MicroVision, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter filing; quarterly figures below are unaudited. Financial amounts are in U.S. dollars.
Business context and strategy
MicroVision is developing automotive lidar sensors and an advanced driver-assistance systems (ADAS) solution using its laser beam scanning technology. It completed an A-Sample long-range lidar module in April 2021 and tested it outdoors in the third quarter. Development continued on an integrated solution combining lidar, custom ASICs, and software.
Revenue remained dependent on Microsoft, which accounted for 100% of FY2021 revenue. Royalties relate to components MicroVision developed for a display system; since production transferred to Microsoft in 2020, royalties have been applied against a previously received $10.0 million prepayment and do not generate new cash until that prepayment is exhausted.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Total revenue | $2.50 million | $3.09 million |
| Gross profit | $2.50 million | $1.69 million |
| Research and development | $24.11 million | $9.84 million |
| Sales, marketing, general and administrative | $22.26 million | $5.92 million |
| Operating loss | $43.87 million | $13.62 million |
| Net loss | $43.20 million | $13.63 million |
| Net loss per share, basic and diluted | $0.27 | $0.10 |
| Cash used in operating activities | $29.40 million | $16.08 million |
Gross profit was nearly equal to revenue in 2021 because revenue was royalty income with minimal associated product cost; this is not evidence of a scaled product business. Revenue declined 19% year over year, while operating expenses rose substantially, primarily with higher development spending, headcount, share-based compensation, and professional services.
At year-end, cash and cash equivalents were $82.65 million and short-term investments were $32.72 million, for total cash and investments of $115.37 million. Current assets were $119.43 million and current liabilities were $12.46 million. Management said its current operating plan provided funding for at least 12 months, while also expecting significant losses and negative cash flow through at least 2022 and likely thereafter.
Financing activities provided $131.16 million in 2021, chiefly through common-stock sales. The company reported $17.47 million total liabilities, including $392,000 current PPP debt and $5.83 million of operating lease liabilities. Equity offerings increased shares outstanding; 164.36 million shares were outstanding at year-end. The accumulated deficit was $629.43 million.
Fourth-quarter 2021 revenue was $557,000 and net loss was $12.63 million, compared with $395,000 revenue and a $3.57 million net loss in fourth-quarter 2020.
Material changes and unusual items
- Revenue shifted from product sales to Microsoft royalties after production transferred to the customer in March 2020. FY2021 product and contract revenue were both zero; license and royalty revenue was $2.50 million, up from $1.72 million in 2020.
- R&D expense increased 145% to $24.11 million; SG&A increased 276% to $22.26 million. Share-based compensation totaled $15.28 million, versus $1.30 million in 2020.
- Cash and investments rose substantially after equity financing. The company issued shares under at-the-market offerings, receiving $122.9 million net from common-stock issuance in 2021; further issuance could dilute shareholders.
- A $690,000 PPP loan forgiveness was recorded as a gain on debt extinguishment. The company had repaid $488,000 of principal by year-end.
- FY2021 included $882,000 of property-and-equipment impairment and a $19,000 unrealized loss on available-for-sale investments.
Outlook, risks and contingencies
- Management expected to test and demonstrate the ADAS solution in the first half of 2022 and forecast small quantities of sales in 2022, but did not expect significant, sustained near-term ADAS revenue.
- Management estimated a 2022–2030 serviceable market of about 100 million lidar sensors and $80 billion in potential revenue, based on assumptions including an $800 average selling price. These are estimates, not contracted sales or guidance.
- Commercialization remains uncertain: the company said it had been unable to secure the customers needed to launch its products. Automotive awards require lengthy qualification and may determine supply opportunities for particular vehicle models for years.
- Customer concentration, intense competition, single- or limited-source suppliers, COVID-related supply disruptions, and the possibility of technology substitution or delayed ADAS adoption are significant risks.
- The company entered into long-term Redmond office leases, including a 36,062-square-foot lease targeted to commence July 2022. Contractual obligations totaled $21.96 million, including $19.55 million of operating lease payments; the table includes the forward-starting lease.
- Management reported that a material weakness in controls over determining equity-award grant dates, identified in 2021, was remediated by year-end. Management and the auditor concluded internal control over financial reporting was effective as of December 31, 2021. The financial-statement audit opinion was unqualified, with no critical audit matters.
- Management reported no legal proceedings believed reasonably likely to have a material adverse effect.
Most important facts for investors to verify
- Whether MicroVision secures automotive OEM or Tier-1 design wins, and the timing and economics of any production awards.
- Whether the planned 2022 ADAS demonstration and small-volume sales occur, and whether the product achieves customer qualification.
- How quickly cash and investments are consumed relative to the stated 12-month funding assessment, and whether further equity financing is needed.
- Whether Microsoft royalty revenue continues, how much of the prepayment remains available, and when royalties could begin generating cash receipts.
- The effects of share-based compensation and additional share issuance on dilution, alongside execution of the new lease commitments.