Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 27, 2016 | |
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, 2016 | |
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 | 51,759,000 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 7,191 | $ 7,888 |
Accounts receivable, net of allowances of $38 and $38, respectively | 2,087 | 1,687 |
Inventory | 1,118 | 862 |
Other current assets | 626 | 638 |
Total current assets | 11,022 | 11,075 |
Property and equipment, net | 1,324 | 1,669 |
Restricted cash | 435 | 435 |
Intangible assets | 781 | 845 |
Other assets | 18 | 18 |
Total assets | 13,580 | 14,042 |
Current liabilities | ||
Accounts payable | 2,496 | 2,183 |
Accrued liabilities | 3,153 | 3,399 |
Deferred revenue | 1,904 | 2,122 |
Total current liabilities | 7,553 | 7,704 |
Deferred revenue, net of current portion | 5,654 | 6,149 |
Deferred rent, net of current portion | 265 | 342 |
Total liabilities | 13,472 | 14,195 |
Commitments and contingencies (Note 7) | ||
Shareholders' equity (deficit) | ||
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; 51,759 and 47,423 shares issued and outstanding | 52 | 47 |
Additional paid-in capital | 490,459 | 483,171 |
Accumulated deficit | (490,403) | (483,371) |
Total shareholders' equity (deficit) | 108 | (153) |
Total liabilities and shareholders' equity (deficit) | $ 13,580 | $ 14,042 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets | ||
Allowance for doubtful accounts receivable, current | $ 38 | $ 38 |
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 | 51,759 | 47,423 |
Common stock, shares outstanding | 51,759 | 47,423 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||||
Product revenue | $ 3,530 | $ 2,182 | $ 6,685 | $ 2,923 |
Royalty revenue | 609 | 324 | 1,151 | 468 |
Contract revenue | 16 | 1,537 | 20 | 1,553 |
Total revenue | 4,155 | 4,043 | 7,856 | 4,944 |
Cost of product revenue | 2,587 | 2,074 | 5,175 | 3,111 |
Cost of contract revenue | 5 | 782 | 6 | 789 |
Total cost of revenue | 2,592 | 2,856 | 5,181 | 3,900 |
Gross profit | 1,563 | 1,187 | 2,675 | 1,044 |
Research and development expense | 2,879 | 2,011 | 5,476 | 3,909 |
Sales, marketing, general and administrative expense | 2,171 | 1,946 | 4,239 | 3,867 |
Total operating expenses | 5,050 | 3,957 | 9,715 | 7,776 |
Loss from operations | (3,487) | (2,770) | (7,040) | (6,732) |
Other income, net | 11 | 1 | 8 | 1 |
Net loss | $ (3,476) | $ (2,769) | $ (7,032) | $ (6,731) |
Net loss per share - basic and diluted | $ (0.07) | $ (0.06) | $ (0.14) | $ (0.15) |
Weighted-average shares outstanding - basic and diluted | 51,567 | 46,663 | 49,566 | 45,818 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities | ||
Net loss | $ (7,032) | $ (6,731) |
Adjustments to reconcile net loss to net cash provided by (used in) operations: | ||
Depreciation | 396 | 180 |
Amortization of intangible assets | 64 | 64 |
Share-based compensation expense | 674 | 424 |
Inventory write-downs | 171 | 287 |
Other non-cash adjustments | 62 | (31) |
Change in: | ||
Accounts receivable, net | (400) | (651) |
Inventory | (427) | (519) |
Other current and non-current assets | 12 | (30) |
Accounts payable | 362 | 248 |
Accrued liabilities | (267) | 508 |
Deferred revenue | (713) | 7,937 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 0 | (225) |
Net cash provided by (used in) operating activities | (7,098) | 1,461 |
Cash flows from investing activities | ||
Purchases of property and equipment | (193) | (719) |
Net cash used in investing activities | (193) | (719) |
Cash flows from financing activities | ||
Net proceeds from issuance of common stock and warrants | 6,594 | 5,994 |
Net cash provided by financing activities | 6,594 | 5,994 |
Change in cash and cash equivalents | (697) | 6,736 |
Cash and cash equivalents, at beginning of period | 7,888 | 8,336 |
Cash and cash equivalents, at end of period | 7,191 | 15,085 |
Supplemental schedule of non-cash investing and financing activities | ||
Non-cash additions to property and equipment | $ 116 | $ 187 |
MANAGEMENT'S STATEMENT - Note 1
MANAGEMENT'S STATEMENT - Note 1 | 6 Months Ended |
Jun. 30, 2016 | |
Management Disclosure | |
MANAGEMENT'S STATEMENT - Note 1 | 1. MANAGEMENTS STATEMENT The Condensed Consolidated Balance Sheets as of June 30, 2016, the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015, and Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015, 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, 2016 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, 2015. The results of operations for the three and six months ended June 30, 2016 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, 2016, we had $7.2 million in cash and cash equivalents. The consolidated financial statements are prepared assuming we will continue as a going concern. Based on our current operating plan, and assuming some sales of additional equity under our existing At-the-Market (ATM) facility discussed in Note 8, we anticipate that we have sufficient cash and cash equivalents to fund our operations through December 2016. 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 and/or product sales and 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 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 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 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. |
NET LOSS PER SHARE - Note 2
NET LOSS PER SHARE - Note 2 | 6 Months Ended |
Jun. 30, 2016 | |
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. 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. 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, 2016 2015 2016 2015 Numerator: Net loss available for common shareholders - basic and diluted $ (3,476) $ (2,769) $ (7,032) $ (6,731) Denominator: Weighted-average common shares outstanding - basic and diluted 51,567 46,663 49,566 45,818 Net loss per share - basic and diluted $ (0.07) $ (0.06) $ (0.14) $ (0.15) On June 30, 2016 and 2015, we excluded the following securities from diluted net loss per share, as the effect of including them would have been anti-dilutive: options and warrants exercisable into a total of 9,078,000 and 8,236,000 shares of common stock, respectively, and 60,000 and 60,000 nonvested equity shares, respectively. |
KEY ACCOUNTING POLICY - REVENUE
KEY ACCOUNTING POLICY - REVENUE RECOGNITION - Note 3 | 6 Months Ended |
Jun. 30, 2016 | |
Key Accounting Policy - Revenue Recognition - Note 3 | |
KEY ACCOUNTING POLICY - REVENUE RECOGNITION - Note 3 | 3. KEY ACCOUNTING POLICY - REVENUE RECOGNITION We recognize revenue when: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred and there are no uncertainties regarding customer acceptance, (iii) fees are fixed or determinable and (iv) collection is reasonably assured. We generate revenue from many sources and activities. We enter into arrangements that can include various combinations of product sales, services, and licensing activities. 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. To date, our revenue sources can be classified as: product revenue, royalty revenue, or contract revenue. Product revenue Our product sales generally include acceptance provisions. We recognize product revenue upon acceptance of the product by the customer or expiration of the contractual acceptance period, after which there are no rights of return. No estimates are made for product returns because revenue is recognized upon expiration of the contractual acceptance period. Royalty revenue Royalty revenue is revenue under license agreements to our PicoP® scanning technology. We recognize revenue on upfront license fees over the expected time frame that we provide services or have ongoing obligations under the agreement. Ongoing per unit royalties are reported by our customer to us on a quarterly basis. Currently, we recognize revenue for ongoing per unit royalties one quarter in arrears when reported by our customer, representing when such amounts are fixed and determinable, and all other revenue recognition criteria are met. Contract revenue We recognize contract revenue on long-term, cost plus fixed fee, and fixed price contracts using the percentage-of-completion method. Under the percentage-of-completion method, revenue is recognized as work progresses on the contract. The percentage-of-completion method relies on estimates of total expected contract revenue and costs. At the end of each period, we estimate the labor, material and other costs required to complete the contract using data provided by our technical team, project managers, vendors, outside consultants and others and compare these to costs incurred to date. Recognized revenues are subject to amendments for actual costs incurred. Amendments to revenue and costs to complete estimates are recognized in the period in which the facts become known. In the future, amendments to estimates could significantly impact recognized revenue in any one reporting period. If we are unable to estimate costs on a contract, revenue is recognized using the completed-contract method. Under the completed-contract method, revenue and contract costs are deferred and both are recognized when all deliverables are completed. License agreement In March 2015, we signed a license agreement as part of a multiple-element arrangement with a customer for our PicoP® scanning technology. The license agreement granted the customer a non-exclusive license to manufacture and sell display modules that use our PicoP® scanning technology. 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 containing our PicoP® scanning technology. We recognize revenue on the initial $8.0 million payment on a straight-line basis within Royalty Revenues, 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 to us on a quarterly basis. Currently, we recognize revenue for ongoing per unit royalties one quarter in arrears when reported by our customer, representing when such amounts are fixed and determinable, and all other revenue recognition criteria are met. 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. During the three and six months ended June 30, 2016, we recognized $360,000 and $653,000, respectively, from ongoing per unit royalties, and $249,000 and $498,000, respectively, from a prorated portion of the $8.0 million upfront payment. During the three and six months ended June 30, 2015, we recognized $75,000 and $123,000, respectively, from ongoing per unit royalties, and $249,000 and $345,000, respectively, from a prorated portion of the $8.0 million upfront payment. At June 30, 2016, remaining unrecognized upfront license fees are included in current and long-term deferred revenues, amounting to $999,000 and $5.7 million, respectively. At December 31, 2015, unrecognized upfront license fees are included in current and long-term deferred revenues, amounting to $1.0 million and $6.1 million, respectively. |
CONCENTRATION OF CREDIT RISK AN
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS AND SUPPLIERS - Note 4 | 6 Months Ended |
Jun. 30, 2016 | |
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, 2016, our cash and cash equivalents are comprised of short-term, highly rated money market savings accounts. Concentration of major customers and suppliers For the three and six months ended June 30, 2016, one commercial customer accounted for $3.5 million and $6.8 million of our total revenue, representing 84% and 87% of total revenue, respectively. For the three and six months ended June 30, 2016, a second commercial customer accounted for $486,000 and $859,000 of our total revenue, representing 12% and 11% of total revenue, respectively. For the three and six months ended June 30, 2015, one commercial customer accounted for $4.0 million and $4.9 million of our total revenue, representing 99% of total revenue in each period. One commercial customer accounted for $2.1 million of our net accounts receivable balance at June 30, 2016 and one commercial customer accounted for $1.3 million of our net accounts receivable balance at June 30, 2015, representing 100% and 99%, respectively. 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, 2016 | |
Inventory Disclosure | |
Inventory - Note 5 | 5. INVENTORY Inventory consists of the following: June 30, December 31, ( in thousands 2016 2015 Raw materials $ 585 $ 232 Finished goods 533 630 $ 1,118 $ 862 Our inventory consists of raw materials and finished goods assemblies. Inventory is is computed using first-in, first-out (FIFO) method and 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. At June 30, 2016 and December 31, 2015, we recorded aggregate write-downs of $6.8 million and $6.9 million, respectively, offsetting inventory deemed to be obsolete or scrap inventory. 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, 2016 | |
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: Share-based compensation expense Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2016 2015 2016 2015 Cost of product revenue $ 10 $ 4 $ 20 $ 8 Research and development expense 102 68 185 116 Sales, marketing, general and administrative expense 262 162 469 300 $ 374 $ 234 $ 674 $ 424 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, 2016: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Shares Price Term (years) Value Outstanding as of June 30, 2016 4,039,000 $ 4.00 7.8 $ 15,000 Exercisable as of June 30, 2016 1,828,000 $ 6.07 6.2 $ 13,000 As of June 30, 2016, our unamortized share-based employee compensation related to stock options was $2.9 million which we plan to amortize over the next 3.2 years, and our unamortized share-based compensation related to RSUs was $105,000 which we plan to amortize over the next 0.9 years. |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Note 7 | 6 Months Ended |
Jun. 30, 2016 | |
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 As of June 30, 2016, 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, 2016 | |
Common Stock And Warrants - Note 8 | |
COMMON STOCK AND WARRANTS - Note 8 | 8. COMMON STOCK AND WARRANTS During the six months ended June 30, 2016, we received gross proceeds of $349,000 as part of an ATM agreement we entered into with Meyers Associates, L.P. in May 2015. 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. As of June 30, 2016, we have received aggregate gross proceeds of approximately $2.6 million before issuance costs of approximately $95,000 from the sale of 928,000 shares of common stock. In March 2016, we raised $6.9 million before issuance costs of approximately $650,000 from the sale of 4.1 million shares of common stock in an underwritten public offering. During the six months ended June 30, 2015, we received $3.3 million from the exercise of warrants to purchase 1.5 million shares of common stock, which warrants were issued in connection with earlier financing transactions. During the three months ended March 31, 2015, we received gross proceeds of $1.0 million as part of an ATM agreement we entered into with Meyers Associates, L.P. in June 2014. We 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 common stock. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS - Note 9 | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS - Note 9 | 9. RECENT ACCOUNTING PRONOUNCEMENTS In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-13 (ASU 2016-13), Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU 2016-13 is effective for public entities with fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The new guidance shall be applied on a modified-retrospective approach. We are currently evaluating the impact the adoption of this standard will have on our financial statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09), Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies several aspects of the accounting for share-based payment award transactions including a) income tax consequences; b) classification of awards as either equity or liabilities; and c) classification on the statement of cash flows. ASU 2016-09 is effective for public entities in the fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. Various elements of the amendments will be applied using either a modified retrospective transition method, retrospectively, or prospectively. Early adoption is permitted. We are currently evaluating the impact the adoption of this standard will have on our financial statements. In February 2016, the FASB issued Accounting Standards Update No. 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 principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases should be recognized in the balance sheet. 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 are currently evaluating the impact the adoption of this standard will have on our financial statements. In November 2015, the FASB issued Accounting Standards Update No. 2015-17 (ASU 2015-17), Income Taxes: Balance Sheet Classification of Deferred Taxes. ASU 2015-17 eliminates the current requirement to present deferred tax liabilities and assets as current and non-current on the balance sheet and requires that all deferred tax liabilities and asset, and any related valuation allowance, be classified as non-current on the balance sheet. ASU 2015-17 is effective for public entities in fiscal years beginning after December 15, 2016, and for the interim periods within those fiscal years. The new guidance can be applied retrospectively or prospectively and early adoption is permitted. We do not expect the implementation of this standard to have a material effect 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. In May 2014, 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 generally accepted accounting principles of the United States. 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. 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 have not yet selected a transition method and we are currently evaluating the effect that the updated standard will have on our financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Management's Statement | The Condensed Consolidated Balance Sheets as of June 30, 2016, the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015, and Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015, 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, 2016 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, 2015. The results of operations for the three and six months ended June 30, 2016 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, 2016, we had $7.2 million in cash and cash equivalents. The consolidated financial statements are prepared assuming we will continue as a going concern. Based on our current operating plan, we anticipate that we have sufficient cash and cash equivalents to fund our operations through December 2016. 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 and/or product sales and 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 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 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 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. |
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. |
Revenue recognition | We recognize revenue when: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred and there are no uncertainties regarding customer acceptance, (iii) fees are fixed or determinable and (iv) collection is reasonably assured. We generate revenue from many sources and activities. We enter into arrangements that can include various combinations of product sales, services, and licensing activities. 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. To date, our revenue sources can be classified as: product revenue, royalty revenue, contract revenue, or development revenue. Product revenue Our product sales generally include acceptance provisions. We recognize product revenue upon acceptance of the product by the customer or expiration of the contractual acceptance period, after which there are no rights of return. No estimates are made for product returns because revenue is recognized upon expiration of the contractual acceptance period. Royalty revenue Royalty revenue is revenue under license agreements to our PicoP® scanning technology. We recognize revenue on upfront license fees over the expected time frame that we provide services or have ongoing obligations under the agreement. Ongoing per unit royalties are reported by our customer to us on a quarterly basis. We recognize revenue for ongoing per unit royalties one quarter in arrears when such amounts are fixed and determinable. Contract revenue We recognize contract revenue on long-term, cost plus fixed fee, and fixed price contracts using the percentage-of-completion method. Under the percentage-of-completion method, revenue is recognized as work progresses on the contract. The percentage-of-completion method relies on estimates of total expected contract revenue and costs. At the end of each period, we estimate the labor, material and other costs required to complete the contract using data provided by our technical team, project managers, vendors, outside consultants and others and compare these to costs incurred to date. Recognized revenues are subject to amendments for actual costs incurred. Amendments to revenue and costs to complete estimates are recognized in the period in which the facts become known. In the future, amendments to estimates could significantly impact recognized revenue in any one reporting period. If we are unable to estimate costs on a contract, revenue is recognized using the completed-contract method. Under the completed-contract method, revenue and contract costs are deferred and both are recognized when all deliverables are completed. License agreement In March 2015, we signed a license agreement as part of a multiple-element arrangement with a customer for our PicoP® scanning technology. The license agreement granted the customer a non-exclusive license to manufacture and sell display modules that use our PicoP® scanning technology. 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 containing our PicoP® scanning technology. We recognize revenue on the initial $8.0 million payment on a straight-line basis within Royalty Revenues, 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 to us on a quarterly basis. Currently, we recognize revenue for ongoing per unit royalties one quarter in arrears when reported by our customer, representing when such amounts are fixed and determinable, and all other revenue recognition criteria are met. 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. During the three and six months ended June 30, 2016, we recognized $360,000 and $653,000, respectively, from ongoing per unit royalties, and $249,000 and $498,000, respectively, from a prorated portion of the $8.0 million upfront payment. During the three and six months ended June 30, 2015, we recognized $75,000 and $123,000, respectively, from ongoing per unit royalties, and $249,000 and $345,000, respectively, from a prorated portion of the $8.0 million upfront payment. At June 30, 2016, remaining unrecognized upfront license fees are included in current and long-term deferred revenues, amounting to $999,000 and $5.7 million, respectively. At December 31, 2015, unrecognized upfront license fees are included in current and long-term deferred revenues, amounting to $1.0 million and $6.1 million, respectively. |
Inventory | Inventory is is computed using first-in, first-out (FIFO) method and 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. 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 | 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, 2016 | |
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, 2016 2015 2016 2015 Numerator: Net loss available for common shareholders - basic and diluted $ (3,476) $ (2,769) $ (7,032) $ (6,731) Denominator: Weighted-average common shares outstanding - basic and diluted 51,567 46,663 49,566 45,818 Net loss per share - basic and diluted $ (0.07) $ (0.06) $ (0.14) $ (0.15) |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Inventory Tables | |
Inventory (Tables) | Inventory consists of the following: June 30, December 31, ( in thousands 2016 2015 Raw materials $ 585 $ 232 Finished goods 533 630 $ 1,118 $ 862 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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: Share-based compensation expense Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2016 2015 2016 2015 Cost of product revenue $ 10 $ 4 $ 20 $ 8 Research and development expense 102 68 185 116 Sales, marketing, general and administrative expense 262 162 469 300 $ 374 $ 234 $ 674 $ 424 |
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, 2016: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Shares Price Term (years) Value Outstanding as of June 30, 2016 4,039,000 $ 4.00 7.8 $ 15,000 Exercisable as of June 30, 2016 1,828,000 $ 6.07 6.2 $ 13,000 |
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, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Numerator: | ||||
Net loss available for common shareholders - basic and diluted | $ (3,476) | $ (2,769) | $ (7,032) | $ (6,731) |
Denominator: | ||||
Weighted-average shares outstanding - basic and diluted | 51,567 | 46,663 | 49,566 | 45,818 |
Net loss per share - basic and diluted | $ (0.07) | $ (0.06) | $ (0.14) | $ (0.15) |
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, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Options and Private Warrants Exercisable | ||||
Anti-dilutive shares | 9,078,000 | 8,236,000 | 9,078,000 | 8,236,000 |
Nonvested Equity Shares | ||||
Anti-dilutive shares | 60,000 | 60,000 | 60,000 | 60,000 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Deferred revenue | $ 1,904,000 | $ 1,904,000 | $ 2,122,000 | ||
Deferred revenue, net of current portion | 5,654,000 | 5,654,000 | 6,149,000 | ||
License agreement | |||||
Recognition of ongoing per unit royalties | 360,000 | $ 75,000 | 653,000 | $ 123,000 | |
Recognition of prorated portion of deferred revenue | 249,000 | $ 249,000 | 498,000 | $ 345,000 | |
Deferred revenue | 999,000 | 999,000 | 1,000,000 | ||
Deferred revenue, net of current portion | $ 5,700,000 | $ 5,700,000 | $ 6,100,000 |
Concentration of Sales to Major
Concentration of Sales to Major Customers (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Customer Revenue Concentration | ||||
Total revenue | $ 3.5 | $ 4 | $ 6.8 | $ 4.9 |
Concentration Risk, Percentage | 84.00% | 99.00% | 87.00% | 99.00% |
Accounts Receivable Concentration | ||||
Accounts receivable | $ 2.1 | $ 1.3 | $ 2.1 | $ 1.3 |
Concentration Risk, Percentage | 100.00% | 99.00% |
Inventory Components (Details)
Inventory Components (Details) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Inventory Components Details | ||
Raw materials | $ 585,000 | $ 232,000 |
Finished goods | 533,000 | 630,000 |
Inventory, net | $ 1,118,000 | $ 862,000 |
Inventory (Narrative) (Details)
Inventory (Narrative) (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Inventory Narrative Details | ||
Inventory allowance | $ 6.8 | $ 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, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Share-based employee compensation expense | $ 374,000 | $ 234,000 | $ 674,000 | $ 424,000 |
Cost of product revenue | ||||
Share-based employee compensation expense | 10,000 | 4,000 | 20,000 | 8,000 |
Research and development expense | ||||
Share-based employee compensation expense | 102,000 | 68,000 | 185,000 | 116,000 |
Sales, marketing, general and administrative expense | ||||
Share-based employee compensation expense | $ 262,000 | $ 162,000 | $ 469,000 | $ 300,000 |
Shared-Based Compensation (Opti
Shared-Based Compensation (Options Activity and Position) (Details) | 6 Months Ended |
Jun. 30, 2016USD ($)$ / sharesshares | |
Shared-based Compensation Options Activity And Position Details | |
Outstanding shares | shares | 4,039,000 |
Weighted-average exercise price of options outstanding | $ / shares | $ 4 |
Weighted-average remaining contractual term (in years) of options outstanding | 7 years 292 days |
Aggregate intrinsic value of options outstanding | $ | $ 15,000 |
Exercisable shares | shares | 1,828,000 |
Weighted-average exercise price of options exercisable | $ / shares | $ 6.07 |
Weighted-average remaining contractual term (in years) of options exercisable | 6 years 72 days |
Aggregate intrinsic value of options exercisable | $ | $ 13,000 |
Share-Based Compensation (Narra
Share-Based Compensation (Narrative) (Details) | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Employee Stock Options | |
Unrecognized compensation cost related to share-based compensation | $ 2,900,000 |
Weighted-average service period, years | 3 years 72 days |
Restricted Stock Rights | |
Unrecognized compensation cost related to share-based compensation | $ 105,000 |
Weighted-average service period, years | 324 days |
Commitments and Contingencies (
Commitments and Contingencies (Adverse Purchase Commitments Narrative) (Details) | Jun. 30, 2016USD ($) |
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, 2016 | Mar. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Common Stock And Warrants Narrative Details | ||||
Exchange of warrants, shares | 1,500,000 | |||
Cash on exercise of warrants | $ 3,300,000 | |||
Number of shares of common stock issued | 928,000 | |||
Cash received from stock sale, before issuance costs | $ 6,900,000 | $ 1,000,000 | $ 2,600,000 | |
Stock issuance costs | $ 650,000 | $ 95,000 | ||
Warrant terms and provisions | In March 2016, we raised $6.9 million before issuance costs of approximately $650,000 from the sale of 4.1 million shares of common stock in an underwritten public offering. | 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, 2016, we received gross proceeds of $349,000 as part of an ATM agreement we entered into with Meyers Associates, L.P. in May 2015. 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. As of June 30, 2016, we have received aggregate gross proceeds of approximately $2.6 million before issuance costs of approximately $95,000 from the sale of 928,000 shares of common stock. | During the six months ended June 30, 2015, we received $3.3 million from the exercise of warrants to purchase 1.5 million shares of common stock, which warrants were issued in connection with earlier financing transactions. |