by reference from Exhibit 10.3 on Form 8-K dated June 4,
2008)
|
||
10.16
|
Employment
Agreement between Registrant and John Stuckey dated June 4, 2008
(incorporated by reference from Exhibit 10.4 on Form 8-K dated June 4,
2008)
|
68
Exhibit
Number
|
Description
|
||
10.17 |
Employment
Agreement between Registrant and Gregory Rawlins dated June 4, 2008
(incorporated by reference from Exhibit 10.5 on Form 8-K dated June 4,
2008)
|
||
10.18
|
Form
of Restricted Stock Unit Agreement between Registrant and Executives
(incorporated by reference from Exhibit 10.6 on Form 8-K dated June 4,
2008)
|
||
10.19
|
Form
of Performance Accelerated Restricted Stock Unit Agreement between
Registrant and Executives (incorporated by reference from Exhibit 10.7 on
Form 8-K dated June 4, 2008)
|
||
10.20
|
Form
of Subscription Agreement between Registrant and Investors in Management
Offering dated February 26, 2009 (incorporated by reference from Exhibit
10.1 on Form 8-K dated February 26, 2009)
|
||
10.21
|
Product
and Marketing Development Agreement dated December 4, 2008 between
Registrant and LG Innotek Co., Ltd. (incorporated by reference from
Exhibit 10.23 on Form 10-K/A dated December 31, 2008)
|
||
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*
|
||
* Filed
herewith
|
Financial Statement
Schedule
Valuation
and Qualifying Accounts Schedule (include as Schedule II hereto).
Schedules
other than those listed have been omitted since they are either not required,
not applicable or the information is otherwise included.
69
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
15, 2010
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
|
March
15, 2010
|
|
Jeffrey
L. Parker
|
Chairman
of the Board (Principal
|
|||
Executive
Officer)
|
||||
By:
|
/s/ Cynthia L. Poehlman
|
Chief
Financial Officer (Principal
|
March
15, 2010
|
|
Cynthia
L. Poehlman
|
Accounting
Officer) and Corporate
|
|||
Secretary
|
||||
By:
|
/s/ David F. Sorrells
|
Chief
Technical Officer
|
March
15, 2010
|
|
David
F. Sorrells
|
and
Director
|
|||
By:
|
/s/ William A. Hightower
|
Director
|
March
15, 2010
|
|
William
A. Hightower
|
||||
By:
|
/s/ John Metcalf
|
Director
|
March
15, 2010
|
|
John
Metcalf
|
||||
By:
|
/s/ William L. Sammons
|
Director
|
March
15, 2010
|
|
William
L. Sammons
|
||||
By:
|
/s/ Robert G. Sterne
|
Director
|
March
15, 2010
|
|
Robert
G. Sterne
|
||||
By:
|
Director
|
March
15, 2010
|
||
Nam P. Suh | ||||
By:
|
/s/ Papken S. der Torossian
|
Director
|
March
15, 2010
|
|
Papken
S. der Torossian
|
70
SCHEDULE
II
PARKERVISION,
INC. AND SUBSIDIARY
VALUATION
AND QUALIFYING ACCOUNTS
Valuation
Allowance for Income Taxes
|
Balance
at Beginning of Period
|
Provision
|
Write-Offs
|
Balance
at End of Period
|
||||||||||||
Year
ended December 31, 2007
|
$ | 67,042,100 | $ | 4,434,374 | $ | 0 | $ | 71,476,474 | ||||||||
Year
ended December 31, 2008
|
71,476,474 | 7,073,205 | 0 | 78,549,679 | ||||||||||||
Year
ended December 31, 2009
|
78,549,679 | 8,216,530 | (1,793,511 | ) | 84,972,698 |
71
EXHIBIT
INDEX
23.1
|
Consent
of PricewaterhouseCoopers LLP
|
|
31.1
|
Rule
13a-14 and 15d-14 Certification of Jeffrey L. Parker
|
|
31.2
|
Rule
13a-14 and 15d-14 Certification of Cynthia L. Poehlman
|
|
32.1
|
Section
1350 Certification of Jeffrey L. Parker and Cynthia L.
Poehlman
|
|
72