Add
PRKR to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| PRKR > SEC Filings for PRKR > Form 10-Q on 10-Nov-2008 | All Recent SEC Filings |
10-Nov-2008
Quarterly Report
Forward-Looking Statements
When used in this Form 10-Q and in future filings by the Company with the
Securities and Exchange Commission, the words or phrases "will likely result",
"management expects" or "Company expects", "will continue", "is anticipated",
"estimated" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Readers are cautioned not to place undue reliance on such
forward-looking statements, each of which speaks only as of the date made. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected, including the timely development and acceptance of new
products, sources of supply and concentration of customers. We have no
obligation to publicly release the results of any revisions that may be made to
any forward-looking statements to reflect anticipated events or circumstances
occurring after the date of such statements.
Results of Operations for Each of the Three and Nine Month Periods Ended September 30, 2008 and 2007
General
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 had no revenue for the three and nine month periods
ended September 30, 2008 and have used the proceeds from the sale of our equity
securities to fund our operations.
Critical Accounting Policies
There have been no other changes in critical accounting policies from those
stated in the Annual Report on Form 10-K for the year ended December 31, 2007.
Revenue and Gross Margin
We had no revenue or gross margin for the three or nine month periods ended
September 30, 2008. For the three and nine month periods ended September 30,
2007, we had nominal revenues resulting from an engineering services agreement
with ITT Corporation (ITT). We continue to work with ITT and a mobile handset
chip customer to complete integrated circuit (IC) designs for their specific
applications. We will be able to re-purpose all or a significant portion of
these IC designs for future customers. We also have the capability of
customizing the designs to a specific customer if required.
We believe revenue from initial product royalties will begin in the first half of 2009 as our commercial customer commences delivery of chipsets which incorporate our technology. Revenues from product royalties, however, are dependent on our customers' ability to bring products containing our technology to market. Their ability to market such products is contingent on uncertainties relating to product design, the market for cellular devices and general economic conditions. We can provide no assurance that our customers will be able to market such products within the anticipated time frame.
Research and Development Expenses
Our research and development expenses increased approximately $1,432,000 or
51.4% during the three month period ended September 30, 2008 when compared to
the same period in 2007. This increase was due primarily to an increase in
personnel-related costs of approximately $240,000, an increase in outside
consulting services of approximately $360,000, an increase in foundry production
costs of approximately $270,000, an increase in employee stock compensation
expense of approximately $320,000, an increase in software development costs of
approximately $90,000 and an increase in amortization expense related to
licenses of approximately $60,000.
Our research and development costs increased approximately $2,858,000, or 35.4% during the nine month period ended September 30, 2008 when compared to the same period in 2007. This increase was primarily due to an increase of approximately $1,300,000 in outside consulting expenses, an increase in personnel-related expenses of approximately $770,000, an increase in employee stock compensation expense of approximately $420,000, and an increase in prototype fabrication costs of approximately $90,000.
The increase in personnel costs was primarily the result of engineering personnel additions during 2007 and 2008, including the addition of a Vice President of Engineering, as well as compensation increases for engineering staff effective January 2008 and signing bonuses paid to the chief technical officer and chief staff scientist in connection with new employment agreements executed in June 2008. The increase in stock compensation expense was primarily a result of RSUs and other restricted stock awards granted to engineering executives and other employees in 2008.
Outside consulting services are utilized to supplement our internal engineering resources, and the related fees are generally project-based and will vary based on the timing of development projects. The increase in these fees was primarily related to programs to develop prototype ICs for the digital engine that controls our RF transmit ICs and to develop our complimentary RF receiver ICs.
Prototype fabrication costs generally vary period to period based on the timing of foundry runs, the materials specified and the number of variants requested on each run.
Marketing and Selling Expenses
Marketing and selling expenses increased approximately $66,000, or 10.5% during
the three month period ended September 30, 2008 when compared to the same period
in 2007. This increase was primarily due to an increase in outside consulting
and other professional fees of approximately $60,000.
Marketing and selling expenses increased by approximately $53,000, or 2.7 % during the nine month period ended September 30, 2008 when compared to the same period in 2007. This increase was due primarily to an increase in outside consulting and other professional fees of approximately $84,000, offset by decreases in various other expenses.
General and Administrative Expenses
General and administrative expenses increased approximately $295,000 or 19.9 %
during the three month period ended September 30, 2008 when compared to the same
period in 2007 and approximately $547,000 or 13.1% during the nine month period
ended September 30, 2008 when compared to the same period in 2007. The increases
in general and administrative expenses were primarily the result of increases in
employee stock compensation expense resulting from long term equity incentive
awards to executive officers in 2007 and 2008.
Interest and Other Income
Interest and other income consist of interest earned on our investments and
other miscellaneous income. Interest and other income decreased by approximately
$145,000 or 65.0% during the three months ended September 30, 2008 when compared
to the same period in 2007. For the nine month period ended September 30, 2008,
interest and other income decreased by approximately $315,000, or 47.5% when
compared to the same period in 2007. These decreases are primarily due to lower
interest rates and lower average cash balances during the three and nine month
periods ended September 30, 2008.
Loss and Loss per Share
Our net loss increased approximately $1,957,000 or 42.0% during the three month
period ended September 30, 2008 when compared to the same period in 2007,
primarily due to an increase in operating expenses of approximately
$1,790,000. This increase in operating expenses was primarily due to increases
in research and development expenses and an aggregate increase in stock based
compensation expense of approximately $780,000.
Our net loss increased approximately $3,806,000 or 28.1% during the nine month period ended September 30, 2008 when compared to the same period in 2007, primarily due to an increase of approximately $3,460,000 in operating expenses. This increase in operating expenses was primarily due to increases in research and development expenses and an aggregate increase in stock based compensation expense of approximately $1,260,000.
Liquidity and Capital Resources
As of September 30, 2008, we had working capital of approximately $8.3 million
which represented a decrease of approximately $4.3 million from working capital
at December 31, 2007. The decrease was due to the use of approximately $12.4
million in cash for operating activities and $1.3 million in purchases of design
licenses and investments in intellectual property protection. These decreases
were partially offset by proceeds from the sale of equity securities in March
2008 of approximately $8.9 million and proceeds from the exercise of warrants
and employee stock options of approximately $1.4 million.
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 expand our market opportunities through additional product offerings with our current customers, and/or the addition of new customers such that we are able to secure a reasonable share of the market. The expected continued losses and use of cash will continue to be funded from available working capital.
We believe that our current capital resources will be sufficient to support our liquidity requirements into the first quarter of 2009. The long-term continuation of our business plan is dependent upon generation of sufficient revenues from our technologies to offset expenses. We expect revenue growth from initial product royalties to begin in 2009. The rate of that revenue growth, along with the financial terms of anticipated future customer relationships and/or our ability to reduce certain operating costs will impact our need to obtain additional funding through public or private financing in 2009. Management believes certain operating costs could be reduced if working capital decreases significantly and sufficient additional funding is not available. In addition, we currently have no outstanding long-term debt obligations. Failure to generate sufficient revenues, raise additional capital and/or reduce certain discretionary spending could have a material adverse effect on our ability to achieve our intended long-term business objectives.
Off-Balance Sheet Transactions, Arrangements and Other Relationships As of September 30, 2008, we had outstanding warrants to purchase 1,778,819 shares of common stock that were issued in connection with the sale of equity securities in various private placement transactions in 2000, 2001, 2005 and 2006. These warrants have exercise prices ranging from $8.50 to $56.66 per share, with a weighted average exercise price of $31.73 and a weighted average remaining contractual life of approximately 2.7 years. The estimated fair value of these warrants of $17,335,777 is included in shareholders' equity in our consolidated balance sheets.
|
|