Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 27, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Microvision, Inc. | |
Entity Central Index Key | 65,770 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 71,596,000 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 17,744 | $ 15,139 |
Accounts receivable, net of allowances of $26 and $26, respectively | 805 | 245 |
Inventory | 2,677 | 1,233 |
Other current assets | 4,233 | 731 |
Total current assets | 25,459 | 17,348 |
Property and equipment, net | 3,299 | 1,537 |
Restricted cash | 435 | 435 |
Intangible assets | 660 | 718 |
Other assets | 58 | 68 |
Total assets | 29,911 | 20,106 |
Current liabilities | ||
Accounts payable | 1,852 | 2,195 |
Accrued liabilities | 4,706 | 3,704 |
Deferred revenue | 999 | 999 |
Billings on uncompleted contracts in excess of related costs | 3,667 | 168 |
Other current liabilities | 10,070 | 178 |
Total current liabilities | 21,294 | 7,244 |
Deferred revenue, net of current portion | 4,654 | 5,150 |
Deferred rent, net of current portion | 102 | 185 |
Other long-term liabilities | 36 | 53 |
Total liabilities | 26,086 | 12,632 |
Commitments and contingencies (Note 7) | ||
Shareholders' equity | ||
Preferred stock, par value $0.001; 25,000 shares authorized; 0 and 0 shares issued and outstanding | 0 | 0 |
Common stock, par value $0.001; 100,000 shares authorized; 71,596 and 68,093 shares issued and outstanding | 72 | 68 |
Additional paid-in capital | 514,737 | 507,249 |
Accumulated deficit | (510,984) | (499,843) |
Total shareholders' equity | 3,825 | 7,474 |
Total liabilities and shareholders' equity | $ 29,911 | $ 20,106 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Allowance for doubtful accounts receivable, current | $ 26 | $ 26 |
Stockholders equity | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 25,000 | 25,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 71,596 | 68,093 |
Common stock, shares outstanding | 71,596 | 68,093 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Product revenue | $ 0 | $ 3,530 | $ 0 | $ 6,685 |
Royalty revenue | 346 | 609 | 881 | 1,151 |
Contract revenue | 1,107 | 16 | 1,364 | 20 |
Total revenue | 1,453 | 4,155 | 2,245 | 7,856 |
Cost of product revenue | 135 | 2,587 | 348 | 5,175 |
Cost of contract revenue | 810 | 5 | 1,135 | 6 |
Total cost of revenue | 945 | 2,592 | 1,483 | 5,181 |
Gross profit | 508 | 1,563 | 762 | 2,675 |
Research and development expense | 3,672 | 2,879 | 6,990 | 5,476 |
Sales, marketing, general and administrative expense | 2,325 | 2,171 | 4,905 | 4,239 |
Total operating expenses | 5,997 | 5,050 | 11,895 | 9,715 |
Loss from operations | (5,489) | (3,487) | (11,133) | (7,040) |
Other (expense) income, net | (5) | 11 | (8) | 8 |
Net loss | $ (5,494) | $ (3,476) | $ (11,141) | $ (7,032) |
Net loss per share - basic and diluted | $ (0.08) | $ (0.07) | $ (0.16) | $ (0.14) |
Weighted-average shares outstanding - basic and diluted | 69,373 | 51,567 | 68,747 | 49,566 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities | ||
Net loss | $ (11,141) | $ (7,032) |
Adjustments to reconcile net loss to net cash used in operations: | ||
Depreciation | 172 | 396 |
Amortization of intangible assets | 58 | 64 |
Share-based compensation expense | 703 | 674 |
Inventory write-downs | 37 | 171 |
Other non-cash adjustments | (31) | 62 |
Change in: | ||
Accounts receivable, net | (560) | (400) |
Inventory | (1,481) | (427) |
Other current and non-current assets | (3,471) | 12 |
Accounts payable | (277) | 362 |
Accrued liabilities | 954 | (150) |
Deferred revenue | (496) | (713) |
Billings in excess of costs and estimated earnings on uncompleted contracts | 3,499 | 0 |
Other currrent liabilities | 9,892 | (117) |
Other long-term liabilities | (17) | 0 |
Net cash used in operating activities | (2,159) | (7,098) |
Cash flows from investing activities | ||
Purchases of property and equipment | (2,000) | (193) |
Net cash used in investing activities | (2,000) | (193) |
Cash flows from financing activities | ||
Net proceeds from issuance of common stock and warrants | 6,764 | 6,594 |
Net cash provided by financing activities | 6,764 | 6,594 |
Change in cash and cash equivalents | 2,605 | (697) |
Cash and cash equivalents, at beginning of period | 15,139 | 7,888 |
Cash and cash equivalents, at end of period | 17,744 | 7,191 |
Supplemental schedule of non-cash investing and financing activities | ||
Non-cash additions to property and equipment | $ 285 | $ 116 |
MANAGEMENT'S STATEMENT - Note 1
MANAGEMENT'S STATEMENT - Note 1 | 6 Months Ended |
Jun. 30, 2017 | |
Management Disclosure | |
MANAGEMENT'S STATEMENT - Note 1 | 1. MANAGEMENTS STATEMENT The Condensed Consolidated Balance Sheets as of June 30, 2017, the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016, and Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016, have been prepared by MicroVision, Inc. ("we" or "our") and have not been audited. In the opinion of management, all adjustments necessary to state fairly the financial position at June 30, 2017 and the results of operations and cash flows for all periods presented have been made and consist of normal recurring adjustments. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules of the Securities and Exchange Commission (SEC). The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. You should read these condensed consolidated financial statements in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The results of operations for the six months ended June 30, 2017 are not necessarily indicative of the operating results that may be attained for the entire fiscal year. We have incurred significant losses since inception. We have funded our operations to date primarily through the sale of common stock, convertible preferred stock, warrants, the issuance of convertible debt and, to a lesser extent, from development contract revenues, product sales and licensing activities. At June 30, 2017, we had $17.7 million in cash and cash equivalents. Based on our current operating plan that includes expected proceeds from a development contract signed in April 2017 with a major technology company, we anticipate that we have sufficient cash and cash equivalents to fund our operations through December 2017. Our receipt of proceeds under our April 2017 development contract is subject to our completion of certain milestones, and we can provide no assurance that such milestones will be completed. We will require additional capital to fund our operating plan past that time. We plan to obtain additional capital through the issuance of equity or debt securities, product sales and/or licensing activities. There can be no assurance that additional capital will be available to us or, if available, will be available on terms acceptable to us or on a timely basis. If adequate capital resources are not available on a timely basis, we intend to consider limiting our operations substantially. This limitation of operations could include reducing investments in our production capacities, research and development projects, staff, operating costs, and capital expenditures. We are introducing new technology and products into an emerging market which creates significant uncertainty about our ability to accurately project revenue, costs and cash flows. Our capital requirements will depend on many factors, including, but not limited to, the commercial success of our laser beam scanning (LBS) engines, the rate at which original design manufacturers (ODMs) or original equipment manufacturers (OEMs) introduce products incorporating our PicoP® scanning technology and the market acceptance and competitive position of such products. If revenues are less than we anticipate, if we fail to meet milestones for future payments or have to repay amounts already received under our April 2017 development contract, if the mix of revenues and the associated margins vary from anticipated amounts or if expenses exceed the amounts budgeted, we may require additional capital earlier than expected to fund our operations. In addition, our operating plan provides for the development of strategic relationships with suppliers of components and systems and equipment manufacturers that may require additional investments by us. These factors raise substantial doubt regarding our ability to continue as a going concern. Our unaudited consolidated financial statements have been prepared assuming we will continue as a going concern and do not include any adjustments that might be necessary should we be unable to continue as a going concern. |
NET LOSS PER SHARE - Note 2
NET LOSS PER SHARE - Note 2 | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share - Note 2 | 2. NET LOSS PER SHARE Basic net loss per share is calculated using the weighted-average number of common shares outstanding during the period. Net loss per share, assuming dilution, is calculated using the weighted-average number of common shares outstanding and the dilutive effect of all potentially dilutive securities, including common stock equivalents and convertible securities. Net loss per share, assuming dilution, is equal to basic net loss per share because the effect of dilutive securities outstanding during the period, including options and warrants computed using the treasury stock method, is anti-dilutive. The components of basic and diluted net loss per share were as follows (in thousands, except loss per share data): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Numerator: Net loss available for common shareholders - basic and diluted $ (5,494) $ (3,476) $ (11,141) $ (7,032) Denominator: Weighted-average common shares outstanding - basic and diluted 69,373 51,567 68,747 49,566 Net loss per share - basic and diluted $ (0.08) $ (0.07) $ (0.16) $ (0.14) For the three and six months ended June 30, 2017 and 2016, we excluded the following securities from net loss per share as the effect of including them would have been anti-dilutive: options outstanding and warrants exercisable into a total of 7,217,000 and 9,078,000 shares of common stock, respectively, and 60,000 and 60,000 nonvested restricted stock units, respectively. |
LONG-TERM CONTRACTS - Note 3
LONG-TERM CONTRACTS - Note 3 | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
Long-term contracts - Note 3 | 3. LONG-TERM CONTRACTS In April 2017, we signed a contract with a major technology company to develop an LBS display system. Under this agreement, we are working to develop a new generation of MEMS, ASICs and related firmware for a high resolution, LBS-based product that the technology company is planning to produce. We may receive up to $24.0 million, including $14.0 million in fees for development work that is expected to span 21 months and an upfront payment of $10.0 million, which payment has been received. Our receipt of the development fees is contingent on completion of milestones in 2017 and 2018. As of June 30, 2017, our balance sheet includes $3.2 million of billings in excess of costs incurred on this contract. Upon successful completion of the development program, if the major technology company decides to manufacture the product with the MicroVision display components, the $10.0 million upfront payment would be applied as a discount to future component purchases from us. If the contract is terminated by the technology company for our failure to meet milestones, the $10.0 million upfront payment is subject to repayment. We are recognizing revenue on the $14.0 million in development fees under the percentage-of-completion method of accounting. For the three and six months ended June 30, 2017, we have recognized $761,000 of contract revenue from development fees on this agreement. The $10.0 million upfront payment is classified within other current liabilities on the balance sheet. |
CONCENTRATION OF CREDIT RISK AN
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS AND SUPPLIERS - Note 4 | 6 Months Ended |
Jun. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS AND SUPPLIERS - Note 4 | 4 . CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS AND SUPPLIERS Concentration of credit risk Financial instruments that potentially subject us to a concentration of credit risk are primarily cash equivalents and accounts receivable. We typically do not require collateral from our customers. As of June 30, 2017, our cash and cash equivalents are comprised of operating checking accounts and short-term, highly rated money market savings accounts. Concentration of major customers and suppliers For the three and six months ended June 30, 2017, one commercial customer accounted for $769,000 and $973,000 in revenue, representing 53% and 43% of our total revenue, respectively. Additionally, a second commercial customer accounted for $345,000 and $880,000 in revenue, representing 24% and 39% of our total revenue for the three and six months ended June 30, 2017, respectively. For the three and six months ended June 30, 2016, one commercial customer accounted for $3.5 million and $6.8 million in revenue, representing 84% and 87% of our total revenue, respectively. Additionally, a second commercial customer accounted for $486,000 and $859,000 in revenue, representing 12 % and 11% of our total revenue for the three and six months ended June 30, 2016, respectively. At June 30, 2017, one commercial customer accounted for $510,000, or 63% of our net accounts receivable balance, a second commercial customer accounted for $182,000, or 23% of our net accounts receivable balance, and a third commercial customer accounted for $92,000, or 11% of our net accounts receivable balance. A significant concentration of our components and the products we sell are currently manufactured and obtained from single or limited-source suppliers. The loss of any single or limited- source supplier, the failure of any of these suppliers to perform as expected, or the disruption in the supply chain of components from these suppliers could subject us to risks and uncertainties including, but not limited to, increased cost of sales, possible loss of revenues, or significant delays in product deliveries, any of which could adversely affect our financial condition and operating results. |
INVENTORY - Note 5
INVENTORY - Note 5 | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure | |
Inventory - Note 5 | 5. INVENTORY Inventory consists of the following: June 30, December 31, ( in thousands 2017 2016 Raw materials $ 1,142 $ 999 Finished goods 1,535 234 $ 2,677 $ 1,233 Our inventory consists of raw materials and finished goods assemblies. Inventory is computed using the first-in, first-out (FIFO) method and is stated at the lower of cost and net realizable value. Management periodically assesses the need to account for obsolescence of inventory and adjusts the carrying value of inventory to its net realizable value when required. In addition, we reduce the value of our inventory to its estimated scrap value when management determines that it is not probable that the inventory will be consumed through the normal course of business during the next twelve months. As of June 30, 2017 and December 31, 2016, we recorded aggregate write-downs of $6.6 million and $6.6 million, respectively, offsetting the value of inventory deemed to be obsolete or scrap inventory. We may enter into arrangements to sell the obsolete or scrap inventory resulting in a gain in the period such transactions are realized. We have made significant advance payments to our contract manufacturer that will be applied against future inventory purchases. As of June 30, 2017, these advance payments totaled $3.1 million and are classified within other current assets on the balance sheet. |
SHARE-BASED COMPENSATION - Note
SHARE-BASED COMPENSATION - Note 6 | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure Of Compensation Related Costs | |
Share-Based Compensation - Note 6 | 6. SHARE-BASED COMPENSATION We issue share-based compensation to employees in the form of stock options and restricted stock units (RSUs). We account for the share-based awards by recognizing the fair value of share-based compensation expense on a straight-line basis over the service period of the award, net of estimated forfeitures. The fair value of stock options is estimated on the grant date using the Black-Scholes option pricing model. The fair value of RSUs is determined by the closing price of our common stock on the grant date. Changes in estimated inputs or using other option valuation methods may result in materially different option values and share-based compensation expense. The following table summarizes the amount of share-based compensation expense by line item in the statements of operations: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2017 2016 2017 2016 Cost of product revenue $ 10 $ 10 $ 19 $ 20 Research and development expense 158 102 263 185 Sales, marketing, general and administrative expense 225 262 421 469 $ 393 $ 374 $ 703 $ 674 Options activity and positions The following table summarizes shares, weighted-average exercise price, weighted-average remaining contractual term and aggregate intrinsic value of options outstanding and options exercisable as of June 30, 2017: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Shares Price Term (years) Value Outstanding as of June 30, 2017 5,244,000 $ 2.91 7.7 $ 1,294,000 Exercisable as of June 30, 2017 2,514,000 $ 3.96 6.2 $ 400,000 As of June 30, 2017, our unamortized share-based employee compensation related to stock options was $3.1 million which we plan to amortize over the next 2.9 years, and our unamortized share-based compensation related to RSUs was $110,000 which we plan to amortize over the next 11 months. |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Note 7 | 6 Months Ended |
Jun. 30, 2017 | |
Commitments And Contingencies Disclosure Footnote | |
Commitments and Contingencies - Note 7 | 7. COMMITMENTS AND CONTINGENCIES Litigation On March 31, 2014, Asia Optical Co., Inc., a supplier pursuant to an agreement entered into in 2008, filed a complaint for arbitration with the American Arbitration Association claiming that we ordered products from them and failed to take delivery of and pay for such products. The relief sought in the complaint is $3.6 million plus attorneys' fees, interest and arbitration costs. We contest the claim and are defending against it. An adverse outcome of these proceedings could materially and adversely affect our financial condition. At this stage, we cannot predict the likelihood of an unfavorable outcome or the range of potential loss. We are also subject to various claims and pending or threatened lawsuits in the normal course of business. We are not currently party to any other legal proceedings that we believe are reasonably possible to have a material adverse effect on our financial position, results of operations or cash flows. Purchase commitments At June 30, 2017, we had $11.3 million in open purchase obligations that represent commitments to purchase inventory, materials, capital equipment, and other goods used in the normal operation of our business. Adverse purchase commitments As of June 30, 2017, we had $500,000 accrued for commitments to purchase materials for the SHOWWX TM |
COMMON STOCK AND WARRANTS - Not
COMMON STOCK AND WARRANTS - Note 8 | 6 Months Ended |
Jun. 30, 2017 | |
Common Stock And Warrants - Note 8 | |
COMMON STOCK AND WARRANTS - Note 8 | 8. COMMON STOCK AND WARRANTS During the second quarter of 2017, we received $906,000 from the exercise of warrants to purchase 460,000 shares of common stock, which warrants were issued in connection with an earlier financing transactions. In May 2017, we entered into an At-The-Market (ATM) agreement with IFS Securities (DBA Brinson Patrick). As of June 30, 2017, we received gross proceeds of $3.7 million before issuance costs of approximately $125,000 from the sale of approximately 1.7 million shares of our common stock under this agreement. The agreement was terminated in June 2017 at our election without penalty. During the three months ended June 30, 2017, we received proceeds of $2.2 million from the sale of 1.2 million shares of our common stock as part of the Common Stock Purchase agreement we entered into with Lincoln Park Capital Fund, LLC (Lincoln Park) in September 2016. As of June 30, 2017, $12.8 million in shares of our common stock remain available for sale under our Common Stock Purchase Agreement. In March 2016, we raised approximately $6.9 million before issuance costs of approximately $650,000 through an underwritten public offering of approximately 4.1 million shares of our common stock. The offering included the exercise in full of the underwriter's option to purchase up to an additional 529,411 shares of our common stock. During the six months ended June 30, 2016, we received gross proceeds of $349,000 before issuance cost of approximately $10,000 from the sale of approximately 186,000 shares of our common stock as part of an ATM agreement we entered into with Meyers Associates, L.P. in May 2015. We received total gross proceeds of $3.1 million before issuance costs of approximately $109,000 from the sale of 1.2 million shares of our common stock during 2015 and 2016. There were no sales under this agreement in 2017. The agreement was terminated in May 2017 in accordance with its terms without penalty. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS - Note 9 | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS - Note 9 | 9. RECENT ACCOUNTING PRONOUNCEMENTS In May 2017, the Financial Accounting Standards Board (FASB) issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting , In November 2016, the FASB issued Accounting Standards Update 2016-18 (ASU 2016-18), Restricted Cash. The standard requires restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The new guidance will be applied using a retrospective approach. As of June 30, 2017, we have $435,000 of restricted cash, and as such we do not expect the implementation of this standard to have a material effect on our financial statements. In August 2016, the FASB issued Accounting Standards Update 2016-15 (ASU 2016-15), Statement of Cash Flows (Topic 230): Clarification of Certain Cash Receipts and Cash Payments. The objective of ASU 2016-15 is to eliminate the diversity in practice related to the classification of certain receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. For public business entities, ASU 2016-15 is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. The amendments in this update should be applied retrospectively to all periods presented, unless deemed impracticable, in which case, prospective application is permitted. We do not expect the implementation of this standard to have a material effect on our financial statements. In February 2016, the FASB issued Accounting Standards Update 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016-02 requires lessees to recognize a right-of-use asset and lease liability in the balance sheet for all leases, including operating leases, with terms of more than twelve months. Recognition, measurement and presentation of expenses and cash flows from a lease by a lessee have not significantly changed from previous guidance. The amendments also require qualitative disclosures along with specific quantitative disclosures. The new guidance will be effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. The amendments must be applied on a modified retrospective basis. We anticipate the adoption of this standard will have a material impact on our financial statements. While we are continuing to assess all the potential impacts of the standard, we currently believe the most significant impact relates to our accounting for our office lease. Under the new guidance, the net present value of the obligation for our office lease will appear on the balance sheet. Currently, it is classified as an operating lease and payments are expensed in the period incurred. In May 2014, the FASB issued Accounting Standards Update 2014-09 (ASU 2014-09), Revenue from Contracts with Customers, an updated standard on revenue recognition. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, and improve guidance for multiple-element arrangements. We will implement the new standard as of January 1, 2018 using the full retrospective approach, meaning we will restate each prior reporting period presented. We are performing a review of our revenue generated from significant product and service contracts with customers subject to ASU 2014-09, and we expect the implementation of this standard to have a material impact on our financial statements. While we are continuing to assess all potential impacts of this standard, we currently believe the most significant impact relates to our accounting for the $8.0 million upfront license fee payment under the PicoP® scanning technology license agreement we signed with Sony in March 2015. Under current guidance, we are recognizing the upfront license fee payment of $8.0 million on a straight-line basis over a period of eight years. Under the new guidance, we expect to recognize the entire $8.0 million upfront license fee payment in the first quarter of 2015, which will increase 2015 revenues by $7.2 million, and reduce reported 2016 revenues by $1.0 million and year-to-date 2017 revenues by $496,000. We currently expect no changes to the timing of our recognition of the ongoing per unit royalties; they will continue to be recognized one quarter in arrears when reported by our customers. We expect product revenue related to our component sales to remain substantially unchanged. We are currently evaluating the impact the adoption of this standard will have on our financial statements relating to the $24.0 million contract with a major technology company that was signed in April 2017 to develop an LBS system. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
Management's Statement | The Condensed Consolidated Balance Sheets as of June 30, 2017, the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016, and Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016, have been prepared by MicroVision, Inc. ("we" or "our") and have not been audited. In the opinion of management, all adjustments necessary to state fairly the financial position at June 30, 2017 and the results of operations and cash flows for all periods presented have been made and consist of normal recurring adjustments. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules of the Securities and Exchange Commission (SEC). The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. You should read these condensed consolidated financial statements in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The results of operations for the six months ended June 30, 2017 are not necessarily indicative of the operating results that may be attained for the entire fiscal year. We have incurred significant losses since inception. We have funded our operations to date primarily through the sale of common stock, convertible preferred stock, warrants, the issuance of convertible debt and, to a lesser extent, from development contract revenues, product sales and licensing activities. At June 30, 2017, we had $17.7 million in cash and cash equivalents. Based on our current operating plan that includes expected proceeds from a development contract signed in April 2017 with a major technology company, we anticipate that we have sufficient cash and cash equivalents to fund our operations through December 2017. Our receipt of proceeds under our April 2017 development contract is subject to our completion of certain milestones, and we can provide no assurance that such milestones will be completed. We will require additional capital to fund our operating plan past that time. We plan to obtain additional capital through the issuance of equity or debt securities, product sales and/or licensing activities. There can be no assurance that additional capital will be available to us or, if available, will be available on terms acceptable to us or on a timely basis. If adequate capital resources are not available on a timely basis, we intend to consider limiting our operations substantially. This limitation of operations could include reducing investments in our production capacities, research and development projects, staff, operating costs, and capital expenditures. We are introducing new technology and products into an emerging market which creates significant uncertainty about our ability to accurately project revenue, costs and cash flows. Our capital requirements will depend on many factors, including, but not limited to, the commercial success of our laser beam scanning (LBS) engines, the rate at which original design manufacturers (ODMs) or original equipment manufacturers (OEMs) introduce products incorporating our PicoP® scanning technology and the market acceptance and competitive position of such products. If revenues are less than we anticipate, if we fail to meet milestones for future payments or have to repay amounts already received under our April 2017 development contract, if the mix of revenues and the associated margins vary from anticipated amounts or if expenses exceed the amounts budgeted, we may require additional capital earlier than expected to fund our operations. In addition, our operating plan provides for the development of strategic relationships with suppliers of components and systems and equipment manufacturers that may require additional investments by us. These factors raise substantial doubt regarding our ability to continue as a going concern. Our unaudited consolidated financial statements have been prepared assuming we will continue as a going concern and do not include any adjustments that might be necessary should we be unable to continue as a going concern. |
Net Loss Per Share | Basic net loss per share is calculated using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is calculated using the weighted-average number of common shares outstanding and the dilutive effect of all potentially dilutive securities, including common stock equivalents and convertible securities. Diluted net loss per share is equal to basic net loss per share because the effect of dilutive securities outstanding during the period, including options and warrants computed using the treasury stock method, is anti-dilutive. |
Inventory | Our inventory consists of raw materials and finished goods assemblies. Inventory is computed using the first-in, first-out (FIFO) method and is stated at the lower of cost and net realizable value. Management periodically assesses the need to account for obsolescence of inventory and adjusts the carrying value of inventory to its net realizable value when required. In addition, we reduce the value of our inventory to its estimated scrap value when management determines that it is not probable that the inventory will be consumed through the normal course of business during the next twelve months. As of June 30, 2017 and December 31, 2016, we recorded aggregate write-downs of $6.6 million and $6.6 million, respectively, offsetting the value of inventory deemed to be obsolete or scrap inventory. We may enter into arrangements to sell the obsolete or scrap inventory resulting in a gain in the period such transactions are realized. |
Share-based Compensation | We issue share-based compensation to employees in the form of stock options and restricted stock units (RSUs). We account for the share-based awards by recognizing the fair value of share-based compensation expense on a straight-line basis over the service period of the award, net of estimated forfeitures. The fair value of stock options is estimated on the grant date using the Black-Scholes option pricing model. The fair value of RSUs is determined by the closing price of our common stock on the grant date. Changes in estimated inputs or using other option valuation methods may result in materially different option values and share-based compensation expense. |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Net Loss Per Share Tables | |
Net Loss Per Share (Tables) | The components of basic and diluted net loss per share were as follows (in thousands, except loss per share data): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Numerator: Net loss available for common shareholders - basic and diluted $ (5,494) $ (3,476) $ (11,141) $ (7,032) Denominator: Weighted-average common shares outstanding - basic and diluted 69,373 51,567 68,747 49,566 Net loss per share - basic and diluted $ (0.08) $ (0.07) $ (0.16) $ (0.14) |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Tables | |
Inventory (Tables) | Inventory consists of the following: June 30, December 31, ( in thousands 2017 2016 Raw materials $ 1,142 $ 999 Finished goods 1,535 234 $ 2,677 $ 1,233 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Share-based Compensation Tables | |
Stock-based employee compensation expense | The following table summarizes the amount of share-based compensation expense by line item in the statements of operations: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2017 2016 2017 2016 Cost of product revenue $ 10 $ 10 $ 19 $ 20 Research and development expense 158 102 263 185 Sales, marketing, general and administrative expense 225 262 421 469 $ 393 $ 374 $ 703 $ 674 |
Options activity and positions | The following table summarizes shares, weighted-average exercise price, weighted-average remaining contractual term and aggregate intrinsic value of options outstanding and options exercisable as of June 30, 2017: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Shares Price Term (years) Value Outstanding as of June 30, 2017 5,244,000 $ 2.91 7.7 $ 1,294,000 Exercisable as of June 30, 2017 2,514,000 $ 3.96 6.2 $ 400,000 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Numerator: | ||||
Net loss available for common shareholders - basic and diluted | $ (5,494) | $ (3,476) | $ (11,141) | $ (7,032) |
Denominator: | ||||
Weighted-average shares outstanding - basic and diluted | 69,373 | 51,567 | 68,747 | 49,566 |
Net loss per share - basic and diluted | $ (0.08) | $ (0.07) | $ (0.16) | $ (0.14) |
Net Loss Per Share (Convertible
Net Loss Per Share (Convertible Securities and Options Excluded Narrative) (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Options and Private Warrants Exercisable | ||||
Anti-dilutive shares | 7,217,000 | 9,078,000 | 7,217,000 | 9,078,000 |
Nonvested Equity Shares | ||||
Anti-dilutive shares | 60,000 | 60,000 | 60,000 | 60,000 |
Long-Term Contracts (Narrative)
Long-Term Contracts (Narrative) (Details) - License agreement - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Upfront payment received | $ 10,000,000 | |
Contract revenue from development fees | $ 761,000 | $ 761,000 |
Deferred Revenue, Description | In April 2017, we signed a contract with a major technology company to develop an LBS display system. Under this agreement, we are working to develop a new generation of MEMS, ASICs and related firmware for a high resolution, LBS-based product that the technology company is planning to produce. We may receive up to $24.0 million, including $14.0 million in fees for development work that is expected to span 21 months and an upfront payment of $10.0 million, which payment has been received. Our receipt of the development fees is contingent on completion of milestones in 2017 and 2018. As of June 30, 2017, our balance sheet includes $3.2 million of billings in excess of costs incurred on this contract. Upon successful completion of the development program, if the major technology company decides to manufacture the product with the MicroVision display components, the $10.0 million upfront payment would be applied as a discount to future component purchases from us. If the contract is terminated by the technology company for our failure to meet milestones, the $10.0 million upfront payment is subject to repayment. We are recognizing revenue on the $14.0 million in development fees under the percentage-of-completion method of accounting. For the three and six months ended June 30, 2017, we have recognized $761,000 of contract revenue from development fees on this agreement. The $10.0 million upfront payment is classified within other current liabilities on the balance sheet. |
Concentration of Sales to Major
Concentration of Sales to Major Customers (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Customer Revenue Concentration | ||||
Total revenue | $ 769 | $ 3,500 | $ 973 | $ 6,800 |
Concentration Risk, Percentage | 53.00% | 84.00% | 43.00% | 87.00% |
Second Commercial Customer | ||||
Total revenue | $ 345 | $ 486 | $ 880 | $ 859 |
Concentration Risk, Percentage | 24.00% | 12.00% | 39.00% | 11.00% |
Accounts Receivable Concentration | ||||
Accounts receivable | $ 510 | $ 510 | ||
Concentration Risk, Percentage | 63.00% | |||
Second Receivable | ||||
Accounts receivable | 182 | $ 182 | ||
Concentration Risk, Percentage | 23.00% | |||
Third Receivable | ||||
Accounts receivable | $ 92 | $ 92 | ||
Concentration Risk, Percentage | 11.00% |
Inventory Components (Details)
Inventory Components (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Inventory Components Details | ||
Raw materials | $ 1,142,000 | $ 999,000 |
Finished goods | 1,535,000 | 234,000 |
Inventory, net | $ 2,677,000 | $ 1,233,000 |
Inventory (Narrative) (Details)
Inventory (Narrative) (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Inventory Narrative Details | ||
Inventory allowance | $ 6.6 | $ 6.6 |
Advance payments to contract manufactuers | $ 3.1 |
Share-Based Compensation (Sched
Share-Based Compensation (Schedule Of Stock-Based Compensation Expense By Statement Of Operations) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Share-based employee compensation expense | $ 393,000 | $ 374,000 | $ 703,000 | $ 674,000 |
Cost of product revenue | ||||
Share-based employee compensation expense | 10,000 | 10,000 | 19,000 | 20,000 |
Research and development expense | ||||
Share-based employee compensation expense | 158,000 | 102,000 | 263,000 | 185,000 |
Sales, marketing, general and administrative expense | ||||
Share-based employee compensation expense | $ 225,000 | $ 262,000 | $ 421,000 | $ 469,000 |
Shared-Based Compensation (Opti
Shared-Based Compensation (Options Activity and Position) (Details) | 6 Months Ended |
Jun. 30, 2017USD ($)$ / sharesshares | |
Shared-based Compensation Options Activity And Position Details | |
Outstanding shares | shares | 5,244,000 |
Weighted-average exercise price of options outstanding | $ / shares | $ 2.91 |
Weighted-average remaining contractual term (in years) of options outstanding | 7 years 252 days |
Aggregate intrinsic value of options outstanding | $ | $ 1,294,000 |
Exercisable shares | shares | 2,514,000 |
Weighted-average exercise price of options exercisable | $ / shares | $ 3.96 |
Weighted-average remaining contractual term (in years) of options exercisable | 6 years 72 days |
Aggregate intrinsic value of options exercisable | $ | $ 400,000 |
Share-Based Compensation (Narra
Share-Based Compensation (Narrative) (Details) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Employee Stock Options | |
Unrecognized compensation cost related to share-based compensation | $ 3,100,000 |
Weighted-average service period, years | 2 years 324 days |
Restricted Stock Rights | |
Unrecognized compensation cost related to share-based compensation | $ 110,000 |
Weighted-average service period, years | 11 months |
Commitments and Contingencies (
Commitments and Contingencies (Adverse Purchase Commitments Narrative) (Details) | Jun. 30, 2017USD ($) |
Commitments And Contingencies Adverse Purchase Commitments Narrative Details | |
Open purchase obligations | $ 11,300,000 |
Accrued liability for loss on commitments to purchase materials to support production of PicoP based products | $ 500,000 |
Common Stock and Warrants (Narr
Common Stock and Warrants (Narrative) (Details) - USD ($) shares in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended |
Mar. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Common Stock And Warrants Narrative Details | |||
Number of shares of common stock issued | 4.1 | ||
Cash received from stock sale, before issuance costs | $ 6,900,000 | $ 3,100,000 | |
Stock issuance costs | $ 650,000 | $ 109,000 | |
Warrant terms and provisions | In March 2016, we raised approximately $6.9 million before issuance costs of approximately $650,000 through an underwritten public offering of approximately 4.1 million shares of our common stock. The offering included the exercise in full of the underwriter's option to purchase up to an additional 529,411 shares of our common stock. | During the second quarter of 2017, we received $906,000 from the exercise of warrants to purchase 460,000 shares of common stock, which warrants were issued in connection with an earlier financing transactions. In May 2017, we entered into an At-The-Market (ATM) agreement with IFS Securities (DBA Brinson Patrick). As of June 30, 2017, we received gross proceeds of $3.7 million before issuance costs of approximately $125,000 from the sale of approximately 1.7 million shares of our common stock under this agreement. The agreement was terminated in June 2017 at our election without penalty. During the three months ended June 30, 2017, we received proceeds of $2.2 million from the sale of 1.2 million shares of our common stock as part of the Common Stock Purchase agreement we entered into with Lincoln Park Capital Fund, LLC (Lincoln Park) in September 2016. As of June 30, 2017, $12.8 million in shares of our common stock remain available for sale under our Common Stock Purchase Agreement. | During the six months ended June 30, 2016, we received gross proceeds of $349,000 before issuance cost of approximately $10,000 from the sale of approximately 186,000 shares of our common stock as part of an ATM agreement we entered into with Meyers Associates, L.P. in May 2015. We received total gross proceeds of $3.1 million before issuance costs of approximately $109,000 from the sale of 1.2 million shares of our common stock during 2015 and 2016. There were no sales under this agreement in 2017. The agreement was terminated in May 2017 in accordance with its terms without penalty. |