Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 27, 2015 | |
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, 2015 | |
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 | 47,216,000 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $ 15,085 | $ 8,349 |
Accounts receivable, net of allowances of $38 and $52 | 1,320 | 669 |
Inventory | 348 | 116 |
Other current assets | 542 | 491 |
Total current assets | 17,295 | 9,625 |
Property and equipment, net | 1,519 | 894 |
Restricted cash | 435 | 435 |
Intangible assets | 909 | 973 |
Other assets | 18 | 18 |
Total assets | 20,176 | 11,945 |
Current liabilities | ||
Accounts payable | 1,971 | 1,626 |
Accrued liabilities | 3,269 | 2,729 |
Deferred revenue | 1,284 | 0 |
Billings on uncompleted contracts in excess of related costs | 5 | 230 |
Total current liabilities | 6,529 | 4,585 |
Deferred revenue, net of current portion | 6,653 | 0 |
Deferred rent, net of current portion | 417 | 488 |
Total liabilities | $ 13,599 | 5,073 |
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; 47,216 and 44,758 shares issued and outstanding | 47 | 45 |
Additional paid-in capital | 482,090 | 475,656 |
Accumulated deficit | (475,560) | (468,829) |
Total shareholders' equity | 6,577 | 6,872 |
Total liabilities and shareholders' equity | $ 20,176 | $ 11,945 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets | ||
Allowance for doubtful accounts receivable, current | $ 38 | $ 52 |
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 | 47,216 | 44,758 |
Common stock, shares outstanding | 47,216 | 44,758 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Product revenue | $ 2,182 | $ 1 | $ 2,923 | $ 2 |
Royalty revenue | 324 | 18 | 468 | 26 |
Contract revenue | 1,537 | 324 | 1,553 | 341 |
Development revenue | 0 | 268 | 0 | 1,461 |
Total revenue | 4,043 | 611 | 4,944 | 1,830 |
Cost of product revenue | 2,074 | 33 | 3,111 | 23 |
Cost of contract revenue | 782 | 135 | 789 | 144 |
Total cost of revenue | 2,856 | 168 | 3,900 | 167 |
Gross profit | 1,187 | 443 | 1,044 | 1,663 |
Research and development expense | 2,011 | 2,236 | 3,909 | 4,779 |
Sales, marketing, general and administrative expense | 1,946 | 1,841 | 3,867 | 3,800 |
Gain on sale of previously reserved inventory | 0 | (228) | 0 | (455) |
Total operating expenses | 3,957 | 3,849 | 7,776 | 8,124 |
Loss from operations | (2,770) | (3,406) | (6,732) | (6,461) |
Loss on warrant exchange | 0 | 0 | (4,967) | |
Other income, net | 1 | 5 | 1 | 9 |
Net loss | $ (2,769) | $ (3,401) | $ (6,731) | $ (11,419) |
Net loss per share - basic and diluted | $ (0.06) | $ (0.08) | $ (0.15) | $ (0.29) |
Weighted-average shares outstanding - basic and diluted | 46,663 | 43,015 | 45,818 | 38,951 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities | ||
Net loss | $ (6,731) | $ (11,419) |
Adjustments to reconcile net loss to net cash provided by (used in) operations: | ||
Depreciation | 180 | 250 |
Amortization of intangible assets | 64 | 66 |
Non-cash share-based compensation expense | 424 | 506 |
Realized loss on warrant exchange | 4,967 | |
Inventory write-downs | 287 | 25 |
Non-cash adjustments | (31) | (59) |
Change in: | ||
Accounts receivable, net | (651) | (30) |
Inventory | (519) | (7) |
Other current and non-current assets | (30) | (194) |
Accounts payable | 248 | 19 |
Accrued liabilities | 508 | (230) |
Deferred revenue | 7,937 | 0 |
Billings in excess of costs and estimated earnings on uncompleted contracts | (225) | (560) |
Net cash provided by (used in) operating activities | 1,461 | (6,666) |
Cash flows from investing activities | ||
Proceeds on sale of property and equipment | 0 | 28 |
Purchases of property and equipment | (719) | (109) |
Net cash used in investing activities | (719) | (81) |
Cash flows from financing activities | ||
Principal payments under capital leases and long-term debt | 0 | (15) |
Net proceeds from issuance of common stock and warrants | 5,994 | 13,851 |
Net cash provided by financing activities | 5,994 | 13,836 |
Change in cash and cash equivalents | 6,736 | 7,089 |
Cash and cash equivalents, at beginning of period | 8,349 | 5,375 |
Cash and cash equivalents, at end of period | 15,085 | 12,464 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 1 | 1 |
Supplemental schedule of non-cash investing and financing activities | ||
Non-cash additions to property and equipment | 187 | 29 |
Issuance of common stock for exchange of warrants | $ 0 | $ 9,869 |
MANAGEMENT'S STATEMENT - Note 1
MANAGEMENT'S STATEMENT - Note 1 | 6 Months Ended |
Jun. 30, 2015 | |
Management Disclosure | |
MANAGEMENT'S STATEMENT - Note 1 | 1. MANAGEMENTS STATEMENT The Condensed Consolidated Balance Sheet as of June 30, 2015 and December 31, 2014, the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014, and Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 have been prepared by MicroVision, Inc. ("we" or "us") and have not been audited. In the opinion of management, all adjustments necessary to state fairly the financial position at June 30, 2015 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 (the "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, 2014. The results of operations for the three and six months ended June 30, 2015 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, licensing activities and product and component sales. At June 30, 2015, we had $15.1 million in cash and cash equivalents. Based on our current operating plan, we anticipate that we have sufficient cash and cash equivalents to fund our operations through June 2016. We will require additional cash to fund our operating plan past that time. We plan to obtain additional cash through sales and licensing activities and/or the issuance of equity or debt securities. There can be no assurance that additional cash will be available or that, if available, it will be available on terms acceptable to us or on a timely basis. If adequate funds are not available on a timely basis, we intend to consider limiting our operations substantially. This limitation of operations could include reducing our planned investments in our production capabilities or research and development projects, resulting in reductions in staff, operating costs, and capital expenditures. We are introducing new technology 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 rate at which original equipment manufacturers (OEMs) or original device manufacturers (ODMs) introduce products incorporating our PicoP® display technology and the market acceptance and competitive position of such products. If revenues are less than we anticipate, 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. We have received a report from our independent registered public accounting firm regarding the consolidated financial statements for the year ended December 31, 2014 that includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. These financial statements are prepared assuming we will continue as a going concern. |
NET LOSS PER SHARE - Note 2
NET LOSS PER SHARE - Note 2 | 6 Months Ended |
Jun. 30, 2015 | |
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 reporting periods. Diluted net loss per share is calculated using the weighted-average number of common shares outstanding and taking into account the dilutive effect of all potentially dilutive securities, including common stock equivalents and convertible securities outstanding. Potentially dilutive common stock equivalents primarily consist of warrants, employee stock options and nonvested equity shares. Diluted net loss per share for the three and six months ended June 30, 2015 and 2014, is equal to basic net loss per share because the effect of all potential common stock outstanding during the periods, including options, warrants and nonvested equity shares 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, 2015 2014 2015 2014 Numerator: Net loss available for common shareholders - basic and diluted $ (2,769) $ (3,401) $ (6,731) $ (11,419) Denominator: Weighted-average common shares outstanding - basic and diluted 46,663 43,015 45,818 38,951 Net loss per share - basic and diluted $ (0.06) $ (0.08) $ (0.15) $ (0.29) We excluded the following convertible securities from diluted net loss per share, as the effect of including them would have been anti-dilutive: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Options and warrants exercisable 8,236,000 9,048,000 8,236,000 9,048,000 Nonvested equity shares 60,000 60,000 60,000 60,000 8,296,000 9,108,000 8,296,000 9,108,000 |
KEY ACCOUNTING POLICY _ REVENUE
KEY ACCOUNTING POLICY – REVENUE RECOGNITION - Note 3 | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
KEY ACCOUNTING POLICY – REVENUE RECOGNITION - Note 3 | 3. KEY ACCOUNTING POLICY - REVENUE RECOGNITION We enter into arrangements that can include various combinations of product and component sales, services, and licensing activities. In March 2015, we signed a license agreement as part of a multiple-element arrangement with a customer for our PicoP® display technology. The license agreement granted the customer a non-exclusive license to manufacture and sell display modules that incorporate our PicoP display technology. For multiple-element arrangements, we use a hierarchy to determine the contract consideration to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (VSOE), (ii) third-party evidence of selling price (TPE) and (iii) best estimate of selling price. Because VSOE and TPE do not exist for the March 2015 agreement, we have allocated the contract consideration based on our best estimate. Under the terms of this multiple-element arrangement, we received an $8.0 million upfront payment in March 2015, and we will receive a per unit royalty for each display module sold by the customer. We expect to recognize revenue on the initial $8.0 million payment over a period of eight years which is the expected time frame that we will provide services under the agreement. Ongoing per unit royalties are reported by our customer quarterly and will be recognized as revenue as they are earned. Products delivered under multiple-element arrangements will be recognized upon acceptance of the deliverables by the customer or the expiration of the contractual acceptance period, after which there are no rights of return. |
CONCENTRATION OF MAJOR CUSTOMER
CONCENTRATION OF MAJOR CUSTOMERS AND SUPPLIERS - Note 4 | 6 Months Ended |
Jun. 30, 2015 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATION OF MAJOR CUSTOMERS AND SUPPLIERS - Note 4 | 4. CONCENTRATION OF MAJOR CUSTOMERS AND SUPPLIERS For each of the three and six months ended June 30, 2015, one commercial customer accounted for 99% of our total revenue. One commercial customer accounted for approximately 99% of our net accounts receivable balance at June 30, 2015. For the three and six months ended June 30, 2014, two commercial customers accounted for approximately 90% and 95% of our total revenue, respectively. Three commercial customers accounted for 92% of our net accounts receivable balance at June 30, 2014. A significant concentration of our components and the products we sell are currently manufactured and obtained from single or limited-source suppliers which are primarily located in foreign countries. The loss of any single or limited source supplier or the disruption in the supply chain of components from these suppliers could subject us to risks and uncertainties regarding, 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, 2015 | |
Inventory Disclosure | |
Inventory - Note 5 | 5. INVENTORY Inventory consisted of the following: June 30, December 31, (in thousands) 2015 2014 Raw materials $ 138 $ 42 Finished goods 210 74 $ 348 $ 116 The inventory at June 30, 2015 and December 31, 2014 consisted of raw materials and finished goods assemblies. Inventory is stated at the lower of cost or market. 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. At June 30, 2015 and December 31, 2014, we had recorded aggregate write-downs of $7.2 million and $6.9 million, respectively, which primarily consisted of outdated product lines. From time to time, we may enter into arrangements to sell the obsolete or scrap inventory, or enter into consignment agreements with third-parties to sell the units, resulting in a gain in the period such transactions are realized. |
SHARE-BASED COMPENSATION - Note
SHARE-BASED COMPENSATION - Note 6 | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure Of Compensation Related Costs | |
Share-Based Compensation - Note 6 | 6. SHARE-BASED COMPENSATION We use the straight-line attribution method to allocate the fair value of share-based compensation expense over the requisite service period of the related award. The value of restricted or unrestricted shares is determined using the fair value method, which is based on the number of shares granted and the closing price of our common stock on the NASDAQ Global Market on the date of grant. The value of options is determined using the Black-Scholes option pricing model with estimates of option lives, stock price volatility and interest rates, then expensed over the periods of service allowing for pre-vest forfeitures. Changes in the estimated inputs or using other option valuation methods could result in materially different option values and share-based compensation expense. The following table shows the amount of share-based compensation expense included in each line item of the consolidated statements of operations for each period shown: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2015 2014 2015 2014 Cost of product revenue $ 4 $ - $ 8 $ - Research and development expense 68 (127) 116 (13) Sales, marketing, general and administrative expense 162 328 300 519 Total share-based compensation expense $ 234 $ 201 $ 424 $ 506 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, 2015: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term (years) Value Outstanding as of June 30, 2015 3,197,000 $ 5.74 7.7 $ 1,903,000 Exercisable as of June 30, 2015 1,422,000 $ 9.70 5.9 $ 916,000 As of June 30, 2015, our unamortized share-based employee compensation related to stock options was $2.8 million which we plan to amortize over the next 3.2 years and our unamortized share-based compensation related to the restricted stock units was $181,000 which we plan to amortize over the next 1.0 year. |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Note 7 | 6 Months Ended |
Jun. 30, 2015 | |
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. Adverse purchase commitments We have periodically entered into noncancelable purchase contracts in order to ensure the availability of materials to support production of our products. We continuously assess our outstanding commitments and recognize a loss on purchase commitments when required if such commitments are in excess of our product needs or the costs are not expected to be recoverable. As of June 30, 2015 and December 31, 2014, we had $500,000 accrued for commitments to purchase materials for the SHOWWX pico projector that were in excess of our estimated future proceeds from the sale of that product. |
COMMON STOCK AND WARRANTS - Not
COMMON STOCK AND WARRANTS - Note 8 | 6 Months Ended |
Jun. 30, 2015 | |
Common Stock And Warrants - Note 8 | |
COMMON STOCK AND WARRANTS - Note 8 | 8. COMMON STOCK AND WARRANTS In May 2015, we entered into an At-the-Market (ATM) agreement with Meyers Associates, L.P. Under the terms of the agreement, we may, from time to time, at our discretion, offer and sell shares of our common stock having an aggregate value of up to $6.0 million. During the three months ended June 30, 2015, we received gross proceeds of $1.8 million before issuance costs of approximately $71,000 from the sale of 555,000 shares of our common stock. During the six months ended June 30, 2015, we received $3.3 million from the exercise of warrants we issued in connection with earlier financing transactions to purchase 1.5 million shares of our common stock. During the three months ended March 31, 2015, we received gross proceeds of $1.0 million as part of an At-the-Market (ATM) agreement we entered into with Meyers Associates, L.P. in June 2014. We have completed sales under this agreement, having received total proceeds of $4.5 million before issuance costs of approximately $206,000 from the sale of 2.0 million shares of our common stock. In March 2014, we raised $13.9 million before issuance costs of approximately $1.0 million through an underwritten offering of 7.2 million shares of our common stock and warrants to purchase 2.1 million shares of our common stock. In February 2014, we issued 3.7 million shares of our common stock under the warrant exchange provisions of our then-outstanding warrants. We recognized a loss of $5.0 million on the exchange as the fair market value of the common stock issued was greater than the obligation recorded due to an increase in our stock price since December 31, 2013 to the date the warrants were exchanged. |
NEW ACCOUNTING PRONOUNCEMENTS -
NEW ACCOUNTING PRONOUNCEMENTS - Note 9 | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS - Note 9 | 9. NEW ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers, an updated standard on revenue recognition. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using International Financial Reporting Standards and GAAP. 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. In July 2015, the FASB voted to defer the effective date of this update for one year. ASU 2014-09 will be effective in the first quarter of fiscal 2018 and may be applied on a full retrospective or modified retrospective approach. We are still evaluating the impact of implementation of this standard on our financial statements. In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. ASU 2014-15 will be effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. We do not expect the implementation of this standard to have a material effect on our financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Management's Statement | The Condensed Consolidated Balance Sheet as of June 30, 2015 and December 31, 2014, the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014, and Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 have been prepared by MicroVision, Inc. ("we" or "us") and have not been audited. In the opinion of management, all adjustments necessary to state fairly the financial position at June 30, 2015 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 (the "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, 2014. The results of operations for the three and six months ended June 30, 2015 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, licensing activities and product and component sales. At June 30, 2015, we had $15.1 million in cash and cash equivalents. Based on our current operating plan, we anticipate that we have sufficient cash and cash equivalents to fund our operations through June 2016. We will require additional cash to fund our operating plan past that time. We plan to obtain additional cash through sales and licensing activities and/or the issuance of equity or debt securities. There can be no assurance that additional cash will be available or that, if available, it will be available on terms acceptable to us or on a timely basis. If adequate funds are not available on a timely basis, we intend to consider limiting our operations substantially. This limitation of operations could include reducing our planned investments in our production capabilities or research and development projects, resulting in reductions in staff, operating costs, and capital expenditures. We are introducing new technology 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 rate at which original equipment manufacturers (OEMs) or original device manufacturers (ODMs) introduce products incorporating our PicoP® display technology and the market acceptance and competitive position of such products. If revenues are less than we anticipate, 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. We have received a report from our independent registered public accounting firm regarding the consolidated financial statements for the year ended December 31, 2014 that includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. These financial statements are prepared assuming we will 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 reporting periods. Diluted net loss per share is calculated using the weighted-average number of common shares outstanding and taking into account the dilutive effect of all potentially dilutive securities, including common stock equivalents and convertible securities outstanding. Potentially dilutive common stock equivalents primarily consist of warrants, employee stock options and nonvested equity shares. Diluted net loss per share for the three and six months ended June 30, 2015 and 2014, is equal to basic net loss per share because the effect of all potential common stock outstanding during the periods, including options, warrants and nonvested equity shares is anti-dilutive. |
Revenue recognition | We enter into arrangements that can include various combinations of product and component sales, services, and licensing activities. In March 2015, we signed a license agreement as part of a multiple-element arrangement with a customer for our PicoP® display technology. The license agreement granted the customer a non-exclusive license to manufacture and sell display modules that incorporate our PicoP display technology. For multiple-element arrangements, we use a hierarchy to determine the contract consideration to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (VSOE), (ii) third-party evidence of selling price (TPE) and (iii) best estimate of selling price. Because VSOE and TPE do not exist for the March 2015 agreement, we have allocated the contract consideration based on our best estimate. Under the terms of this multiple-element arrangement, we received an $8.0 million upfront payment in March 2015, and we will receive a per unit royalty for each display module sold by the customer. We expect to recognize revenue on the initial $8.0 million payment over a period of eight years which is the expected time frame that we will provide services under the agreement. Ongoing per unit royalties are reported by our customer quarterly and will be recognized as revenue as they are earned. Products delivered under multiple-element arrangements will be recognized upon acceptance of the deliverables by the customer or the expiration of the contractual acceptance period, after which there are no rights of return. |
Inventory | Inventory is stated at the lower of cost or market. 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. |
Share-based Compensation | We use the straight-line attribution method to allocate the fair value of share-based compensation expense over the requisite service period of the related award. The value of restricted or unrestricted shares is determined using the fair value method, which is based on the number of shares granted and the closing price of our common stock on the NASDAQ Global Market on the date of grant. The value of options is determined using the Black-Scholes option pricing model with estimates of option lives, stock price volatility and interest rates, then expensed over the periods of service allowing for pre-vest forfeitures. Changes in the estimated inputs or using other option valuation methods could 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, 2015 | |
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, 2015 2014 2015 2014 Numerator: Net loss available for common shareholders - basic and diluted $ (2,769) $ (3,401) $ (6,731) $ (11,419) Denominator: Weighted-average common shares outstanding - basic and diluted 46,663 43,015 45,818 38,951 Net loss per share - basic and diluted $ (0.06) $ (0.08) $ (0.15) $ (0.29) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | We excluded the following convertible securities from diluted net loss per share, as the effect of including them would have been anti-dilutive: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Options and warrants exercisable 8,236,000 9,048,000 8,236,000 9,048,000 Nonvested equity shares 60,000 60,000 60,000 60,000 8,296,000 9,108,000 8,296,000 9,108,000 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Inventory Tables | |
Inventory (Tables) | Inventory consisted of the following: June 30, December 31, (in thousands) 2015 2014 Raw materials $ 138 $ 42 Finished goods 210 74 $ 348 $ 116 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Share-based Compensation Tables | |
Stock-based employee compensation expense | The following table shows the amount of share-based compensation expense included in each line item of the consolidated statements of operations for each period shown: Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2015 2014 2015 2014 Cost of product revenue $ 4 $ - $ 8 $ - Research and development expense 68 (127) 116 (13) Sales, marketing, general and administrative expense 162 328 300 519 Total share-based compensation expense $ 234 $ 201 $ 424 $ 506 |
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, 2015: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term (years) Value Outstanding as of June 30, 2015 3,197,000 $ 5.74 7.7 $ 1,903,000 Exercisable as of June 30, 2015 1,422,000 $ 9.70 5.9 $ 916,000 |
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, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Numerator: | ||||
Net loss available for common shareholders - basic and diluted | $ (2,769) | $ (3,401) | $ (6,731) | $ (11,419) |
Denominator: | ||||
Weighted-average shares outstanding - basic and diluted | 46,663 | 43,015 | 45,818 | 38,951 |
Net loss per share - basic and diluted | $ (0.06) | $ (0.08) | $ (0.15) | $ (0.29) |
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, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Options and Private Warrants Exercisable | ||||
Anti-dilutive shares | 8,236,000 | 9,048,000 | 8,236,000 | 9,048,000 |
Nonvested Equity Shares | ||||
Anti-dilutive shares | 60,000 | 60,000 | 60,000 | 60,000 |
Concentration of Sales to Major
Concentration of Sales to Major Customers (Narrative) (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Customer Revenue Concentration | ||||
Concentration Risk, Percentage | 99.00% | 90.00% | 99.00% | 95.00% |
Accounts Receivable Concentration | ||||
Concentration Risk, Percentage | 99.00% | 92.00% |
Inventory Components (Details)
Inventory Components (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Inventory Components Details | ||
Raw materials | $ 138,000 | $ 42,000 |
Finished goods | 210,000 | 74,000 |
Inventory, net | $ 348,000 | $ 116,000 |
Inventory (Narrative) (Details)
Inventory (Narrative) (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Inventory Narrative Details | ||
Inventory allowance | $ 7.2 | $ 6.9 |
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, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based employee compensation expense | $ 234,000 | $ 201,000 | $ 424,000 | $ 506,000 |
Cost of product revenue | ||||
Share-based employee compensation expense | 4,000 | 0 | 8,000 | 0 |
Research and development expense | ||||
Share-based employee compensation expense | 68,000 | (127,000) | 116,000 | (13,000) |
Sales, marketing, general and administrative expense | ||||
Share-based employee compensation expense | $ 162,000 | $ 328,000 | $ 300,000 | $ 519,000 |
Shared-Based Compensation (Opti
Shared-Based Compensation (Options Activity and Position) (Details) - Jun. 30, 2015 - USD ($) | Total |
Shared-based Compensation Options Activity And Position Details | |
Outstanding shares | 3,197,000 |
Weighted-average exercise price of options outstanding | $ 5.74 |
Weighted-average remaining contractual term (in years) of options outstanding | 7 years 256 days |
Aggregate intrinsic value of options outstanding | $ 1,903,000 |
Exercisable shares | 1,422,000 |
Weighted-average exercise price of options exercisable | $ 9.70 |
Weighted-average remaining contractual term (in years) of options exercisable | 5 years 329 days |
Aggregate intrinsic value of options exercisable | $ 916,000 |
Share-Based Compensation (Narra
Share-Based Compensation (Narrative) (Details) - Jun. 30, 2015 - USD ($) | Total |
Employee Stock Options | |
Unrecognized compensation cost related to share-based compensation | $ 2,800,000 |
Weighted-average service period, years | 3 years 73 days |
Restricted Stock Rights | |
Unrecognized compensation cost related to share-based compensation | $ 181,000 |
Weighted-average service period, years | 1 year |
Commitments and Contingencies (
Commitments and Contingencies (Adverse Purchase Commitments Narrative) (Details) | Jun. 30, 2015USD ($) |
Commitments And Contingencies Adverse Purchase Commitments Narrative Details | |
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 ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Mar. 31, 2014 | Feb. 28, 2014 | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Common Stock And Warrants Narrative Details | |||||||
Exchange of warrants | $ 0 | $ 9,869,000 | |||||
Exchange of warrants, shares | 3,700,000 | 1,500,000 | |||||
Cash on exercise of warrants | $ 3,300,000 | ||||||
Number of shares of common stock issued | 7,200,000 | 555,000 | |||||
Loss on warrant exchange | $ (5,000,000) | $ 0 | $ 0 | $ (4,967,000) | |||
Cash received from stock sale, before issuance costs | $ 13,900,000 | 1,800,000 | $ 1,000,000 | ||||
Stock issuance costs | $ 1,000,000 | $ 71,000 | |||||
Common shares underlying warrants | 2,100,000 | ||||||
Warrant terms and provisions | In March 2014, we raised $13.9 million before issuance costs of approximately $1.0 million through an underwritten offering of 7.2 million shares of our common stock and warrants to purchase 2.1 million shares of our common stock. | In February 2014, we issued 3.7 million shares of our common stock under the warrant exchange provisions of our May and September 2013 registered direct offerings. We recognized a loss of $5.0 million on the exchange as the fair market value of the common stock issued was greater than the obligation recorded due to an increase in our stock price since December 31, 2013 to the date the warrants were exchanged. | In May 2015, we entered into an At-the-Market (ATM) agreement with Meyers Associates, L.P. Under the terms of the agreement, we may, from time to time, at our discretion, offer and sell shares of our common stock having an aggregate value of up to $6.0 million. During the three months ended June 30, 2015, we received gross proceeds of $1.8 million before issuance costs of approximately $71,000 from the sale of 555,000 shares of our common stock. | During the three months ended March 31, 2015, we received gross proceeds of $1.0 million as part of an At-the-Market (ATM) agreement we entered into with Meyers Associates, L.P. in June 2014. We have completed sales under this agreement, having received total proceeds of $4.5 million before issuance costs of approximately $206,000 from the sale of 2.0 million shares of our common stock. | During the six months ended June 30, 2015, we received $3.3 million from the exercise of warrants we issued in connection with earlier financing transactions to purchase 1.5 million shares of our common stock. |