| PARKERVISION INC Item 1A Risk Factors 10 Item 1A Risk Factors In addition to other information in this Annual Report on Form 10-K, the following risk factors should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition |
| As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements |
| We have had a history of losses which may ultimately compromise our ability to implement our business plan and continue in operations |
| We have had losses in each year since our inception in 1989, and continue to have an accumulated deficit which, at December 31, 2005, was dlra133dtta6 million |
| To date, our technologies and products have not produced revenues sufficient to cover operating, research and development and overhead costs |
| We also will continue to make expenditures on marketing, research and development, pursuit of patent protection for our intellectual property and operational costs for fulfillment of any contracts that we achieve for the sale of our products or technologies |
| We expect that our revenues in the near term will not bring the company to profitability |
| If we are not able to generate sufficient revenues or we have insufficient capital resources, we will not be able to implement our business plan and investors will suffer a loss in their investment |
| 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, manufacturing, marketing and general operations |
| Our current capital resources, including cash and short-term investments of dlra10dtta6 million and net proceeds from our February 2006 private placement transaction of dlra16dtta3 million, are expected to sustain operations through the first half of 2007, if not longer |
| Thereafter, unless we increase revenues to a level that they cover operating expenses or we reduce costs, we will require additional capital to fund these expenses |
| Financing, if any, may be in the form of loans or additional sales of equity securities |
| A loan or the sale of preferred stock may result in the imposition of operational limitations and other covenants and payment obligations, any of which may be burdensome to the Company |
| The sale of equity securities will result in dilution to the current stockholders &apos ownership |
| The long-term continuation of our business plan is dependent upon the generation of sufficient revenues from 10 the sale of our products, additional funding or reducing expenses or a combination of the foregoing |
| The failure to generate sufficient revenues, raise capital or reduce expenses could have a material adverse effect on our ability to achieve our long-term business objectives |
| Our industry is subject to rapid technological changes which if we are unable to match or surpass, will result in a loss of competitive advantage and market opportunity |
| Because of the rapid technological development that regularly occurs in the microelectronics industry, we must continually devote substantial resources to developing and improving our technology and introducing new product offerings |
| For example, in fiscal year 2004 and 2005, we spent approximately dlra11dtta4 and dlra10dtta3 million, respectively, on research and development, and we expect to continue to spend a significant amount in this area in the future |
| These efforts and expenditures are necessary to establish and increase market share and, ultimately, to grow revenues |
| If another company offers better products or our product development lags, a competitive position or market window opportunity may be lost, and therefore our revenues or revenue potential may be adversely affected |
| If our products are not commercially accepted, our developmental investment will be lost and our future business continuation will be impaired |
| There can be no assurance that our research and development will produce commercially viable technologies and products |
| If existing or new technologies and products are not commercially accepted, the funds expended will not be recoverable, and our competitive and financial position will be adversely affected |
| In addition, perception of our business prospects will be impaired with an adverse impact on our ability to do business and to attract capital and employees |
| If our patents and intellectual property do not provide us with the anticipated market protections and competitive position, our business and prospects will be impaired |
| We rely on our intellectual property, including patents and patent applications, to provide competitive advantage and protect us from theft of our intellectual property |
| We believe that many of our patents are for entirely new technologies |
| If the patents are not issued or issued patents are later shown not to be as broad as currently believed, or are otherwise challenged such that some or all of the protection is lost, we will suffer adverse effects from the loss of competitive advantage and our ability to offer unique products and technologies |
| In addition, there would be an adverse impact on the Companyapstas financial condition and business prospects |
| If we cannot demonstrate that our technologies and products can compete in the marketplace and are better than current competitive solutions, then we will not be able to generate the sales we need to continue our business and our prospects will be impaired |
| We expect to face competition from chip suppliers such as RF MicroDevices, Anadigics, Skyworks, Texas Instruments and Philips, among others |
| Our technology may also face competition from other emerging approaches or new technological advances which are under development and have not yet emerged |
| If our technologies and products are not established in the market place as improvements over current, traditional chip solutions in wireless communications, our business prospects and financial condition will be adversely affected |
| 11 We anticipate selling chips and certain other components to OEMs for which there may only be a limited number of qualified foundries; therefore if we cannot secure a foundry relationship for the time and quantity needed, we will not be able to supply our customers and generate revenues |
| We anticipate that our future revenues will come from products that we manufacture using the facilities of third party foundries |
| We believe there are several such producers available for the production of our products |
| If, however, the foundry with which we are working is not able to devote the manufacturing space and time or is not able to carry our production for us, we will have to locate another qualified foundry |
| Locating and changing foundries may take unexpected amounts of time and likely will cause delays and additional expenses |
| An unsuccessful business relationship with a foundry or a change in foundries also likely will result in our being unable to temporarily supply customers which might jeopardize the relationship, result in penalties and cause a loss of revenues |
| We believe that we will rely, in large part, on key business and sales relationships for the successful commercialization of our products, which if not developed or maintained, will have an adverse impact on achieving market awareness and acceptance and 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 components into their products and/or market products based on our technologies |
| Our successful commercialization of our products will depend in part on our ability to meet obligations under contracts with respect to the products and related development requirements |
| The failure of the business relationships will limit the commercialization of our products which will have an adverse impact on our business development and our ability to generate revenues and recover development expenses |
| We have limited experience interfacing with third party foundry partners for high volume production of chips to be sold to the OEM market which may result in production inadequacies, delays and rejection |
| We have limited experience interfacing with third party foundry partners for the high volume production of chips for the OEM market |
| If there are manufacturing errors resulting from our inexperience or by the third party manufacturers, there may be resulting delays while they are corrected |
| In addition, using others to manufacture on our behalf exposes us to timing, quality and delivery risks |
| The failure to produce adequate numbers of products, at the quality levels expected by our customers, may result in the loss of acceptance of our products, or result in excessive returns and possible warranty claims |
| These may result in loss of commercialization opportunities as well as adversely affect revenues and cause additional, unanticipated expenses |
| We are highly dependent on Mr |
| Jeffrey Parker as our chief executive officer whose services, if lost, would have an adverse impact on the leadership of the Company and industry and investor perception about our future |
| Because of Mr |
| Parkerapstas position in the company and the respect he has garnered in the industry in which we operate and from the investment community, the loss of the services of Mr |
| Parker might be seen as an impediment to the execution of our business plan |
| Parker were no longer available to the company, investors may experience an adverse impact on their investment |
| We do not currently have an employment agreement with Mr |
| We maintain key-employee life insurance for our benefit on Mr |
| 12 If we are unable to attract highly skilled employees we will not be able to execute our research and development plans or provide the highly technical services that our products require |
| Our business is very specialized, and therefore it is dependent on having skilled and specialized employees to conduct our research and development activities, operations, marketing and support |
| The inability to obtain these kinds of persons will have an adverse impact on our business development because persons will not obtain the information or services expected in the markets and may prevent us from successfully implementing our current business plans |
| The outstanding options and warrants may affect the market price and liquidity of the common stock |
| At December 31, 2005, we had 20cmam958cmam765 shares of common stock outstanding and had 6cmam340cmam674 exercisable options and warrants for the purchase of shares of common stock, assuming no terminations or forfeitures of such options and warrants |
| In addition, on February 3, 2006, the Company issued warrants for the purchase of 593cmam335 shares of common stock in connection with the sale of equity securities |
| On December 31, 2006 and 2007, there will be 7cmam269cmam791 and 7cmam454cmam539 respectively, currently outstanding and exercisable options and warrants (assuming no terminations or forfeitures) |
| All of the underlying common stock of these securities is or will be registered for sale to the holder or for public resale by the holder |
| The amount of common stock available for the sales may have an adverse impact on our ability to raise capital and may affect the price and liquidity of the common stock in the public market |
| In addition, the issuance of these shares of common stock will have a dilutive effect on current stockholders &apos ownership |
| Provisions in the certificate of the incorporation and by-laws could have effects that conflict with the interest of stockholders |
| Some provisions in our certificate of incorporation and by-laws could make it more difficult for a third party to acquire control |
| For example, the board of directors has the ability to issue preferred stock without stockholder approval, and there are pre-notification provisions for director nominations and submissions of proposals from stockholders to a vote by all the stockholders under the by-laws |
| Florida law also has anti-takeover provisions in its corporate statute |
| We have a shareholder protection rights plan that may delay or discourage someone from making an offer to purchase the company without prior consultation with the board of directors and management which may conflict with the interests of some of the stockholders |
| On November 17, 2005, the board of directors adopted a shareholder protection rights plan which called for the issuance, on November 29, 2005, as a dividend, rights to acquire fractional shares of preferred stock |
| The rights are attached to the shares of common stock and transfer with them |
| Additionally, the rights have what are known as "e flip-in "e and "e flip-over "e provisions that could make any acquisition of the company more costly |
| The principal objective of the plan is to cause someone interested in acquiring the company to negotiate with the board of directors rather than launch an unsolicited bid |
| This plan may limit, prevent, or discourage a takeover offer that some stockholders may find more advantageous than a negotiated transaction |
| A negotiated transaction may not be in the best interests of the stockholders |