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Parkervision Inc – ‘10KSB’ for 12/31/96

As of: Monday, 3/31/97 · For: 12/31/96 · Accession #: 1005477-97-947 · File #: 0-22904

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 3/31/97  Parkervision Inc                  10KSB      12/31/96    4:122K                                   CT EDGAR123/FA

Annual Report — Small Business — Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       56    229K 
 2: EX-10.19    Third Amendment to Lease Agreement                     1      7K 
 3: EX-23.1     Consent of Accountants                                 1      5K 
 4: EX-27       Financial Data Schedule                                1      6K

10KSB — Annual Report — Small Business
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Certain Relationships and Related Transactions Changes In and Disagreements With Accountants on Accounting and Financial Disclosure Description of Business Description of Property Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act Executive Compensation Exhibits and Reports on Form 8-K Financial Statements Forward-Looking Statements Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations Market for Common Equity and Related Stockholder Matters Security Ownership of Certain Beneficial Owners and Management Submission of Matters to a Vote of Security Holders
1	1st Page - Filing Submission
2	Item 1. Description of Business
12	Item 2. Description of Property
13	Item 3. Legal Proceedings
"	Item 4. Submission of Matters to a Vote of Security Holders
14	Item 5. Market for Common Equity and Related Stockholder Matters
16	Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Forward-Looking Statements
24	Item 7. Financial Statements
43	Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
"	Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act
45	Item 10. Executive Compensation
48	Item 11. Security Ownership of Certain Beneficial Owners and Management
50	Item 12. Certain Relationships and Related Transactions
51	Item 13. Exhibits and Reports on Form 8-K

10KSB 1st Page of 56 TOC ↑Top Previous Next ↓Bottom Just 1st
 
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 Form 10-KSB

(Mark One)        (X)  ANNUAL REPORT UNDER SECTION 13 or 15(d)                  
                   OF THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]

 For the fiscal year ended December 31, 1996

    ( )  TRANSITION REPORT UNDER SECTION 13 OR 15(d)
             OF THE SECURITIES ACT OF 1934 [No Fee Required]
                   For the transition period from ________to____________

Commission file number 0-22904

PARKERVISION, INC.
(Name of small business issuer in its charter)

Florida                                          59-2971472   
(State of Incorporation)                              (I.R.S. Employer ID No.)  

 8493 Baymeadows Way
 Jacksonville, Florida 32256
(904) 737-1367
(Address of principal executive offices)

Securities registered under Section 12(b) of the Exchange Act:
None

Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $.01 PAR VALUE

Check whether the issuer (1) filed all reports required to be filed by Section  
13 or 15(d) of the Exchange Act during the past 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 |_|.       

Check if there is no disclosure of delinquent filers in response to Item 405 of 
Regulation S-B contained in this form, and no disclosure will 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-KSB or any     
amendment to this Form 10-KSB (X).                                              

The Issuer's revenues for the fiscal year ended December 31, 1996, were         
$9,252,052.                                                                     

As of March 7, 1997, the aggregate market value of the Issuer's $.01 par value  
Common Stock held by non-affiliates of the Issuer was approximately $80,706,112 
(based upon $15.375 per share closing price on that date, as reported by the    
NASDAQ National Market).                                                        

As of March 7, 1997, 10,045,604 shares of the Issuer's Common Stock, $.01 par   
value, were outstanding.                                                        

Documents incorporated by reference:  None.                                     

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PART I

Item 1. Description of Business                                                 

ParkerVision, Inc. (the "Company"), was incorporated under the laws of the state
of Florida on August 22, 1989. The Company is engaged in the design, development
and marketing of the CameraMan(R) automated video camera control systems. The   
Company is also researching certain wireless technologies which the Company     
believes may have potential applications in various commercial and consumer     
markets.                                                                        

CameraMan(R) Systems                                                            

In recent years, the emergence of increasingly sophisticated, relatively low    
cost personal computers, audiovisual products and telecommunication services has
significantly expanded the commercial markets for video solutions. Audiovisual  
systems have become increasingly popular with a broad range of small businesses,
large corporations, educational institutions, corporate professionals and others
who perceive video as a viable addition to their communications, training,      
presentation, instructional and educational needs.                              

For this emerging commercial market, the Company developed the CameraMan(R)     
system which allows a non-professional video user to create consistently        
effective video communication at a reasonable cost. Additionally, the Company's 
CameraMan(R) system is designed to permit the video user to appear in the video 
while at the same time controlling the camera action.                           

Since the initial product introduction in 1992, the Company has developed       
several CameraMan(R) models for different targeted commercial markets and a     
variety of compatible systems to meet the needs of its customers. Although the  
Company believes there are many markets for its CameraMan(R) systems, the       
Company has initially focused on video solutions for the educational and        
videoconferencing segments of the commercial markets in which the Company       
believes CameraMan(R) has wide application.                                     

In 1995, the Company launched a second generation product, CameraMan(R) System  
II, ("System II"), and by the end of the third quarter of 1995, a complete      
System II product line was available for sale. The primary difference between   
System II and the previous CameraMan(R) systems is the integration of a         
professional quality single-chip imaging camera into the base unit. In 1995,    
System II products comprised approximately 86% of the Company's unit sales, and 
early in 1996, the Company discontinued the sale of its initial CameraMan(R)    
product line. Also during 1996, the Company expanded its System II product line 
by integrating a three-chip camera into the base unit. The three-chip camera    
systems provide higher resolution, better color reproduction, improved optics,  
and more control over basic camera functions than the Company's single-chip     
systems.                                                                        

2 

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In March 1995, the Company entered into a joint product development agreement   
with VTEL Corporation ("VTEL"), located in Austin, Texas. VTEL designs,         
manufactures and markets applications-oriented videoconferencing equipment and  
claims to hold a greater than fifty percent share of the education and          
healthcare markets. The agreement provided a framework within which the two     
companies could integrate various CameraMan(R) systems into the VTEL MediaMax,  
and other VTEL products to create fully integrated videoconferencing systems.   
This initial system integration was completed and shipments of integrated       
CameraMan(R) systems to VTEL began during the third quarter of 1995. Sales of   
System II products to VTEL accounted for approximately 12% and 41% of the       
Company's unit sales during 1995 and 1996, respectively.                        

Wireless Technology                                                             

In connection with the refinement of CameraMan(R) systems, the Company has been 
researching certain wireless technologies. In 1995, the Company developed a     
specific engineering team to continue this research and, in 1996, the Company   
filed for a patent related to its research efforts. The Company believes it has 
developed a new, highly reliable and cost effective wireless capability that is 
compatible with standard wireless narrow-band frequencies currently approved    
worldwide. The Company believes this technology, while beneficial to current and
future CameraMan(R) systems, also has potential applications in other commercial
and consumer markets.                                                           

During 1996, the Company continued its development of the wireless technology   
and conducted market research into various applications for this technology. The
Company may determine to (1)license the technology to third parties, (2)sell the
technology in the form of circuits which third parties could then integrated    
into their own products, or (3)develop and sell finished products integrating   
the technology. The Company has not yet determined which, if any, of these      
methods will be utilized in marketing its wireless technology.                  

If the Company successfully completes development and testing of applications   
for the wireless technology, the Company anticipates that it will focus its     
efforts initially on formalizing manufacturing and marketing arrangements. The  
implementation of large-scale manufacturing and marketing programs and the      
commercial rollout of a wireless product will require capital resources         
substantially greater than those currently available to the Company.            
Accordingly, the Company may seek to enter into strategic alliances with one or 
more large, financially capable companies or seek additional capital to         
undertake these activities itself. The Company has not finalized any            
manufacturing and commercialization strategies for the proposed wireless        
products at this time.                                                          

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Products                                                                        

CameraMan(R) System II                                                          
The Company's second generation CameraMan(R) product, System II, uses the       
CameraMan(R) base unit, a portable, computerized base which pans and tilts      
simultaneously to achieve fluid motion, into which is integrated a professional 
quality single-chip or three-chip imaging camera that provides the system camera
control functions, such as auto-focus and auto-image control. The System II base
unit is available with or without automatic tracking capability. Other          
components of the System II product line include a main docking station and     
tracking ring package which are devices used to control the automatic tracking  
functions, as well as various keypads or locators which are designed to remotely
control base unit and camera functions. System II products are offered in a     
variety of application-specific packages designed for the Distance Education and
Videoconferencing markets including the following:                              

o  Distance Education Systems                                             

-  CameraMan(R) System II Presenter Camera System                     

     The System II Presenter Camera System is a robotic camera system with
        automatic tracking capabilities. The Presenter Camera System consists of
       a CameraMan(R) autoTRACK Camera with input/output Main Docking Station,
    a Tracking Ring Package with built-in microphone, and a wireless, or
     hard-wired, Presenter Keypad. When instructed to do so, the autoTRACK
Camera will locate the Tracking Ring worn by the presenter. The 
   autoTRACK Camera will then automatically pan and tilt to follow the
  presenter while he or she moves throughout the room. The Presenter
   Keypad is a hand-held keypad which allows the presenter to manually
      control camera functions and autoTRACK views, as well as recall preset
locations, such as a white board or other educational aids.     

-  CameraMan(R) System II Student Camera System                       

    The System II Student Camera System is a robotic camera system which
       consists of a non-autoTRACK Student Response Camera with a Programmable
     Response Module and a Classroom Controller Keypad. The Student Camera
        System allows students to "raise their hands" electronically by pressing
  a locator button on a microphone. The Student Response Camera then
        automatically recalls a location preset for the individual student. This
    provides educators and students with a better level of communication
        than a more traditional wide-angle camera view. The Classroom Controller
   Keypad stores the location presets for each student microphone. The
Programmable Response Module provides 30 inputs where either    
  "press-to-talk" or "voice-activated" microphones are wired. When a
     student activates a microphone, the Programmable Response Module will
      send a command to the Student Response Camera to pan, tilt and zoom to
the student location.                                           

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o  Videoconferencing Systems                                              

-  CameraMan(R) System II Personal Locator System                     

      The System II Personal Locator System is a robotic camera system which
    is offered with both autoTRACKing and non-autoTRACKing capabilities.
  Both systems include a CameraMan(R) Camera, three Personal Locator
Keypads and a Chairperson Keypad. This system allows each       
     videoconferencing participant to program his or her personal location
        preset and then recall that preset at the touch of a "MY TURN" button on
  that individual's Personal Locator Keypad. The Chairperson Locator
   Keypad has an additional "system lockout" functionality for meeting
control.                                                        

        The autoTRACKing Personal Locator System (also referred to as the Deluxe
       Camera System) also includes an input/output Main Docking Station and a
      Tracking Ring Package for automatically tracking a presenter. With the
       use of the Tracking Ring, a videoconference participant can get up from
    the conference room table to give a presentation while the autoTRACK
Camera automatically follows his or her movement.               

    The Company also offers SHAREview, a software upgrade feature to the
      Personal Locator System. The SHAREview technology enables the Personal
   Locator System to automatically calculate and adjust the camera for
      multiple individuals who wish to share the camera view simultaneously.

o  Other Camera Systems                                                   

-  CameraMan(R) System II General Pan/Tilt System                     

  The System II General Pan/Tilt System is a non-autoTRACKing camera
 system for use in general purpose commercial applications where a
   high-quality, full-featured pan/tilt system is desired but tracking
      capability is not needed. The system is upgradable to a Student Camera
       System or Personal Locator System and, as a result, is easily adaptable
to distance education and videoconferencing applications.       

o  VTEL Camera Systems                                                    

   In connection with the volume purchase agreement with VTEL, the Company
   has developed a complete product line that integrates with certain VTEL
      products. This product line includes the same application-specific systems
    for both distance education and videoconferencing applications including
      Presenter Camera Systems, Student Camera Systems, Personal Locator Systems
and General Pan/Tilt Systems. The basic difference between the VTEL 
      specific product line and the Company's other product lines is the ability
      for the VTEL specific products to be integrated at the factory with select
VTEL products.                                                      

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Subsequent to December 31, 1996, the Company revised its System II product      
offering such that all CameraMan(R) products are manufactured with an           
autoTRACKing base unit and thus can be upgraded to any other                    
application-specific CameraMan(R) system in the field. As a result, the previous
non-tracking systems, the Student Camera System, the Personal Locator System and
the General Pan/Tilt Systems will now be field upgradable to tracking systems.  

New Products                                                                    

o  Shot Director                                                          

    During the fourth quarter of 1996, the Company completed the development
of a new product, the Shot Director. The Shot Director is a joystick
   controller which is compatible with both the single-chip and three-chip
     camera systems. The Shot Director integrates real-time camera control and
setup functionality with an LCD display and menu driven keys for    
    three-chip camera control unit ("CCU") capability and allows an operator
    to control up to sixteen CameraMan(R) cameras. This product is the first
  product offering in the Company's future CameraManSTUDIO product line.

o  CameraManSTUDIO                                                        

      During 1996, the Company introduced a new product concept which represents
a CameraMan(R) system specifically designed for industrial studio   
production environments including corporate, education, government, 
      healthcare and religious studios. This system will incorporate two or more
 CameraMan(R) single-chip or three-chip camera systems with additional
   studio-related hardware and a Windows(R) compatible software package to
    provide a low-cost, fully-integrated PC-based studio system with certain
  unique functionality. The Company believes its CameraManSTUDIO product
will reduce the number of operators required in a typical studio    
   environment. The Company plans to introduce a working prototype of this
  system early in 1997 and anticipates shipments of the product to begin
during the second half of 1997.                                     

o  Wireless Technology Products                                           

The Company has conducted market and technology research for the    
  application of its wireless technology and has developed prototypes of
    user input devices which integrate this wireless technology as proofs of
      concept. These prototypes do not necessarily represent initial products of
  the Company. The technology is still in the development stage, and the
Company cannot presently determine when, or if, development will be 
completed or how the technology will be marketed.                   

6 

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Marketing and Sales                                                             

CameraMan(R) Systems                                                            

The Company's principal marketing strategy is to sell CameraMan(R) systems in   
targeted commercial markets in which the Company believes the systems have wide 
application. The current CameraMan(R) systems are generally marketed to         
educators and corporate professionals who make use of audiovisual and           
telecommunications systems in distance education and videoconferencing.         

System sales are directed by an internal sales staff and a network of authorized
audiovisual products dealers, telecommunication dealers and systems integrators 
who design and specify audiovisual equipment of various manufacturers. The      
majority of the Company's authorized dealers are located throughout the United  
States and Canada. Late in 1996, the Company began expanding its audiovisual    
dealer network to the international markets, including Latin America, Asia and  
Europe. At the same time, the Company seeks national account sales arrangements,
such as the program with VTEL for specific applications and targeted commercial 
markets.                                                                        

During the fourth quarter of 1996, the Company entered into a reseller agreement
with PictureTel Corporation ("PTEL"), whereby PTEL will sell the complete       
CameraMan(R) product line through its direct and indirect sales channels. PTEL, 
located in Andover, Massachusetts, is a world leader in developing,             
manufacturing and marketing videoconferencing solutions. In addition, early in  
1997, the Company entered into a similar reseller agreement with Compression    
Labs, Inc., ("CLI") located in San Jose, California. CLI is another of the      
industry's leading manufacturers of videoconferencing equipment.                

The Company currently supports its distribution channels with marketing programs
to promote its products. These include targeted trade advertising, lead         
generation/fulfillment, tradeshow attendance and live demonstration facilities. 
In addition, the Company provides training of its dealers' sales, support and   
installation personnel. The Company also has dedicated specific sales and       
marketing personnel to provide comprehensive support to the sales staff and     
resellers of VTEL, PTEL and CLI.                                                

Approximately 64% and 88% of the Company's revenues were generated from its     
dealer network in 1996 and 1995, respectively. In 1996, VTEL and an audiovisual 
reseller, TeleMeasurements, Inc., accounted for approximately 35% and 11% of the
Company's revenues, respectively, In 1995, VTEL and Video Images, another of the
Company's resellers, accounted for approximately 12% and 10%, respectively, of  
the Company's revenues. Video Images also accounted for approximately 12% of the
Company's revenues in 1994.                                                     

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Target Markets for CameraMan(R) Products                                        

o  Distance Education                                                     

In the education market, the Company targets universities, colleges,
 primary schools, hospitals/clinics, and corporate/government training
  facilities. The Company believes telecommunications technologies are a
     major movement in education resulting in teaching programs which are more
    accessible, more cost-effective per student and more timely. The Company
believes that compared to other widely used educational tools, the  
 CameraMan(R) system permits a more effective presentation of teaching
    materials and a higher level of interaction between student and teacher.
   Moreover, the Company believes the CameraMan(R) system is easier to use
than other available camera systems.                                

o  Videoconferencing                                                      

     The videoconferencing market has seen significant growth in recent years.
Until recently, videoconferencing generally was limited to large    
corporations, state and federal agencies and universities that used 
 special-purpose, on-site videoconferencing rooms or public conference
centers for long-distance communication among corporate personnel,  
customers, clients and suppliers. As a result of the technological  
 advances being made in the communications industry, videoconferencing
 solutions are being sought by smaller entities for the same purposes.

o  Studio Production                                                      

The studio production industry includes broadcast and cable         
networks/stations, independent studios and corporate, education,    
   healthcare, government and religious studio environments. The Company's
  CameraManSTUDIO product, which is expected to be released during 1997,
 targets the industrial sector of the studio production industry which
   includes the corporate, education, government, healthcare and religious
    studios. The Company believes its product will also be utilized in other
    sectors of the studio production industry for FlashCam and Public Access
applications, Business T.V. and small ancillary broadcast and video 
production studios.                                                 

Competition                                                                     

The markets for videoconferencing and distance education systems are continually
evolving due to customer demand to achieve "just like being there" effective    
communications. The Company is aware of certain other companies which have      
commercialized or developed technologies and products which are competitive with
certain functions of the CameraMan(R) system.                                   

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In both the distance education and videoconferencing markets, manufacturers of  
manual pan/tilt heads, such as Panasonic, Sony Corporation, Vicon, Inc.,        
Vinton/TSM, Inc., Telemetrics, Inc., and Fujinon, compete with the Company's    
products. Some of these pan/tilt heads have limited preset location             
capabilities, but they offer no tracking capabilities and must be operated      
either by a camera operator or by a monitor or control pad. While the technology
exists to replace the cable connections with devices that transmit and receive  
wireless signals, these devices still require manual operation. Some of the     
above mentioned products sell for substantially more than the CameraMan(R)      
system while others sell at prices similar to, or less than, that of the        
CameraMan(R) system, but offer limited functions.                               

During 1995, Canon introduced a general pan/tilt camera which, when integrated  
with third party software from Teleos Research and a personal computer with     
specific video hardware, is able to perform certain tracking functions. The     
Company believes that the Canon tracking solution has a significantly lower     
level of performance than the CameraMan(R) system in terms of function, features
and reliability. In addition, although the pricing of the Canon offering is     
similar to CameraMan(R), the Canon offering is not available as an integrated,  
packaged system.                                                                

In the distance education market, approximately 50% of the market utilizes      
telephone lines to transmit video. This method requires the use of a CODEC to   
compress and decompress the data prior and subsequent to transmission.          
PictureTel, VTEL and CLI are the three largest CODEC manufacturers in North     
America. While the Company does have reseller agreements with each of these     
three manufacturers to offer CameraMan(R) as a main camera with their CODEC, or 
as an auxiliary camera for presentation purposes, each of these manufacturers   
also offer lower priced systems utilizing their own or other manufacturers'     
non-tracking cameras. The Company competes with these cameras based on features 
and functionality.                                                              

Many of the Company's competitors are well-established, have substantially      
greater financial and other resources than the Company, have established        
reputations for success in the development, sale and service of audiovisual     
products, and have significant advertising budgets to permit them to implement  
extensive advertising and promotional campaigns in response to competitors.     
Certain of these competitors dominate the audiovisual industry and have the     
financial resources necessary to enable them to withstand substantial price     
competition, which is expected to increase, and downturns in the markets for    
audiovisual products.                                                           

The Company believes that it competes principally on the basis of the           
capabilities of the CameraMan(R) system, ease of system application, price and  
system flexibility.                                                             

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Production and Supply                                                           

The Company engages in assembly operations for its CameraMan(R) products at its 
facility in Jacksonville, Florida. The Company's operations involve the         
inspection of each component, assembly of the system's electronic circuitry and 
other components, a series of quality specification measurements, and various   
other computer, visual and physical tests, including product field testing, to  
certify final performance specifications. The Company believes that it has      
sufficient production capacity to satisfy increased demand for CameraMan(R)     
systems for the foreseeable future.                                             

The Company obtains all of its component parts, including standard electronic   
components and specially designed components for the CameraMan(R) system, from  
third-party manufacturers. The Company currently purchases all of its           
requirements of specially designed component parts from single-source suppliers.
The Company owns the design and dies for such components and believes that      
alternative sources of supply for such components are available.                

For the years ended December 31, 1996, 1995 and 1994, one supplier accounted for
approximately 21%, 23% and 20%, respectively of the Company's component         
purchases. This supplier is a single-source supplier of the Company's camera    
modules for System II. The Company maintains a three to six month inventory of  
this component and has identified an alternative source of supply for this      
component, although its use would require minor modifications to the existing   
system. No other supplier accounted for more than 15% of the Company's component
purchases in 1996, 1995 or 1994.                                                

At December 31, 1996, the Company has a commitment to purchase camera modules   
from its single-source supplier. This purchase commitment is currently estimated
to aggregate approximately $780,000 through 1997. In addition, the Company has a
commitment totaling approximately $145,000 thorough 1997 to purchase motors used
in its camera systems from a non sole-source supplier.                          

The Company is substantially dependent on the ability of its suppliers, among   
other things, to satisfy performance and quality specifications and dedicate    
sufficient production capacity for components within scheduled delivery times.  
The Company does not maintain contracts with any of its suppliers and purchases 
system components pursuant to purchase orders placed from time to time in the   
ordinary course of business. Failure or delay by the Company's suppliers in     
supplying necessary components to the Company would adversely affect the        
Company's ability to obtain and deliver CameraMan(R) systems on a timely and    
competitive basis. The Company endeavors to mitigate the potential adverse      
effect of supply interruptions by carefully qualifying vendors on the basis of  
quality and dependability, and by maintaining an inventory of certain           
components, but there can be no assurances that such components will be readily 
available when needed.                                                          

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The Company's sales cycle generally is from one to eighteen months while the    
period from execution of a customer's purchase order to delivery of a           
CameraMan(R) system is typically three to five weeks. The Company attempts to   
forecast orders and to purchase long lead-time components in advance of receipt 
of purchase orders to permit it to provide deliveries of completed systems      
within its standard three to five week delivery period. At December 31, 1996,   
the Company maintained an inventory of standard electronic and other system     
components of $1,353,499. Substantially all of the Company's systems are        
delivered to customers by common carrier.                                       

The Company offers a one-year limited warranty covering defects in workmanship  
and materials. During the warranty period the Company will replace parts and    
make repairs to system components at its expense. The Company records a reserve 
for future warranty costs at the time of sale. To date, the Company has not     
incurred any significant warranty expense.                                      

Patents and Trademarks                                                          

The Company holds eleven United States patents and one foreign patent covering  
certain tracking functions and methods for controlling the field of view in an  
automatic tracking camera system. The Company has applied for several additional
United States and foreign patents relating to the CameraMan(R) system and the   
wireless technology.                                                            

The Company promotes the ParkerVision and CameraMan trademarks in connection    
with its marketing activities and holds United States trademark registrations   
for such marks. In addition, the Company has applied to register other          
trademarks.                                                                     

Government Regulation                                                           

The Company utilizes wireless communications both in its CameraMan(R) systems   
and in its new wireless technology. These wireless communications utilize       
infrared and radio frequency technology which is subject to regulation by the   
Federal Communications Commission ("FCC"). The Company has obtained all licenses
and approvals necessary for the operation of its products. There can be no      
assurance that, in the future, the Company will be able to obtain required      
licenses or that the FCC will not require the Company to comply with more       
stringent licensing requirements. Failure or delay in obtaining required        
licenses would have a material adverse effect on the Company. In addition,      
expansion of the Company's operations into consumer or certain foreign markets  
may require the Company to obtain additional licenses for its products.         
Amendments to existing statutes and regulations, adoption of new statutes and   
regulations and the Company's expansion into foreign jurisdictions, could       
require the Company to alter methods of operations at costs that could be       
substantial, which could have an adverse effect on the Company. There can be no 
assurance that the Company will be able, for financial or other reasons, to     
comply with applicable laws and regulations and licensing requirements.         

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Research and Development                                                        

The Company's principal efforts to date have been devoted to the design,        
development and support of the CameraMan(R) systems, the integration of the     
CameraMan(R) systems into a product line for use with VTEL products, the        
development of CameraManSTUDIO, and research in emerging wireless technologies. 
The Company has contemplated the development of a consumer version of the       
CameraMan(R) system and has conducted market and technology research for such a 
system. A consumer CameraMan(R) would require reduced system size and cost, as  
well as additional features and functionality in order to make it attractive for
the mass consumer market. The consumer product is still in its early research   
stages and the Company cannot presently determine when, or if, development of a 
consumer version of the CameraMan(R) system will be completed.                  

For the fiscal years ended December 31, 1996 and 1995, the Company expended     
approximately $1,483,000 and $1,179,000, respectively, on research and          
development.                                                                    

Employees                                                                       

As of December 31, 1996, the Company had one part-time and seventy-eight        
full-time employees, of which thirty-one are employed in manufacturing, eighteen
in engineering research and development, twenty-one in sales, support and       
marketing, and eight in finance and administration. None of the Company's       
employees are represented by a labor union. The Company considers its employee  
relations satisfactory.                                                         

Item 2. Description of Property                                                 

The Company's executive offices and assembly operations are located in          
approximately 33,000 square feet of leased space on three acres of land in      
Jacksonville, Florida, pursuant to a lease agreement with Jeffrey Parker,       
Chairman of the Board, Chief Executive Officer and President of the Company, and
Barbara Parker, Mr. Parker's mother. The initial lease term expired in February 
1997, and the Company exercised its first of three five-year renewal options.   
The lease is on a triple net basis and prior to amendment, minimum annual rental
payments were $242,880. In 1996, the Company renegotiated its base annual rental
payment and amended its lease agreement to provide for a base annual rental     
payment of $100,000. The five year renewal option exercised by the Company      
provides for a base annual rental payment of $100,000 through August 31, 1997,  
increasing to a base annual rental payment of no less than $279,306 thereafter. 

The Company believes that its facility is adequate for its current and          
reasonably foreseeable future needs. The Company believes that additional       
physical capacity at its current facility will accommodate expansion, if        
required.                                                                       

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Item 3. Legal Proceedings                                                       

None.                                                                           

Item 4. Submission of Matters to a Vote of Security Holders                     

The Company held its annual meeting on October 29, 1996. The stockholders       
elected Messrs. Jeffrey Parker, Todd Parker, Arthur Yeager and William Sammons  
and Ms. Stacie Wilf as directors. The following is a tabulation of votes cast   
for and against and abstentions for each director:                              

      Votes Cast
       -------------------------
      Name              For         Against      Abstentions
----------------------------------------------------------------- 

Jeffrey Parker          8,383,655       2,750            0        
Todd Parker             8,383,655       2,750            0        
William Sammons         8,383,655       2,750            0        
Arthur Yeager           8,383,655       2,750            0        
Stacie Wilf             8,383,655       2,750            0        

At this meeting, the stockholders also approved a proposal to amend the 1993    
Stock Plan to increase from 500,000 to 1,500,000 the number of shares of common 
stock reserved for the Plan. On the matter of approving the amendment, 6,018,273
votes were cast in favor, 168,879 votes were cast against and 9,249 votes       
abstained. There were 2,190,004 broker non-votes.                               

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PART II                                                                         

Item 5. Market for Common Equity and Related Stockholder Matters                

Market Information                                                              

The Company's common stock is traded under the symbol "PRKR" on the Nasdaq      
National Market ("Nasdaq"), which is the principal market for the common stock. 
Listed below is the range of the high and low bid prices of the common stock for
the last two fiscal years, as reported by Nasdaq. The amounts represent         
inter-dealer quotations without adjustment for retail markups, markdowns or     
commissions and do not necessarily represent the prices of actual transactions. 

                                             High            Low
                                              --------        --------
Fiscal year ending December 31,                                     
1995:                                                               
     First quarter                            $  5.000        $  2.500
     Second quarter                              7.125           3.000
     Third quarter                              11.125           6.375
     Fourth quarter                             10.000           5.875

Fiscal year ending December 31,                                     
1996:                                                               
     First quarter                              10.750           6.750
     Second quarter                             17.125          10.500
     Third quarter                              13.500           9.750
     Fourth quarter                             15.250          10.500

Holders                                                                         

As of March 7, 1997, there were 67 holders of record. The Company believes there
to be approximately 1,350 beneficial holders of the Company's common stock.     

Dividends                                                                       

To date, the Company has not paid any dividends on its common stock. The payment
of dividends, if any, in the future is within the discretion of the board of    
directors and will depend upon the Company's ability to generate earnings, its  
capital requirements and financial condition, and other relevant factors. The   
Company does not intend to declare any dividends in the foreseeable future, but 
instead intends to retain all earnings, if any, for use in the Company's        
business.                                                                       

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Sales of Unregistered Securities                                                

                                                        [Enlarge/Download Table]

                                                                                                   If option,    
                                                                                                   warrant or    
                                                Consideration received and        Exemption       convertible    
                                              description of underwriting or         from       security, terms  
 Date of                           Number     other discounts to market price    registration    of exercise or  
   sale      Title of security      sold          afforded to purchasers           claimed         conversion    
----------- --------------------- ---------- ---------------------------------- --------------- -----------------
                                                                                                                 
4/12/96     Common stock          800,000    Received proceeds of $7,397,500,   Regulation S          n/a        
                                             net of purchasers' discount of                                      
                                             $560,000 and offering costs of                                      
                                             $42,500                                                             

4/12/96     Warrants to           250,000    Warrants granted - no              4(2)            Exercisable for  
            purchase common                  consideration received by                          a period         
            stock granted to                 Company until exercise                             lasting five     
            outside financial                                                                   years from the   
            consultants in                                                                      date of grant    
            connection with                                                                     at an exercise   
            Regulation S                                                                        price of $10     
            offering                                                                            per share        

4/22/96     Common stock          80,000     Received proceeds of $800,000      4(2)                  n/a        
                                             with no discount to purchasers                                      

7/16/96     Warrants to           200,000    Financial services valued at       4(2)            Exercisable for  
            purchase common                  $512,000 to be received over a                     a period         
            stock granted to                 five year term commencing July                     lasting five     
            financial consultant             16, 1996                                           years from the   
                                                                                                date of grant    
                                                                                                at an exercise   
                                                                                                price of $10     
                                                                                                per share        

1/96 -      Options to purchase   134,275    Options granted - no               4(2)            Exercisable for  
12/96       common stock                     consideration received by                          periods lasting  
            granted to                       Company until exercise                             from five to     
            directors and                                                                       ten years from   
            employees pursuant                                                                  the date of      
            to stock option plan                                                                grant at         
                                                                                                exercise prices  
                                                                                                ranging from     
                                                                                                $10.50 to        
                                                                                                $13.875 per      
                                                                                                share            

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Item 6. Management's Discussion and Analysis of Financial Condition and Results 
of Operations                                                                   

Forward-Looking Statements                                                      

When used in the Form 10-KSB and in future filings by the Company with the      
Securities and Exchange Commission, the words or phrases "expects" or "the      
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 any such forward-looking statements,   
each of which speak 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. These risks include, but are not limited to, the continuing losses of
the Company which may result in the need for additional capital in the future or
a change in current operations, the need for substantial capital and use of     
current working capital amounts to develop new products and for research and    
development, uncertainty of product development, technological obsolescence,    
market acceptance of its products and dependence on third party suppliers and   
distributors. The Company may also have to expend substantial employee time and 
financial resources to meet governmental regulation requirements and for the    
protection of its intellectual property rights. The Company has no obligation to
publicly release the result of any revisions which may be made to any           
forward-looking statements to reflect anticipated or unanticipated events or    
circumstances occurring after the date of such statements.                      

General                                                                         

The Company had not generated revenues sufficient to offset its operating       
expenses from inception in August 1989 to the present. The Company anticipates  
operating at a cash flow from operations deficit in 1997. The Company, however, 
has experienced increases of revenues in 1995 and 1996 and anticipates further  
increases in revenues in 1997. These increases are subject to the Company       
continuing to expand its marketing and sales efforts, attracting additional     
means of distribution and customers and maintaining current margins, among other
things. The Company intends to continue to use its working capital to build its 
infrastructure to support future system marketing and sales activities and      
research and development for new system products and configurations and wireless
technology development and deployment. No assurance can be given that such      
expenditures will result in increased sales, new products, or technological     
advances.                                                                       

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Results of Operations for Each of the Three Years Ended December 31, 1996, 1995 
and 1994                                                                        

Revenues                                                                        

The Company's revenues consist of sales of CameraMan(R) systems and various     
accessories which complement those systems. Revenues for the years ended        
December 31, 1996, 1995 and 1994 were $9,252,052, $3,941,194 and $1,227,799,    
respectively. The increase in revenues is a result of an increase in the number 
of systems sold, as well as an increase in the average selling price per system.

From 1995 to 1996, the number of systems sold increased from 862 systems in 1995
to 1,611 systems in 1996. The increase in units sold is primarily attributable  
to the Company's relationship with VTEL as well as continued increasing market  
acceptance of the Company's System II products. Approximately 41% of the systems
sold in 1996 represent sales to VTEL, as compared to approximately 12% in 1995. 
The $5,310,858 increase in revenues from 1995 to 1996 is also attributable, in  
part, to an increase in the average selling price per system from approximately 
$4,600 in 1995 to approximately $5,700 in 1996. This increase is due primarily  
to the introduction of the Company's three-chip product line in 1996. The       
three-chip product, which accounted for approximately 9% of unit sales in 1996, 
generates approximately $8,500 more revenues per system than the single-chip    
product.                                                                        

From 1994 to 1995, the number of systems sold increased from 372 systems in 1994
to 862 in 1995. Of the 862 systems sold in 1995, 14% represented sales of the   
initial CameraMan(R) models and the remaining 86% represented System II sales.  
This increase in units sold is primarily attributable to market acceptance of   
the Company's System II product line, the success of the Company's continued    
efforts to increase market penetration of its products by establishing a new    
dealer network, the success of the Company's 1994 marketing efforts targeting   
the distance education market, and the establishment of a co-development and    
co-marketing agreement with VTEL in 1995. The $2,713,395 increase in revenues   
from 1994 to 1995 is also attributable, in part, to an increase in the average  
selling price per system from approximately $3,300 in 1994 to approximately     
$4,600 in 1995. This increase of approximately $1,300 per system is due to a    
change in the mix of systems sold. During 1994, approximately 25% of systems    
sold represented lower priced CameraMan(R) models which were discontinued in the
fourth quarter of 1994. In addition, in 1994, approximately 85% of the systems  
sold did not include a camera, whereas the System II product line, which        
accounted for the majority of 1995 system sales, incorporates the camera into   
the base unit.                                                                  

The Company's sales are primarily generated from the distance education market  
which has a 12 to 18 month sales cycle. As a result, the Company expects the    
results of the 1995 and 1996 sales and marketing activities generally to be     
reflected in 1997 and 1998 revenues. In addition, the Company anticipates a     
continued increase in its average selling price per system in 1997 as a result  
of continued market acceptance of the three-chip camera system and a price      
increase effective January 1, 1997 on the majority of the Company's products.   
Any                                                                             

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increase in the average selling price of Company products will depend, in part, 
upon the mix of single-chip versus three-chip camera systems sold in 1997 and   
future years, and market acceptance of price increases.                         

Gross Margin                                                                    

For the years ended December 31, 1996, 1995 and 1994, gross margins as a        
percentage of sales were 35%, 38% and 48%, respectively. The decrease in margin 
from 1995 to 1996 is primarily due to the mix of products sold to VTEL. In 1996,
the Company implemented a program with VTEL whereby VTEL could purchase a       
general pan/tilt base unit at very low margins and then separately purchase     
various upgrade packages, at significantly higher margins, to convert the       
general pan/tilt unit into an application specific package such as a Presenter  
or Student Camera System. Approximately 25% of the base units purchased by VTEL 
in 1996 were general pan/tilt units with no application specific upgrade        
package. The Company revised its pricing structure with VTEL in 1997 whereby the
margin is shared more equally between the base unit and the application-specific
packages.                                                                       

The decrease in margin from 1994 to 1995 is primarily due to the mix of products
sold, the incorporation of a camera into the CameraMan(R) base unit, and the    
production inefficiencies experienced as a result of introducing several new    
products during 1995. During 1995, the Company required each of its dealers in  
its new national dealer network to purchase a System II demonstration unit and  
offered these dealers an additional 10% discount on the price of these units.   
Approximately 10% of the systems sold during 1995 represented such dealer       
demonstration units. Also, during 1995, the Company introduced a System II      
general pan/tilt system which was designed and priced to compete directly with  
manufacturers of low-end pan/tilt cameras. These systems were sold at a         
significantly lower margin than other System II products and represented        
approximately 10% of the total systems sold during 1995. In addition, 86% of the
Company's sales in 1995 were attributable to the System II product line which   
incorporates a single-chip camera into the base unit. The Company's margins on  
the single-chip camera, which is sourced from a third-party, are lower than     
margins earned on the system components manufactured by the Company. The camera 
comprised approximately 30% of the total system cost. In addition to the changes
in product mix, the Company experienced inefficiencies in production due to the 
manufacturing of several new products during 1995, including the full System II 
product line.                                                                   

The Company is working to improve its gross margin through product pricing,     
labor efficiencies, reduction of overhead, and product design; however, there   
can be no assurance that gross margins will improve significantly over, or      
remain stable with, the gross margins attained in 1996 due to the highly        
competitive nature of the industry, the introduction of new products, and       
fluctuations in the cost of component parts.                                    

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Marketing and Selling Expenses                                                  

Marketing and selling expenses increased by $390,569, or 20%, from $1,995,727 in
1995 to $2,386,296 in 1996, and increased $474,998, or 31%, from $1,520,729 in  
1994 to $1,995,727 in 1995. Marketing and selling expenses as a percentage of   
revenues were 26%, 51% and 124% for the years ended December 31, 1996, 1995 and 
1994, respectively.                                                             

The increase in marketing and selling expenses from 1995 to 1996 was primarily  
due to the addition of sales and marketing personnel and related costs in order 
to support expansion into international markets, to provide specific sales      
support to VTEL, PTEL and CLI, and to expand the internal sales staff in        
preparation for the release of CameraManSTUDIO. This increase was somewhat      
offset by a decrease in advertising costs as the Company's level of advertising 
was higher in 1995 due to the release of System II.                             

Due to the length of the sales cycle in the Company's primary market, distance  
education, the Company believes the results of its 1996 investment in marketing 
and selling efforts will be further realized through continued revenue increases
in 1997 and 1998.                                                               

The increase in marketing and selling expenses from 1994 to 1995 was primarily  
due to higher levels of staffing to support marketing and selling efforts and   
increased advertising costs to improve market recognition and penetration. The  
Company believes the increase in the number of sales and marketing personnel and
the increased marketing promotion expenses resulted in improved market          
acceptance and increased revenues during 1996.                                  

As a percentage of revenues, marketing and selling expenses decreased from 124% 
to 51% to 26% from 1994 to 1996. The Company is committed to continuing its     
investment in marketing and selling efforts in order to continue to increase    
market awareness and penetration of its products; however, the Company expects  
that the growth of such expenses will continue at a slower rate than revenues.  

General and Administrative Expenses                                             

The Company's general and administrative expenses increased by $60,914 from     
$1,446,026 in 1995 to $1,506,940 in 1996, and decreased by $16,796 from         
$1,462,822 in 1994 to $1,446,026 in 1995. General and administrative expenses   
consist primarily of executive and administrative personnel compensation,       
insurance costs and costs incurred for outside professional services.           

The increase in general and administrative expenses from 1995 to 1996 is        
primarily the result of an increase in professional fees due to increased use of
outside professional services during 1996, offset somewhat by a decrease in     
personnel costs. The decrease in personnel costs is largely due to the voluntary
reduction of salaries by two officers during 1996.                              

The decrease in general and administrative expenses from 1994 to 1995 is the    
result of increases in personnel, offset by decreases in officers' compensation 
and professional fees                                                           

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during 1995. Additions in the number of administrative personnel were made in   
order to support the Company's increased production and sale of CameraMan(R)    
systems during 1995. The increase in personnel costs, however, was more than    
offset by a decrease in the cost of outside professional services as the Company
was able to reduce its outside professional fees by performing a significant    
portion of the services with Company personnel. In addition, general and        
administrative expenses were further decreased by a voluntary reduction in      
salaries by executive officers of the Company during 1995.                      

As a percentage of revenues, general and administrative expenses were 16%, 37%  
and 119% in 1996, 1995 and 1994, respectively. Although the Company expects some
increases in general and administrative expenses to occur in order to continue  
to support increased revenues, the Company expects that the growth of such      
expenses will continue at a slower rate than revenues.                          

Research and Development Expenses                                               

The Company's research and development expenses increased by $303,999, or 26%   
from $1,178,772 in 1995 to $1,482,771 in 1996 and increased by $475,273, or 68%,
from $703,499 in 1994 to $1,178,772 in 1995. Research and development expenses  
as a percentage of revenues were 16%, 30% and 57% in 1996, 1995 and 1994,       
respectively. The increase in research and development expenses reflects the    
Company's increased investment in the development of new products and           
technologies.                                                                   

From 1995 to 1996, the increase in research and development expenses was        
primarily due to costs incurred by the research team developed during the latter
half of 1995 to explore new wireless technologies, as well as an increase in    
prototype materials used for the development of the Company's three-chip camera 
systems and studio prototype during 1996.                                       

From 1994 to 1995, the increase in research and development expenses was        
primarily due to the increased number of engineering personnel and expenses for 
the development of the System II product line and the integration of the        
ParkerVision product line with VTEL's products. In addition, the Company created
a research group during the latter half of 1995 for the purposes of exploring   
new technologies for future products.                                           

Although the percentage of revenue invested by the Company in research and      
development may vary from period to period, the Company is committed to         
investing in its research and development programs due to the rapid             
technological advances in the industry.                                         

Nonrecoverable Start-up and Excess Capacity Costs                               

The Company incurred nonrecoverable start-up and excess capacity costs of       
$91,350, $556,675 and $575,161 for the years ended December 31, 1996, 1995 and  
1994, respectively. These costs represent materials, labor and overhead costs   
incurred by the Company in excess of those directly or indirectly attributable  
to system sales.                                                                

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The decrease in nonrecoverable start-up and excess capacity costs from 1995 to  
1996 is due to expanded usage of excess capacity as production volumes          
increased. By the third quarter of 1996, the Company began fully absorbing its  
excess plant capacity into cost of goods sold. The Company does not anticipate  
recognizing any excess capacity costs in 1997 or future periods.                

During 1994 and 1995, nonrecoverable start-up and excess capacity costs were    
primarily composed of the cost of idle facilities, principally rental costs to a
related party for excess space and excess depreciation on manufacturing         
equipment which was used at a less than normal level of capacity. In addition,  
these costs included an immaterial amount of material, labor and overhead costs 
associated with the production of new product prototypes which were not held for
sale. Nonrecoverable start-up and excess capacity costs decreased by $18,486    
from 1994 to 1995. This decrease is due to expanded usage of excess capacity as 
production volumes increased, offset somewhat by the increased cost of new      
product prototypes with the introduction of the System II product line.         

Interest Expense                                                                

Interest expense decreased by $202,239 from $277,786 in 1995 to $75,547 in 1996 
and decreased by $46,894 from $324,680 in 1994 to $277,786 in 1995. Interest    
expense represents interest on the subordinated debentures payable to related   
parties. The decrease in interest expense from 1995 to 1996 is a result of the  
conversion of related party subordinated debentures to equity in April 1996. The
decrease in interest expense from 1994 to 1995 is attributable to an amendment  
of the subordinated debt agreements with related parties reducing the interest  
rate by 2.5% during 1995.                                                       

Interest Income                                                                 

Interest income increased by $215,641 from $398,648 in 1995 to $614,289 in 1996 
and decreased by $80,549 from $479,197 in 1994 to $398,648 in 1995. Interest    
income primarily represents interest earned on the Company's investment of the  
proceeds from its initial public offering in 1993 and its subsequent Regulation 
S and private placement transactions during 1996. The increase in interest      
income from 1995 to 1996 is due to the investment of a substantial portion of   
the proceeds from the Company's Regulation S offering and private placement     
transactions during April 1996. The decrease in interest income from 1994 to    
1995 is attributable to the Company's use of proceeds from maturing investments 
to fund operations during 1995.                                                 

Other Expense, net                                                              

Other expense decreased by $241,902 from $252,712 in 1995 to $10,810 in 1996 and
increased $93,429 from $159,283 in 1994 to $252,712 in 1995. Other expense in   
1995 included losses recognized on obsolete inventories due to the              
discontinuation of the initial                                                  

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CameraMan(R) system product line. No similar losses were incurred in 1996.      
Inventory obsolescence due to product refinement in the normal course of        
business is continually monitored and is recognized as a charge to cost of      
sales.                                                                          

Backlog                                                                         

As of December 31, 1996, 1995 and 1994, the Company had backlog of approximately
$260,000, $170,000 and $260,000, respectively. Backlog consists of orders       
received from customers which generally have a specified delivery schedule      
within three to five weeks of receipt.                                          

Liquidity and Capital Resources                                                 

At December 31, 1996 and 1995, the Company had working capital of $8,213,864 and
$8,680,475, respectively. This $466,611 decrease in working capital from 1995 to
1996 is primarily due to the use of proceeds from maturing investments to fund  
operations. During 1995 and 1996, the Company financed its operations from the  
proceeds of its initial public offering, the private placement of securities to 
two United States investors and an offering pursuant to Regulation S, and       
interest earned on maturing investments of such proceeds.                       

The Company used cash for operating activities of $1,280,403, $4,436,612 and    
$3,649,983 for the years ended December 31, 1996, 1995 and 1994, respectively.  
The $3,156,209 decrease in cash used for operating activities from 1995 to 1996 
is primarily attributable to increases in margins from increased sales volumes. 
The $786,629 increase in cash used for operating activities from 1994 to 1995 is
primarily attributable to increases in accounts receivable and inventories.     
Accounts receivable increased due to the increased volume of sales during 1995. 
The increase in inventories is primarily attributable to increases in inventory 
of components from single-source suppliers, as well as increased purchases based
on production forecasts and a lengthening of lead times from several of the     
Company's suppliers during the second half of 1995.                             

The Company used cash in investing activities of $6,700,317 for the year ended  
December 31, 1996, and generated cash from investing activities of $1,065,284   
and $8,101,552 for the years ended December 31, 1995 and 1994, respectively. The
cash used in investing activities in 1996 is primarily due to the investment of 
the proceeds from the Regulation S offering and private placement transactions  
during April 1996, as well as the reinvestment of maturing investments from the 
Company's initial public offering. The cash generated from investing activities 
in 1995 and 1994 is due to the maturity of investments, somewhat offset by      
capital expenditures.                                                           

The Company incurred $948,183, $596,133 and $428,931 for capital expenditures in
1996, 1995 and 1994, respectively. These capital expenditures primarily         
represent the purchase of certain research and development test equipment as    
well as the purchase of computer and office equipment to support additional     
sales, marketing, product development and                                       

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administrative personnel. At December 31, 1996, the Company was not subject to  
any significant commitments to make additional capital expenditures.            

The Company generated cash from financing activities of $8,243,925 and $113,870 
for the years ended December 31, 1996 and 1995, respectively. The cash generated
from financing activities in 1996 represents proceeds from the issuance of      
common stock primarily as a result of a Regulation S offering and private       
placement transactions. The cash generated from financing activities in 1995    
represents proceeds from the issuance of common stock upon exercise of employee 
stock options. The Company did not sell any securities during the year ended    
December 31, 1994.                                                              

The Company's principal source of liquidity at December 31, 1996 consisted of   
$5,541,881 in cash and short-term investments resulting from its initial public 
offering and subsequent offerings. Until the Company generates sufficient       
revenues from system sales, it will be required to continue to utilize this     
source of liquidity to cover the continuing expense of product development,     
marketing and general administration. The Company believes its cash and         
investment balances will provide sufficient resources to meet its cash          
requirements for at least the next twelve months. In addition, at December 31,  
1996, the Company has $6,965,995 in long-term investments which the Company     
believes is sufficient to sustain its operations on a longer term basis, if     
necessary.                                                                      

If the Company develops a consumer product utilizing its wireless technology,   
the large scale manufacturing, marketing and commercial rollout of the products 
will require substantially greater capital resources than are currently         
available to the Company. The Company may seek to enter into strategic alliances
with one or more large, financially capable companies or may seek additional    
capital to undertake these activities. No assurance can be given that the       
Company will form such alliances or obtain financing, if needed.                

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Item 7. Financial Statements                                                    

 Index to Financial Statements

                                                                          Page
                                                                          ----

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                          25  

BALANCE SHEETS -- DECEMBER 31, 1996 AND 1995                               26-27

STATEMENTS OF OPERATIONS -- FOR THE YEARS ENDED                                 
DECEMBER 31, 1996, 1995 AND 1994                                            28  

STATEMENTS OF SHAREHOLDERS' EQUITY -- FOR THE YEARS                             
ENDED DECEMBER 31, 1996, 1995 AND 1994                                      29  

STATEMENTS OF CASH FLOWS -- FOR THE YEARS ENDED DECEMBER 31, 1996, 1995         
AND 1994                                                                    30  

NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 1996, 1995 AND 1994               
                                                                           31-42

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of                                                    
ParkerVision, Inc.:                                                             

We have audited the accompanying balance sheets of PARKERVISION, INC. (a Florida
corporation) as of December 31, 1996 and 1995, and the related statements of    
operations, shareholders' equity, and cash flows for each of the three years in 
the period ended December 31, 1996. These financial statements are the          
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements based on our audits.                      

We conducted our audits in accordance with generally accepted auditing          
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.          

In our opinion, the financial statements referred to above present fairly, in   
all material respects, the financial position of ParkerVision, Inc. as of       
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.                                  

ARTHUR ANDERSEN LLP                                                             

Jacksonville, Florida,                                                          
February 14, 1997                                                               

25

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PARKERVISION, INC.

BALANCE SHEETS

DECEMBER 31, 1996 AND 1995

                                                                [Download Table]

                                                            1996         1995   
                                                        -----------  -----------
                                                                                
CURRENT ASSETS:                                                                 
   Cash                                                 $ 1,554,732  $ 1,291,527
   Short-term investments                                 3,987,149    5,080,308
   Accounts receivable, net of allowance for doubtful                           
      accounts of $33,033 and $17,350 at December 31,                           
      1996 and 1995, respectively                         1,143,121      451,274
   Interest receivable                                      135,662       84,375
   Insurance and other receivables                            6,712      310,514
   Inventories, net                                       1,957,896    2,274,764
   Prepaid expenses                                         306,511      131,044
   Deferred income taxes                                      3,477        6,662
                                                        -----------  -----------
              Total current assets                        9,095,260    9,630,468

LONG-TERM INVESTMENTS                                     6,965,995            0

PROPERTY AND EQUIPMENT, net                               1,516,685    1,093,269

OTHER ASSETS, net                                           583,972      231,239
                                                        -----------  -----------

              Total assets                              $18,161,912  $10,954,976
                                                        ===========  ===========

The accompanying notes are an integral part of these balance sheets.

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PARKERVISION, INC.

BALANCE SHEETS

DECEMBER 31, 1996 AND 1995

                                                        [Enlarge/Download Table]

                                                             1996           1995      
                                                          ------------   ------------ 
                                                                                      
CURRENT LIABILITIES:                                                                  
   Accounts payable                                       $    555,269   $    462,466 
   Accrued expenses:                                                                  
      Salaries and wages                                       195,864        113,112 
      Professional fees and other                              102,867         62,333 
      Interest payable to related parties                            0          8,110 
   Deferred revenue                                             27,396         87,954 
   Current portion of subordinated debentures                        0        216,018 
                                                          ------------   ------------ 
              Total current liabilities                        881,396        949,993 

SUBORDINATED DEBENTURES, net of current portion                      0      3,028,237 

DEFERRED INCOME TAXES                                            3,477          6,662 

COMMITMENTS AND CONTINGENCIES (Notes 7, 8 and 9)                                      

SHAREHOLDERS' EQUITY:                                                                 
   Preferred stock, $1 par value, 1,000,000 shares                                    
      authorized, none issued or outstanding                         0              0 
   Common stock, $.01 par value, 20,000,000 shares                                    
      authorized, 10,032,604 and 8,800,541 shares issued                              
      and outstanding at December 31, 1996 and 1995,                                  
      respectively                                             100,326         88,005 
   Warrants outstanding                                      1,152,360            360 
   Additional paid-in capital                               25,392,608     14,556,754 
   Accumulated deficit                                      (9,368,255)    (7,675,035)
                                                          ------------   ------------ 
              Total shareholders' equity                    17,277,039      6,970,084 
                                                          ------------   ------------ 

              Total liabilities and shareholders' equity  $ 18,161,912   $ 10,954,976 
                                                          ============   ============ 

The accompanying notes are an integral part of these balance sheets.

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PARKERVISION, INC.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

                                                                [Download Table]

                                           1996          1995          1994     
                                        -----------   -----------   ----------- 
                                                                                
Revenues, net                           $ 9,252,052   $ 3,941,194   $ 1,227,799 
Cost of goods sold                        5,987,097     2,440,656       642,551 
                                        -----------   -----------   ----------- 
    Gross margin                          3,264,955     1,500,538       585,248 

Marketing and selling expenses            2,386,296     1,995,727     1,520,729 
General and administrative expenses       1,506,940     1,446,026     1,462,822 
Research and development expenses         1,482,771     1,178,772       703,499 
Nonrecoverable start-up and excess                                              
     capacity costs                          91,350       556,675       575,161 
Interest expense to related parties          75,547       277,786       324,680 
Interest income                            (614,289)     (398,648)     (479,197)
Other expense, net                           10,810       252,712       159,283 
                                        -----------   -----------   ----------- 

     Net loss                           $(1,674,470)  $(3,808,512)  $(3,681,729)
                                        ===========   ===========   =========== 
     Net loss per common and common                                             
         equivalent share               $     (0.17)  $     (0.43)  $     (0.42)
                                        ===========   ===========   =========== 

The accompanying notes are an integral part of these statements.

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PARKERVISION, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

                                                        [Enlarge/Download Table]

                               Common Stock                                                              
                       ---------------------------                                                       
                                                      Warrants    Additional                   Total     
                                            Par         out-       Paid-In    Accumulated   Shareholders'
                         Shares            Value      standing     Capital      Deficit        Equity    
                       -----------      -----------  ----------  -----------  -----------   ------------ 
                                                                                                         
BALANCE, December 31,                                                                                    
1993, as reclassified    8,720,000      $    87,200  $      360  $14,443,689  $  (203,544)  $ 14,327,705 

Net loss for the year                                                                                    
ended December 31,                                                                                       
1994                             0                0           0            0   (3,681,729)    (3,681,729)
                       -----------      -----------  ----------  -----------  -----------   ------------ 

BALANCE, December 31,                                                                                    
1994                     8,720,000           87,200         360   14,443,689   (3,885,273)    10,645,976 

Issuance of common                                                                                       
stock upon employee                                                                                      
stock option exercise       80,541              805           0      113,065            0        113,870 

Unrealized gain on                                                                                       
investments available                                                                                    
for sale                         0                0           0            0       18,750         18,750 

Net loss for the year                                                                                    
ended December 31,                                                                                       
1995                             0                0           0            0   (3,808,512)    (3,808,512)
                       -----------      -----------  ----------  -----------  -----------   ------------ 
BALANCE, December 31,                                                                                    
1995                     8,800,541           88,005         360   14,556,754   (7,675,035)     6,970,084 

Issuance of common                                                                                       
stock upon employee                                                                                      
stock option exercise       27,638              277           0       46,148            0         46,425 

Issuance of common                                                                                       
stock on April 12,                                                                                       
1996, net of cash                                                                                        
offering costs of                                                                                        
$ 602,500                  800,000            8,000     640,000    6,749,500            0      7,397,500 

Issuance of common                                                                                       
stock for conversion                                                                                     
of subordinated                                                                                          
debentures payable         324,425            3,244           0    3,241,006            0      3,244,250 

Issuance of common                                                                                       
stock for cash on                                                                                        
April 22, 1996              80,000              800           0      799,200            0        800,000 

Issuance of warrants                                                                                     
for financial                                                                                            
consulting services              0                0     512,000            0            0        512,000 

Change in unrealized                                                                                     
gain on investments                                                                                      
available for sale               0                0           0            0      (18,750)       (18,750)

Net loss for the                                                                                         
period ended December                                                                                    
31, 1996                         0                0           0            0   (1,674,470)    (1,674,470)
                       -----------      -----------  ----------  -----------  -----------   ------------ 
BALANCE, December 31,                                                                                    
1996                    10,032,604      $   100,326  $1,152,360  $25,392,608  $(9,368,255)  $ 17,277,039 
                       ===========      ===========  ==========  ===========  ===========   ============ 

The accompanying notes are an integral part of these statements.

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PARKERVISION, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

                                                        [Enlarge/Download Table]

                                                                        1996           1995           1994    
                                                                    ------------   ------------   ----------- 
                                                                                                              
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                         
   Net loss                                                         $ (1,674,470)  $ (3,808,512)  $(3,681,729)
   Adjustments to reconcile net loss to net cash used for                                                     
       operating activities:                                                                                  
       Depreciation and amortization                                     609,485        499,605       359,751 
       Amortization of discounts on investments                         (139,452)      (142,605)      (41,423)
       Provision for obsolete inventories                                330,000        309,311       137,368 
       Loss on disposal of property                                            0          4,877        13,987 
       Loss on sale of investments                                             0              0        11,966 
       Changes in operating assets and liabilities:                                                           
          (Increase) decrease in accounts receivable, net               (691,847)      (310,540)       27,776 
          Decrease (increase) in interest and other receivables          252,515       (221,813)     (149,985)
          Increase in inventories                                        (13,132)      (907,148)     (518,625)
          (Increase) decrease in prepaid expenses                        (73,071)       (24,012)       97,181 
          Increase in other assets                                       (27,852)      (122,691)      (30,122)
          Increase in accounts payable and accrued expenses              207,979        198,962       142,894 
          (Decrease) increase in deferred revenue                        (60,558)        87,954       (19,022)
                                                                    ------------   ------------   ----------- 
              Total adjustments                                          394,067       (628,100)       31,746 
                                                                    ------------   ------------   ----------- 
              Net cash used for operating activities                  (1,280,403)    (4,436,612)   (3,649,983)
                                                                    ------------   ------------   ----------- 

CASH FLOWS FROM INVESTING ACTIVITIES:                                                                         
     Purchase of investments                                         (11,890,092)    (8,811,583)     (127,551)
     Proceeds from maturity of investments                             6,137,958     10,473,000     7,670,000 
     Proceeds from sale of investments                                         0              0       988,034 
     Purchase of property and equipment                                 (948,183)      (596,133)     (428,931)
                                                                    ------------   ------------   ----------- 
              Net cash (used for) provided by investing activities    (6,700,317)     1,065,284     8,101,552 
                                                                    ------------   ------------   ----------- 

CASH FLOWS FROM FINANCING ACTIVITIES:                                                                         
     Proceeds from issuance of common stock                            8,243,925        113,870             0 
                                                                    ------------   ------------   ----------- 
              Net cash provided by financing activities                8,243,925        113,870             0 
                                                                    ------------   ------------   ----------- 

NET CHANGE IN CASH                                                       263,205     (3,257,458)    4,451,569 

CASH, beginning of year                                                1,291,527      4,548,985        97,416 
                                                                    ------------   ------------   ----------- 

CASH, end of year                                                   $  1,554,732   $  1,291,527   $ 4,548,985 
                                                                    ============   ============   =========== 

The accompanying notes are an integral part of these statements.

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PARKERVISION, INC.

 NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

1. THE COMPANY AND NATURE OF BUSINESS:                                          

ParkerVision, Inc. (the "Company"), was incorporated under the laws of the state
of Florida on August 22, 1989. The Company is engaged in the design, manufacture
and marketing of automated video equipment and is researching certain wireless  
technologies. The Company sells its products through audiovisual dealers and    
other equipment manufacturers throughout the United States, as well as in       
Canada, Latin America and Asia. Approximately 99% of the Company's sales are    
generated through dealers and other equipment manufacturers in the United       
States. The Company is in a highly competitive industry with rapidly changing   
and evolving technologies and an increasing number of market entrants who have  
introduced or are developing an array of new audiovisual and telecommunications 
products and services. The Company's potential competitors in this industry have
substantially greater financial, technical and other resources than those of the
Company.                                                                        

The Company has made significant investments in developing the technology and   
manufacturing capability for its products, the return on which are dependent    
upon the generation of future revenues for realization. The Company has not yet 
generated sufficient revenues to offset its expenses, and thus has utilized     
proceeds from its initial public offering and subsequent offerings to fund its  
operations. In the opinion of management, the Company has adequate funds to meet
its liquidity needs for 1997 as well as on a longer term basis.                 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:                                  

Use of Estimates in the Preparation of Financial Statements                     

The preparation of financial statements in conformity with generally accepted   
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the        
financial statements and the reported amounts of revenues and expenses during   
the reporting periods. Actual results could differ from those estimates.        

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Investments                                                                     

Investments consist of funds invested in U.S. Treasury notes, U.S. Treasury     
bills, Federal Mortgage Backed Securities and certificates of deposit. The      
Company accounts for investments in accordance with Statement of Financial      
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in   
Debt and Equity Securities." SFAS No. 115 requires investment securities to be  
classified as held-to-maturity, trading, or available-for-sale based on the     
characteristics of the securities and the activity in the investment portfolio. 
At December 31, 1996, all of the Company's investments were classified as       
held-to-maturity. At December 31, 1995, short-term investments included         
investments classified as available-for-sale reported at their fair value of    
$3,009,473 and investments classified as held-to-maturity reported at their     
amortized cost of $2,070,835. For the year ended December 31, 1996, an          
unrealized loss of $18,750 was recorded as a component of shareholders' equity. 
Short-term investments which mature within three months from the date of        
acquisition are classified as cash equivalents.                                 

Inventories                                                                     

Inventories are stated at the lower of average cost (which approximates the     
first-in, first-out method) or market (net realizable value).                   

Purchased materials inventory consists principally of components and            
subassemblies. The Company's substantial investment in inventory is due to      
anticipated future demand for its product and the buildup of safety stock on    
single-source or long lead-time components. Management believes the Company will
realize its investment in net inventory through future product sales and that   
the Company's purchased materials inventories could, if necessary, be resold "as
is" without incurring substantial loss.                                         

Property and equipment                                                          

Property and equipment are stated at cost less accumulated depreciation. The    
cost and accumulated depreciation of assets sold or retired are removed from    
their respective accounts, and any resulting gain or loss is recognized in the  
accompanying statements of operations. Depreciation is determined using the     
straight-line method using the following estimated useful lives:                

    Leasehold improvements                     Lesser of five years or
                                                   remaining term of the lease
Tools and dies                             Five to seven years
Manufacturing and office equipment         Five to seven years
Furniture and fixtures                     Seven years        

Additions below an established threshold are expensed as acquired. The effect of
this policy is not material to the Company's financial statements.              

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Other assets                                                                    

Included in other assets are patent costs which represent costs incurred to     
obtain patents for product concepts and methodologies developed by the Company. 
The Company has submitted additional patent applications which are currently    
pending. Capitalized patent costs are being amortized over the estimated life of
the related patents. Other assets also include prepaid consulting fees carried  
at the estimated fair market value of the warrants issued as consideration for  
such consulting services (see Note 10). These fees are being amortized over the 
term of the consulting agreement.                                               

Nonrecoverable start-up and excess capacity costs                               

Nonrecoverable start-up and excess capacity costs include material, labor and   
overhead costs incurred by the Company in excess of those directly or indirectly
attributable to system sales. Such costs are primarily composed of the cost of  
excess facilities, and are expensed as incurred.                                

Warranty costs                                                                  

The Company generally warrants its products against defects in workmanship and  
material for one year from the date of shipment. Estimated costs related to     
warranty are accrued at the time of revenue recognition. To date, the Company   
has not incurred any significant warranty costs.                                

Loss per share                                                                  

Loss per share is determined based on the weighted-average number of common     
shares assumed to be outstanding during each year. Common share equivalents are 
excluded from the calculation as their effect is anti-dilutive. The             
weighted-average number of common shares assumed to be outstanding for the years
ended December 31, 1996, 1995 and 1994, is 9,681,182, 8,757,802, and 8,720,000, 
respectively.                                                                   

Statements of Cash Flows                                                        

The Company paid interest of $83,658, $269,676, and $328,413 during 1996, 1995  
and 1994, respectively.                                                         

The Company issued 324,425 shares of common stock in 1996 for conversion of     
subordinated debentures totaling $3,244,250.                                    

The Company issued 200,000 warrants in 1996 for professional services to be     
provided over a five year period valued at $512,000.                            

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Fair value of financial instruments                                             

During 1995, the Company adopted SFAS No. 107, "Disclosures About Fair Value of 
Financial Instruments." SFAS No. 107 requires, among other things, disclosures  
regarding the fair value of financial instruments and the assumptions made in   
determining their fair values, where practicable. The carrying amounts of the   
Company's financial instruments, including cash, short-term investments,        
short-term trade receivables and payables, and subordinated debentures,         
approximate their fair values.                                                  

3. INCOME TAXES AND TAX STATUS                                                  

The Company accounts for income taxes in accordance with SFAS No. 109,          
"Accounting for Income Taxes."                                                  

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,
1996 and 1995, and 1994, is as follows:                                         

                                     1996          1995           1994
                                       ---------    -----------    -----------

Tax benefit at statutory rate           $(569,320)   $(1,294,894)   $(1,251,788)
State tax benefit                         (83,724)      (190,426)      (184,086)
Increase in valuation allowance           613,711      1,583,926      1,514,042 
Other                                      39,333        (98,606)       (78,168)
                                       ---------    -----------    -----------
                                       $       0    $         0    $         0
                                       =========    ===========    ===========

The Company's deferred tax assets and liabilities relate to the following       
sources and differences between financial accounting and the tax bases of the   
Company's assets and liabilities at December 31, 1996 and 1995:                 

                                                      1996          1995
                                                     -----------   -----------
Current deferred taxes:                                                         
Current deferred tax assets:                                              
       Inventory obsolescence reserve                $   170,095   $   137,780
       Warranty reserve                                   15,440             0
       Allowance for doubtful accounts                    13,709         7,200
       Deferred revenue                                   11,369        36,501
       Related-party payables and accruals                 4,845         4,962
       Inventory capitalization                            4,231        49,978
                                                     -----------   -----------
                                                         219,689       236,421
        Less valuation allowance                         (216,212)     (229,759)
                                                     -----------   -----------
              Total current deferred tax assets      $     3,477   $     6,662
                                                     ===========   ===========

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                                                      1996          1995
                                                     -----------   -----------
Noncurrent deferred taxes:                                                      
Noncurrent deferred tax assets:                                           
       Net operating loss carryforward               $ 3,856,108   $ 2,944,922
       Patent amortization and other                      16,783        11,321
                                                     -----------   -----------
                                                       3,872,891     2,956,243
        Less valuation allowance                       (3,811,601)   (2,868,209)
                                                     -----------   -----------
              Total noncurrent deferred tax assets        61,290        88,034

Noncurrent deferred tax liabilities:                                      
        Depreciation                                      (64,767)      (94,696)
                                                     -----------   -----------

Net noncurrent deferred income tax liability          $    (3,477)  $    (6,662)
                                                     ===========   ===========

The Company has recorded a valuation allowance to state its deferred tax assets 
at estimated net realizable value due to the uncertainty related to realization 
of these assets through future taxable income. The valuation allowance for      
deferred tax assets as of December 31, 1996 and 1995 was $4,027,813 and         
$3,097,968, respectively.                                                       

At December 31,1996, the Company had net operating loss carryforwards for income
tax purposes of approximately $9,300,000 which expire from 2008 to 2011. The    
Company's ability to benefit from the net operating loss carryforwards could be 
limited under Section 382 of the Internal Revenue Code if ownership of the      
Company changes by more than 50%, as defined.                                   

4. INVENTORIES:                                                                 

Inventories consist of the following at December 31, 1996 and 1995:             

                                               1996               1995
                                                -----------        -----------

Purchased materials                              $ 1,353,499        $ 1,751,527 
Work in process                                      329,983            484,873 
Finished goods                                       684,282            370,364 
                                                -----------        -----------
                                                  2,367,764          2,606,764
Less allowance for inventory                                                    
   obsolescence                                     (409,868)          (332,000)
                                                -----------        -----------
                                                $ 1,957,896        $ 2,274,764
                                                ===========        ===========

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5. PROPERTY AND EQUIPMENT, NET:                                                 

Property and equipment, at cost, consist of the following at December 31, 1996  
and 1995:                                                                       

                                                1996              1995
                                                 -----------       -----------

Manufacturing and office equipment                $ 2,582,790       $ 1,761,565 
Tools and dies                                        789,865           733,936 
Leasehold improvements                                101,303            30,279 
Furniture and fixtures                                 28,079            28,079 
                                                 -----------       -----------
                                                   3,502,037         2,553,859
Less accumulated depreciation                      (1,985,352)       (1,460,590)
                                                -----------        -----------
                                                 $ 1,516,685       $ 1,093,269
                                                 ===========       ===========

Depreciation expense related to property and equipment was $524,762, $477,907,  
and $353,427, in 1996, 1995, and 1994, respectively.                            

6. OTHER ASSETS                                                                 

Other assets consist of the following at December 31, 1996 and 1995:            

                                                  1996              1995
                                                   ---------         ---------

Prepaid consulting fees                             $ 366,939         $       0 
Patents and copyrights                                289,033           261,181 
Other assets                                            4,450             4,450 
                                                   ---------         ---------
                                                     660,442           265,631
Less accumulated amortization                         (76,450)          (34,392)
                                                   ---------         ---------
                                                   $ 583,972         $ 231,239
                                                   =========         =========

Amortization of patents and copyrights was $42,058, $21,698, and $6,324, in     
1996, 1995 and 1994, respectively.                                              

7. RELATED-PARTY TRANSACTIONS:                                                  

Subordinated debentures                                                         

The components of the Company's long-term debt payable to related parties at    
December 31, 1996 and 1995, are as follows:                                     

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                                                         1996         1995
                                                         ----------   ----------

Subordinated debenture payable to a related                                     
party, variable interest at prime (8.5 percent at                               
December 31, 1995)                                       $        0   $2,772,111

Subordinated debenture payable to a related                                     
party, variable interest at prime (8.5 percent at                               
December 31, 1995)                                                0      252,144

Subordinated debenture payable to a related                                     
party, variable interest at prime (8.5 percent at                               
December 31, 1995)                                                0      220,000
                                                         ----------   ----------
                                                                  0    3,244,255
Less current portion                                              0      216,018
                                                         ==========   ==========
                                                         $        0   $3,028,237
                                                         ==========   ==========

On April 12, 1996, the Company converted its long-term debt payable to related  
parties to 324,425 shares of common stock of the Company (See Note 11).         

Building Lease                                                                  

During March 1992, the Company entered into an operating lease arrangement with 
certain officers and shareholders of the Company for the office and             
manufacturing facility the Company currently occupies. The lease provided for a 
base monthly lease payment of approximately $20,240 through February 28, 1997,  
with a provision to extend at the option of the Company. In addition, the       
Company is required to pay all insurance, taxes, repairs and maintenance on the 
property. On December 29, 1995, the Company amended its lease agreement to      
provide for a base monthly lease payment of $16,867 retroactive to January 1,   
1995. Effective January 1, 1996, the Company further negotiated its base monthly
lease payment and amended its lease agreement to provide for a base monthly     
lease payment of $8,333.                                                        

Future minimum payments as of December 31, 1996 are as follows:                 

1997             $16,667                            

Rent expense related to the above lease was $106,500, $215,551, and $258,662,   
for the years ended December 31, 1996, 1995 and 1994, respectively.             

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8. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK                       

In 1996, VTEL and one other reseller accounted for approximately 35% and 11% of 
total revenues, respectively. In 1995, VTEL and one other reseller accounted for
approximately 12% and 10% of total revenues, respectively. In 1994, one reseller
accounted for approximately 12% of total revenues.                              

Financial instruments which potentially subject the Company to concentrations of
credit risk consist primarily of trade receivables. VTEL and one other reseller 
accounted for approximately 43% of accounts receivable at December 31, 1996. The
Company closely monitors extensions of credit and has never experienced         
significant credit losses.                                                      

9. COMMITMENTS                                                                  

At December 31, 1996, the Company has commitments to purchase materials         
aggregating approximately $925,000 through 1997 from two suppliers. One of these
suppliers is a single-source supplier of the Company's camera modules and       
accounted for approximately 21%, 23% and 20% of the Company's component         
purchases for the years ended December 31, 1996, 1995 and 1994, respectively. No
other supplier accounted for more than 15% of the Company's component purchases 
in 1996, 1995, or 1994.                                                         

10. STOCK OPTIONS AND STOCK-BASED COMPENSATION PLANS                            

Nonplan Options                                                                 

On February 1, 1993, the Company issued nonqualified options to purchase 189,746
shares of its common stock for $1.355 per share to certain key employees and a  
former director. These options were granted at an exercise price equal to the   
fair market value of the common stock at the date of grant, are immediately     
exercisable, and expire five years from the date of grant. On October 11, 1993, 
the Company issued nonqualified options to purchase 50,000 shares of its common 
stock for $5 per share to an officer. These options are immediately exercisable 
and expire ten years from the date of grant.                                    

The following table summarizes activity related to these options for each of the
three years ended December 31, 1996:                                            

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                                                                     Wtd. Avg.
                                                                    Exercise
                                                 Option Shares     Price
                                                   -------------    --------

Outstanding at December 31, 1993                       238,860         $2.12    
      Forfeited                                     (4,480)         1.36
                                     -------

Outstanding at December 31, 1994                       234,380          2.13    
      Exercised                                    (78,041)         1.36
      Forfeited                                       (443)         1.36
                                     -------

Outstanding at December 31, 1995                       155,896          2.52    
      Exercised                                    (22,638)         1.36
      Forfeited                                        (43)         1.36
                                     -------

Outstanding at December 31, 1996                       133,215         $2.72    
                                     =======

1993 Stock Plan                                                                 

The Company adopted a stock plan in September 1993 (the "1993 Plan"). The 1993  
Plan, as amended in 1996, provides for the grant of options and other Company   
stock awards, not to exceed 1,500,000 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, bargain purchases of common 
stock, bonuses of common stock and various stock benefits or cash. Under terms  
of the plan, incentive stock options may not be granted at less than the fair   
market value of the common stock on the date of grant and expire no later than  
ten years after the date of grant. Nonqualified options could not be issued at  
an exercise price less than the fair value of the common stock through November 
30, 1996. Thereafter, nonqualified options may be issued at not less than the   
par value of the common stock.                                                  

Options granted to employees under the 1993 Plan generally vest over zero to    
five years and are exercisable for a period of five years from the date the     
options become vested. Options granted to directors under the 1993 Plan are     
generally exercisable immediately and expire ten years from the date of grant.  
Options to purchase 1,195,225 shares of common stock were available for future  
grants under the 1993 Plan at December 31, 1996.                                

The following table summarizes activity under the 1993 Plan for each of the     
years ended December 31:                                                        

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                                                                [Download Table]

                             1996               1995             1994     
                       -----------------  ----------------  --------------
                                   Wtd.              Wtd.             Wtd.
                                   Avg.              Avg.             Avg.
                                   Ex.               Ex.              Ex. 
                        Shares    Price    Shares   Price    Shares  Price
                       -----------------  ----------------  --------------
                                                                          
Outstanding at                                                            
   beginning of year   168,500    $ 7.07   27,500   $ 4.52  20,000   $5.00
Granted                134,275     13.33  143,500     7.50   7,500   $3.25
Exercised               (5,000)     3.25   (2,500)    3.25       0        
Forfeited                 (500)    10.50        0                0        
                       -----------------  ----------------  --------------
Outstanding at                                                            
   end of year         297,275      9.96  168,500     7.07  27,500    4.52
                       =================  ================  ==============
Exercisable at                                                            
   end of year         256,875     10.05  140,500     7.16  27,500    4.52
                       =================  ================  ==============
Weighted average fair                                                     
   value of options                                                       
   granted                         $5.94             $3.25                
                               =========          ========                

The Company's 1993 Stock Plan is accounted for under APB Opinion No. 25, under  
which no compensation cost has been recognized. Had compensation cost for this  
plan been determined consistent with FASB Statement No. 123, the Company's net  
loss and net loss per share would have been increased to the following pro forma
amounts:                                                                        

                                               1996               1995
                                               -------------      --------------

          Net Loss:  As Reported               $  (1,674,470)     $  (3,808,512)
                     Pro Forma                    (2,412,705)        (4,193,457)

Net Loss per Share:  As Reported               $       (0.17)     $       (0.43)
                     Pro Forma                         (0.25)             (0.48)

The options outstanding at December 31, 1996 have exercise prices between $5.00 
and $13.875 and a weighted average remaining contractual life of approximately 8
years. The fair value of each option grant is estimated on the date of grant    
using the Black-Scholes option pricing model with the following weighted average
assumptions used for grants in 1995 and 1996, respectively: risk free interest  
rates of 5.38% to 5.52% in 1995 and 6.04% to 6.78% in 1996, no expected dividend
yields, expected lives of five years, and expected volatility of 40%.           

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In connection with its Regulation S offering (see Note 11), on April 12, 1996,  
the Company granted warrants to outside financial consultants to purchase an    
aggregate of 250,000 shares of common stock of the Company at an exercise price 
of $10.00 per share. The warrants are exercisable for a period of five years    
from the date of consummation of the offering. The warrants have an estimated   
fair market value of $2.56 per share, or $640,000 which is estimated on the date
of grant using the Black-Scholes option pricing model with the following        
weighted average assumptions: risk free interest rate of 6.34%, no expected     
dividend yield, an expected life of two years, and expected volatility of 40%.  

In July 1996, the Company retained Whale Securities Co., L.P. ("Whale") to serve
as a financial consultant and advisor for a period of five years. As            
compensation for these services, the Company issued warrants to Whale and its   
designee for the purchase of 200,000 shares of the Company's common stock at an 
exercise price of $10.00 per share. The warrants are exercisable for a period of
five years from the date of issuance and their estimated fair value of $2.56 per
share or $512,000 is being amortized to expense over the term of the consulting 
agreement.                                                                      

11. STOCK AUTHORIZATION AND ISSUANCE:                                           

Preferred Stock                                                                 

The Certificate of Incorporation of the Company authorizes the Board of         
Directors to issue up to 1,000,000 shares of preferred stock, $1.00 par value.  
No preferred shares have been issued or are outstanding.                        

Common Stock                                                                    

On April 12, 1996, the Company completed an offering of 800,000 shares of its   
common stock to overseas investors in a transaction pursuant to Regulation S of 
the Securities Act of 1933, as amended (the "Offering"). The shares, which      
constituted approximately 8.3% of the Company's outstanding common stock on an  
after-issued basis, were sold at a price of $10.00 per share. After deducting   
issuance and offering costs of $602,500, the Company received net proceeds      
therefrom of $7,397,500.                                                        

The Company engaged outside financial consultants in connection with the        
Offering, and as compensation for their services, on April 12, 1996, the Company
granted the consultants warrants to purchase an aggregate of 250,000 shares of  
common stock of the Company (see Note 10).                                      

Also in connection with the Offering, certain related parties agreed to convert 
subordinated debentures of the Company at a value of $10.00 per share for an    
aggregate of 324,425 shares of common stock.                                    

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On April 22, 1996, the Company completed an offering of an aggregate of 80,000  
shares of its common stock to two investors in a private placement transaction  
pursuant to Section 4(2) of the Securities Act of 1933, as amended. These       
shares, which constituted approximately 0.8% of the Company's outstanding common
stock on an after-issued basis, were sold at a price of $10.00 per share and the
Company received net proceeds therefrom of $800,000.                            

On July 16, 1996, the Company engaged a financial consultant for a period of    
five years, and as compensation for services, the Company granted the financial 
consultant warrants to purchase an aggregate of 200,000 shares of common stock  
of the Company (see Note 10).                                                   

12. QUARTERLY RESULTS OF OPERATIONS (Unaudited):                                

                                                        [Enlarge/Download Table]

                         First Quarter  Second Quarter  Third Quarter  Fourth Quarter
                         -------------  --------------  -------------  --------------
                                                                                     
Year ended December 31,                                                              
1996:                                                                                
     Revenues, net        $ 1,537,689    $ 3,243,972     $ 2,433,652    $ 2,036,739  
     Gross margin             518,888      1,173,194         943,925        628,948  
     Operating expenses     1,160,717      1,365,869       1,281,587      1,659,184  
     Interest expense          66,913          8,634               0              0  
     Net loss                (637,486)       (40,935)       (152,108)      (843,941) 
     Loss per share             (0.07)          0.00           (0.02)         (0.08) 

Year ended December 31,                                                              
1995:                                                                                
     Revenues, net            319,606      1,003,398       1,616,328      1,002,326  
     Gross margin             103,640        382,507         662,256        352,599  
     Operating expenses     1,298,572      1,275,238       1,243,120      1,360,270  
     Interest expense          89,217         89,217          89,217         10,135  
     Net loss              (1,122,251)      (913,041)       (660,286)    (1,112,934) 
     Loss per share             (0.13)         (0.10)          (0.08)         (0.12) 

Year ended December 31,                                                              
1994:                                                                                
     Revenues, net            210,535        248,116         468,672        300,476  
     Gross margin             117,050        121,147         221,737        125,314  
     Operating expenses       935,407      1,033,074       1,017,971      1,275,759  
     Interest expense          69,196         68,944          95,300         91,240  
     Net loss                (761,859)      (859,503)       (818,343)    (1,242,024) 
     Loss per share             (0.09)         (0.10)          (0.09)         (0.14) 

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Item 8. Changes In and Disagreements With Accountants on Accounting and         
Financial Disclosure                                                            

None.                                                                           

PART III                                                                        

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act                                          

The directors and executive officers of the Company and their positions are     
listed below, followed by a brief description of their business experience      
during the past five years:                                                     

Name              Age                     Position                
-------------------    -------    ------------------------------------------    

Jeffrey Parker           40       Chairman of the Board, Chief Executive        
         Officer and President
Todd Parker              32       Vice President and Director                   
Stacie Parker Wilf       38       Secretary, Treasurer and Director             
David F. Sorrells        38       Chief Technical Officer and Director          
Cynthia Poehlman         30       Chief Accounting Officer                      
William L. Sammons       76       Director                                      
Arthur G. Yeager         63       Director                                      

Jeffrey Parker has been chairman of the board and chief executive officer of the
Company since its inception and president of the Company since April 1993. From 
March 1983 to August 1989, Mr. Parker served as Executive Vice President and    
Sales Manager for Parker Electronics, Inc. ("Parker Electronics"), a joint      
venture partner with Carrier Corporation performing research development and    
marketing for the heating, ventilation and air conditioning industry.           

Todd Parker has been vice president and a director of the Company since its     
inception. From January 1985 to August 1989, Mr. Parker served as General       
Manager of Manufacturing for Parker Electronics.                                

Stacie Parker Wilf has been the secretary and treasurer and a director of the   
Company since its inception. From January 1981 to August 1989, Ms. Wilf served  
as the Controller and Chief Financial Officer of Parker Electronics.            

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David F. Sorrells has been the chief technical officer of the Company since     
September 1996 and has been a director of the Company since January 1997. From  
June 1990 to September 1996, Mr. Sorrells served as Engineering Manager for the 
Company.                                                                        

Cynthia Poehlman has been the chief accounting officer of the Company since     
January 1996, and controller of the Company since March 1994. From October 1991 
until she joined the Company, Ms. Poehlman served as Audit Manager with Arthur  
Andersen, LLP, a public accounting firm.                                        

William L. Sammons has been a director of the Company since October 1993. From  
1981 to 1985, Mr. Sammons was President of the North American Operations of     
Carrier Corporation until he retired.                                           

Arthur G. Yeager has been a director of the Company since December 1995. Mr.    
Yeager has been a sole practitioner of law specializing in patent, trademark and
copyright laws since 1960. He has an office located in Jacksonville, Florida.   
Mr. Yeager provides legal services to the Company as its patent and trademark   
attorney.                                                                       

Messrs. Jeffrey and Todd Parker and Ms. Stacie Parker Wilf are brothers and     
sister.                                                                         

All directors hold office until the next annual meeting of shareholders and the 
election and qualification of their successors. Officers of the Company are     
elected annually by the board of directors and serve at the discretion of the   
board.                                                                          

The Company enters into indemnification agreements with each of the directors   
and officers whereby the Company agrees to indemnify, and advance certain       
expenses to, each indemnitee to the fullest extent permitted by applicable law. 
The indemnification agreements will continue until and terminate upon the later 
of (i) the expiration of the statute of limitations applicable to any possible  
claim, or (ii) the final termination of all pending proceedings in respect of   
which the indemnitee is granted rights of indemnification or advancement of     
expenses or any proceeding commenced by the indemnitee. The Company also        
maintains director and officer liability insurance.                             

Messrs. Todd Parker, Arthur G. Yeager and William L. Sammons are members of the 
compensation committee of the board of directors and Messrs. Arthur G. Yeager   
and William L. Sammons are members of the audit committee of the board of       
directors.                                                                      

The Company maintains keyman life insurance on the lives of Jeffrey Parker, Todd
Parker, and David Sorrells in the amounts of $1,000,000, $1,000,000 and         
$1,500,000, respectively.                                                       

The Company has agreed that, until November 30, 1999, if so requested by Whale  
Securities Co., L.P. ("Whale"), it will nominate and use its best efforts to    
elect a designee of Whale as a director of the Company or, at Whale's option, as
a non-voting advisor to the Company's board of directors. The Company's         
principal officers and directors have agreed to vote their                      

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shares of common stock in favor of such designee. Whale has not yet exercised   
its right to designate such a person and has indicated that it has no current   
intention to do so.                                                             

Compliance with Section 16(a) of the Exchange Act                               

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the  
Company's executive officers, directors and persons who beneficially own more   
than ten percent of a registered class of the Company's equity securities ("ten 
percent stockholders") to file initial reports of ownership and changes in      
ownership with the Securities and Exchange Commission ("SEC") and the National  
Association of Securities Dealers, Inc. ("NASD"). Executive officers, directors 
and ten percent stockholders are required by SEC regulation to furnish the      
Company with copies of all Section 16(a) forms they file.                       

Based solely upon its review of the copies of such forms received by it, or     
written representations from certain reporting persons that no Forms 5 were     
required for those persons, the Company believes that, during the fiscal year   
ended December 31, 1996, all filing requirements applicable to its executive    
officers, directors, and ten percent stockholders were fulfilled.               

Item 10. Executive Compensation                                                 

The following tables summarize the cash compensation paid by the Company to each
of the executive officers (including the Chief Executive Officer) who were      
serving as executive officers at the end of the fiscal year ended December 31,  
1996, for services rendered in all capacities to the Company and its            
subsidiaries during the fiscal years ended December 31, 1996, 1995 and 1994,    
options granted to such executive officers during the fiscal year ended December
31, 1996, and the value of all options granted to such executive officers at the
end of the fiscal year ended December 31, 1996.                                 

Summary Compensation Table

========================================================================        
                                                 Long Term
                                                Compensation
                                               -----------------
                             Annual             Awards
                               Compensation    -----------------
             Fiscal Year    --------------      Securities
Name and Principal        Ended                           Underlying          
Position          December 31       Salary        Options/SARs (#)  
---------------------  -------------   --------------  -----------------        

Jeffrey Parker,            1996          $100,000            100,000            
chief executive            1995           148,000             20,000            
officer and                1994           135,500                  0            
president (a)                                                                   

Todd Parker, vice          1996            75,000                  0            
president (b)              1995           145,000             20,000            
               1994           145,000                  0
========================================================================        

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(a) For the years ended December 31, 1996, 1995 and 1994, Jeffrey Parker        
voluntarily reduced his salary from $175,000 annually to $100,000, $148,000 and 
$135,500, respectively.                                                         

(b) For the year ended December 31, 1996, Todd Parker voluntarily reduced his   
salary from $145,000 annually to $75,000.                                       

 Option/SAR Grants in Last Fiscal Year

==============================================================================  
Number of         % of Total            
   Securities        Options/SARs     Exercise
  Underlying        Granted to       or Base
 Name           Options/SARs       Employees in      Price      Expiration
               Granted          Fiscal Year     ($/share)       Date
--------------  -------------------  --------------   ----------   -----------  

Jeffrey Parker       100,000             74.0%          $13.875     6/19/06     

==============================================================================  

 Aggregated Option/SAR Exercises in Last Fiscal Year and
 Fiscal Year-End Option/SAR Values

==============================================================================  
Number of Securities                  
            Underlying Unexercised          Value of Unexercised
                Options/SARs at Fiscal      In-the-Money Options/SARs at
                 Year-End                    Fiscal Year-End
                ---------------------------   ------------------------------
  Name         Exercisable  Unexercisable     Exercisable    Unexercisable
----------------  -----------  --------------   -------------   --------------  

Jeffrey Parker       170,000               0        $537,500              $0    

Todd Parker           20,000               0        $112,500              $0    

==============================================================================  

Compensation of Directors                                                       

Directors who are also employees of the Company receive no compensation for     
serving on the board of directors other than reimbursement of reasonable        
expenses incurred in attending meetings. Non-employee directors receive a fee of
$1,000 for each board meeting attended as well as reimbursement of reasonable   
expenses incurred in attending meetings.                                        

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1993 Stock Option Plan                                                          

In September 1993, the board of directors approved the Company's stock plan (the
"Stock Plan") pursuant to which an aggregate of 500,000 shares of common stock  
have been reserved for issuance in connection with the benefits ("Benefits")    
available for grant. The Benefits may be granted in any one or in combination of
the following: (i) incentive stock options, (ii) non-qualified stock options,   
(iii) stock appreciation rights, (iv) restricted stock awards, (v) stock        
bonuses, (vi) other forms of stock benefit, or (vii) cash. Incentive stock      
options may only be granted to employees of the Company. Other Benefits may be  
granted to consultants, directors (whether or not any such director is an       
employee), employees and officers of the Company. In October 1996, the 1993     
Stock Plan was amended to provide that a total of 1,500,000 shares of common    
stock may be issued in connection with the Benefits available for grant.        

The Stock Plan is administered by the board of directors or, at their           
discretion, by a committee which is appointed by the board to perform such      
function. The board or such committee, as the case may be, within the           
limitations of the Stock Plan, determines, among other things, when to grant    
Benefits, the persons to whom Benefits will be granted, the number of shares for
each Benefit, whether stock options granted are intended to be incentive stock  
options or non-qualified stock options, the duration and rate of exercise of    
each Benefit, the share purchase price and the manner of exercise, and whether  
restrictions such as repurchase rights by the Company are to be imposed on      
shares subject to Benefits.                                                     

In connection with incentive stock options, the exercise price of each incentive
stock option may not be less than 100% of the fair market value of the common   
stock on the date of grant (or 110% of fair market value in the case of an      
employee holding 10% or more of the outstanding stock of the Company). The      
aggregate fair market value of shares for which incentive stock options granted 
to any employee are exercisable for the first time by such employee during any  
calendar year (pursuant to all stock option plans of the Company and any related
corporation) may not exceed $100,000. Non-qualified stock options may be granted
at a price determined by the board or committee, but not less than the par value
of the common stock. Stock options granted pursuant to the Stock Plan will      
expire not more than ten years from the date of grant (five years in the case of
incentive stock options granted to persons holding 10% or more of the voting    
stock of the Company).                                                          

To date, 395,000 non-qualified stock options and 50,000 incentive stock options 
have been granted under the Stock Plan to directors of the Company.             
Non-qualified stock options were granted on November 18, 1993 to Mr. Sammons,   
director of the Company, and Mr. Bloch, former director of the Company, each to 
purchase 10,000 shares of common stock at an exercise price of $5.00 per share. 
In addition, stock options were granted on December 29, 1995 to Messrs. Sammons,
Bloch, Jeffrey Parker and Todd Parker and Ms. Wilf to purchase an aggregate of  
100,000 shares of common stock at an exercise price of $7.875 per share. On June
19, 1996, non-qualified options were granted to Mr. Jeffrey Parker to purchase  
100,000 shares of common stock at an exercise price of $13.875 per share. On    
January 9, 1997, non-                                                           

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qualified stock options were granted to Messrs. Sammons, Yeager, Jeffrey Parker 
and Todd Parker and Ms. Wilf to purchase an aggregate of 175,000 shares of      
common stock at an exercise price of $11.875 per share. All non-qualified stock 
options granted to date expire ten years from the date of grant. Incentive stock
options were granted on December 20, 1995 to Mr. Sorrells to purchase 16,500    
shares of common stock at an exercise price of $6.625 per share. In addition, on
January 9, 1997, incentive stock options were granted to Mr. Sorrells to        
purchase 33,500 shares of common stock at an exercise price of $11.875 per      
share. All incentive stock options granted to date vest over a five year period 
and expire five years from the date they first become exercisable.              

In addition to the shares granted to directors of the Company, the Company has  
granted an aggregate of 150,775 incentive stock options under the Stock Plan to 
employees of the Company. These options are exercisable at prices ranging from  
$3.25 to $13.875 per share and expire five years from the date they first become
exercisable. Of the 150,775 options granted, options for 63,775 shares were     
exercisable immediately and options for the remaining 87,000 vest over a four to
five year period. To date, three holders of incentive stock options have        
exercised them and purchased an aggregate of 7,500 shares of common stock and   
options to purchase an aggregate of 500 shares of common stock have been        
forfeited.                                                                      

Non-Plan Options                                                                

In February 1993, the Company granted options to purchase an aggregate of       
189,746 shares of common stock to 22 employees, including options to purchase   
31,323 shares to Steven Bloch, a former director of the Company. The options are
fully vested and may be exercised at a price of $1.36 per share until February  
1998. In addition, in October 1993, the Company granted options to purchase an  
aggregate of 50,000 shares of common stock to Jeffrey Parker. The options are   
fully vested and may be exercised until October 2003 at a price of $5.00 per    
share. None of these options were issued under a plan. To date, fourteen holders
of these options have exercised all or a portion of them and purchased an       
aggregate of 100,329 shares of common stock.                                    

Item 11. Security Ownership of Certain Beneficial Owners and Management         

The following table sets forth certain information regarding the Company's      
common stock owned as of March 7, 1997 by (i) each person (including any        
"group") who is known by the Company to be the beneficial owner of more than    
five percent of the common stock, (ii) each of the Company's directors and      
executive officers, and (iii) all directors and executive officers of the       
Company as a group.                                                             

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                                                                      Percent of
                                            Amount and Nature of     Class
Name and Address of Beneficial Owner             Beneficial Owner        (a)    
------------------------------------           --------------------   ----------

Jeffrey Parker, 8493 Baymeadows Way,                                            
  Jacksonville, FL  32256                       2,908,888 (b)(c)     28.4%
J-Parker Family Limited Partnership,                                            
  409 S. 17th Street, Omaha, NE  68102          2,659,174 (c)        26.5%
Todd Parker, 8493 Baymeadows Way,                                               
  Jacksonville, FL  32256                       1,072,755 (d)(e)     10.6%
T-Parker Family Limited Partnership,                                            
  409 S. 17th Street, Omaha, NE  68102          1,040,255 (e)        10.4%
Stacie Parker Wilf, 8493 Baymeadows                                             
  Way,  Jacksonville, FL  32256                 1,080,083 (f)(g)     10.7%
S-Parker-Wilf Family Limited                                                    
Partnership, 409 S. 17th Street,                                      
  Omaha, NE  68102                              1,047,583 (g)        10.4%
William Sammons, 8493 Baymeadows                                                
  Way, Jacksonville, FL  32256                     57,000 (h)            *
Arthur G. Yeager, 112 W. Adams Street,                                          
  Suite 1305, Jacksonville, FL  32202              12,700 (i)            *
David F. Sorrells, 8493 Baymeadows                                              
  Way, Jacksonville, FL  32256                     17,308 (j)            *
Cynthia Poehlman, 8493 Baymeadows                                               
  Way, Jacksonville, FL  32256                      8,000 (k)            *
Walter Scheuer and certain other persons                                        
and entities, c/o 635 Madison                                         
  Avenue, New York, NY  10022                     657,100 (l)         6.6%
All officers and directors as a group                                           
  (seven persons)                               5,156,734 (m)        49.6%

*     Less than 1%                                                              

a)    Percentage includes all outstanding shares plus, for each person or group,
   any shares that person or group has the right to acquire within 60 days
 pursuant to options, warrants, conversion privileges or other rights.

b)    Includes 202,500 shares issuable upon immediately exercisable options.    

c)    J-Parker Family Limited Partnership is the record owner of 2,659,174      
      shares of common stock. Mr. Jeffrey Parker has sole voting and disposition
      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.                                    

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d)    Includes 32,500 shares issuable upon immediately exercisable options.     

e)    T-Parker Family Limited Partnership is the record owner of 1,040,255      
   shares of common stock. Mr. Todd Parker has sole voting and disposition
      power over the shares of common stock owned by the T-Parker Family Limited
 Partnership, as a result of which Mr. Todd Parker is deemed to be the
beneficial owner of such shares.                                    

f)    Includes 32,500 shares issuable upon immediately exercisable options.     

g)    S-Parker-Wilf Family Limited Partnership is the record owner of 1,047,583 
   shares of common stock. Ms. Parker Wilf has sole voting and disposition
   power over the shares of common stock owned by the S-Parker-Wilf Family
     Limited Partnership, as a result of which Ms. Parker Wilf is deemed to be
the beneficial owner of such shares.                                

h)    Includes 55,000 shares issuable upon immediately exercisable options.     

i)    Includes 12,500 shares issuable upon immediately exercisable options.     

j)    Includes 17,308 shares issuable upon immediately exercisable options.     

k)    Includes 8,000 shares issuable upon immediately exercisable options.      

l)    Mr. Scheuer and thirty-two other persons and entities have reported on    
      Amendment #3 to Schedule 13D dated July 26, 1996, the beneficial ownership
     as a group of 657,100 shares of common stock. Of these shares, Mr. Walter
      Scheuer has sole voting and dispositive power over 90,000 shares of common
   stock and shares voting and dispositive power with other members of the
group over 567,100 shares of common stock, representing 6.6% of the 
  outstanding common stock. The other members of the group have reported
   sole or shared voting and dispositive power over varying amounts of the
     shares of common stock indicated in the table, but none claims beneficial
ownership of 5% or more of the common stock on an individual basis. 

m)    Includes 352,308 shares of common stock issuable upon immediately         
exercisable options (see notes b, d, f, h, i, j and k above).       

Item 12. Certain Relationships and Related Transactions                         

The Company leases its executive offices pursuant to a lease agreement dated    
March 1, 1992 with Jeffrey Parker and Barbara Parker. For the fiscal years ended
December 31, 1996 and 1995, the Company incurred $106,500 and $215,551,         
respectively, in rental expense under the lease. In December 1995, the Company  
amended its lease agreement to provide for a base monthly lease payment of      
$16,867, reduced from $20,240 retroactive to January 1, 1995. On January 2,     
1996, the Company again amended its lease agreement to provide for a base       
monthly lease payment of $8,333, reduced from $16,867. The Company believes that
the                                                                             

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terms of the lease are currently below market and are more favorable than could 
have been obtained from an unaffiliated third party.                            

The Company had a ten-year variable rate subordinated debenture for $2,772,111, 
payable to Barbara Parker with interest payments due quarterly through June 30, 
1996, followed by quarterly payments of principal and interest through June 30, 
2003. In December 1995, the Company amended the subordinated debenture to reduce
the interest rate from prime plus 2.5% to prime, retroactive to January 1, 1995.
For the year ended December 31, 1995, the Company paid interest totaling        
$228,699 to Barbara Parker. On April 12, 1996, Barbara Parker converted the     
entire principal amount due under the subordinated debenture into 277,211 shares
of common stock at the then current market value and the subordinated debenture 
was canceled. Interest of $71,483 was paid by the Company to Barbara Parker     
during the period from January 1, 1996 to April 12, 1996.                       

The Company had a ten-year variable rate subordinated debenture for $252,144,   
payable to Jeffrey Parker with interest payments due quarterly through June     
30,1996, followed by quarterly payments of principal and interest through June  
30, 2003. The Company had a second ten-year variable rate subordinated debenture
for $220,000, payable to Jeffrey Parker with interest payments due quarterly    
through December 31, 1996, followed by quarterly payments of principal and      
interest through December 31, 2003. In December 1995, the Company amended the   
subordinated debentures to reduce the interest rate from prime plus 2.5% to     
prime, retroactive to January 1, 1995. For the year ended December 31, 1995, the
Company paid interest totaling $38,952 to Jeffrey Parker. On April 12, 1996,    
Jeffrey Parker converted the entire principal amount due under the two          
subordinated debentures into 47,214 shares of common stock at the then current  
market value and the subordinated debentures were canceled. Interest of $12,179 
was paid by the Company to Jeffrey Parker during the period from January 1, 1996
to April 12, 1996.                                                              

Item 13. Exhibits and Reports on Form 8-K                                       

(a) 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           Bylaws (incorporated by reference from Exhibit 3.2
        of Registration Statement No. 33-70588-A).

 4.1           Form of common stock certificate (incorporated by
                  reference from Exhibit 4.1 of Registration Statement
No. 33-70588-A).                  

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   4.2           Form of underwriters' warrant agreement and warrant
        certificate attached as an exhibit thereto
            (incorporated by reference from Exhibit 4.2 of
     Registration Statement No. 33-70588-A).

    4.3           Warrant agreement between Whale Securities Co., L.P.
                  and the Company dated July 16, 1996 (incorporated by
               reference from Exhibit 4.1 of Quarterly Report of
                      Form 10-QSB for the quarterly period ended September 30,
1996).                            

  4.4           Warrant agreement between Frog Hollow Partners and
              the Company dated July 16, 1996 (incorporated by
               reference from Exhibit 4.2 of Quarterly Report of
                      Form 10-QSB for the quarterly period ended September 30,
1996).                            

    10.1          Lease dated March 1, 1992 between the Registrant and
        Jeffrey Parker and Barbara Parker for 8493
                 Baymeadows Way, Jacksonville, Florida (incorporated
            by reference from Exhibit 10.1 of Registration
Statement No. 33-70588-A).        

10.2          1993 Stock Plan, as amended (incorporated by    
                reference from the Company's Proxy Statement dated
October 1 ,1996).                 

10.3          Stock option agreement dated February 1, 1993   
     between the Registrant and Steven Bloch
             (incorporated by reference from Exhibit 10.8 of
     Registration Statement No. 33-70588-A).

10.4          Employment agreement between the Registrant and 
                Jeffrey Parker dated July 1, 1993 (incorporated by
          reference from Exhibit 10.11 of Registration
Statement No. 33-70588-A).        

    10.5          Employment agreement between the Registrant and Todd
                       Parker dated July 1, 1993 (incorporated by reference from
         Exhibit 10.12 of Registration Statement No.
33-70588-A).                      

10.6          Stock option agreement dated October 11, 1993   
       between the Registrant and Jeffrey Parker
              (incorporated by reference from Exhibit 10.13 of
     Registration Statement No. 33-70588-A).

10.7          Form of indemnification agreement between the   
                  Registrant and each of the directors and officers of
            the Registrant (incorporated by reference from
         Exhibit 10.15 of Registration Statement No.
33-70588-A).                      

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        10.8          First amendment to lease dated March 1, 1992 between the
                       Registrant and Jeffrey Parker and Barbara Parker for 8493
                    Baymeadows Way, Jacksonville, Florida (incorporated by
                   reference from Exhibit 10.21 of Annual Report on Form
10-KSB for the year ended         
December 31, 1995)                

         10.9          Second amendment to lease dated March 1, 1992 between the
                       Registrant and Jeffrey Parker and Barbara Parker for 8493
                    Baymeadows Way, Jacksonville, Florida (incorporated by
                     reference from Exhibit 10.1 of Quarterly Report of Form
                    10-QSB for the quarterly period ended March 31, 1996).

     10.10          Offshore securities subscription agreement dated April
                    10, 1996 between the Registrant and Banca del Gottardo
                       (incorporated by reference from Exhibit 10.2 of Quarterly
                  Report of Form 10-QSB for the quarterly period ended
March 31, 1996).                  

10.11          Purchase option agreement dated April 12, 1996   
     between the Registrant and Jack Ferraro
             (incorporated by reference from Exhibit 10.3 of
               Quarterly Report of Form 10-QSB for the quarterly
period ended March 31, 1996).     

10.12          Purchase option agreement dated April 12, 1996   
      between the Registrant and Jack Erlanger
             (incorporated by reference from Exhibit 10.4 of
               Quarterly Report of Form 10-QSB for the quarterly
period ended March 31, 1996).     

     10.13          Securities subscription agreement dated April 22, 1996
          between the Registrant and Hopewell Partners
                       (incorporated by reference from Exhibit 10.9 of Quarterly
                  Report of Form 10-QSB for the quarterly period ended
March 31, 1996).                  

10.14          Securities subscription agreement dated April 22,
                1996 between the Registrant and Gaymark Associates
              (incorporated by reference from Exhibit 10.10 of
               Quarterly Report of Form 10-QSB for the quarterly
period ended March 31, 1996).     

      10.15          Consulting agreement between Whale Securities Co., L.P.
             and the Company dated July 16, 1996, as amended
                       (incorporated by reference from Exhibit 10.1 of Quarterly
                  Report of Form 10-QSB for the quarterly period ended
September 30, 1996).              

       10.16          Third amendment to lease dated March 1, 1992 between the
                       Registrant and Jeffrey Parker and Barbara Parker for 8493
    Baymeadows Way, Jacksonville, Florida.

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23.1          Consent of Arthur Andersen, L.L.P.              

27.1          Financial data schedule                         

(b) Reports on Form 8-K                                                         

None                                                                            

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant      
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.                                                                     

ParkerVision, Inc.                                                              

Date:  March 28, 1997                                   By : /s/ Jeffrey Parker 
                                                             -------------------
                                                        Jeffrey Parker
                                                   President

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.                                                                

By:  /s/ Jeffrey Parker                                     Date: March 28, 1997
------------------                                                    
Jeffrey Parker                                                        
Chairman of the Board, Chief Executive                                
Officer and President                                                 

By:  /s/ Todd Parker                                        Date: March 28, 1997
---------------                                                       
Todd Parker                                                           
Vice President and Director                                           

By: /s/ Stacie Parker Wilf                                  Date: March 28, 1997
----------------------                                                  
Stacie Parker Wilf                                                  
Secretary, Treasurer and Director                                   

By: /s/ Cynthia Poehlman                                    Date: March 28, 1997
--------------------                                                    
Cynthia Poehlman                                                    
Controller and Chief Accounting Officer                             

By: /s/ William L. Sammons                                  Date: March 28, 1997
----------------------                                                  
William L. Sammons                                                  
Director                                                            

By: /s/ Arthur G. Yeager                                    Date: March 28, 1997
--------------------                                                    
Arthur G. Yeager                                                    
Director                                                            

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 Exhibit Index

        10.19           Third amendment to lease dated March 1, 1992 between the
                    Registrant and Jeffrey Parker and Barbara Parker for
           8493 Baymeadows Way, Jacksonville, Florida.

23.1            Consent of Arthur Andersen, L.L.P.              

27.1            Financial data schedule                         

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10KSB’ Filing	Date	First	Last	Other Filings

	12/31/03	51		10-K
	6/30/03	51		10-Q
	11/30/99	44		4
	8/31/97	12
Filed on:	3/31/97			10QSB
	3/28/97	55
	3/7/97	1	48
	2/28/97	37
	2/14/97	25
	1/9/97	47	48
	1/1/97	17
For Period End:	12/31/96	1	51
	11/30/96	39
	10/29/96	13		DEF 14A
	9/30/96	52	53	10QSB, DEF 14A
	7/26/96	50
	7/16/96	42	53
	6/30/96	51		10-Q, 10-Q/A
	6/19/96	47
	4/22/96	42	53
	4/12/96	29	53
	4/10/96	53
	3/31/96	53
	1/2/96	50
	1/1/96	37	51
	12/31/95	10	53
	12/29/95	37	47
	12/20/95	48
	1/1/95	37	51
	12/31/94	10	46
	12/31/93	29
	11/18/93	47
	10/11/93	38	52
	7/1/93	52
	2/1/93	38	52
	3/1/92	50	56
				List all Filings

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Filing Submission 0001005477-97-000947 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Parkervision Inc – ‘10KSB’ for 12/31/96

As of: Monday, 3/31/97 · For: 12/31/96 · Accession #: 1005477-97-947 · File #: 0-22904

Annual Report — Small Business — Form 10-KSBFiling Table of Contents

10KSB — Annual Report — Small BusinessDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Annual Report — Small Business — Form 10-KSB
Filing Table of Contents

10KSB — Annual Report — Small Business
Document Table of Contents