MicroVision (MVIS) 10-Q 29 Jul 15 2015 Q2 Quarterly report Financial data

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. 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 - 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.