MicroVision, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Financial statements are unaudited. Amounts below are in millions of dollars unless otherwise stated.
Business context
MicroVision is developing laser-beam-scanning technology, with automotive long-range lidar (LRL) its current priority. It also has display and consumer-lidar technologies. The company reported that product shipments to a major technology customer ended in March 2020; it now receives royalties under an arrangement with that customer. Management is also exploring strategic alternatives, including a potential sale or merger, sale of part of the company, investment, or licensing transactions. No specific transaction was agreed or committed to as of the filing.
Financial results and liquidity
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Total revenue | $0.479 | $1.469 |
| Gross profit | $0.484 | $0.070 |
| Operating expenses | $6.709 | $5.004 |
| Operating loss | $(6.225) | $(4.934) |
| Net loss | $(6.231) | $(4.934) |
| Net loss per share, basic and diluted | $(0.04) | $(0.04) |
| Cash used in operating activities | $(4.531) | $(5.437) |
Revenue consisted of $0.479 million in license and royalty revenue, with no product or contract revenue. Gross profit exceeded revenue because reported cost of product revenue was a $5,000 credit; the filing does not explain this credit in the presented results. Gross margin is therefore not a meaningful indicator for comparison.
Research and development expense rose 21% to $4.462 million, and sales, marketing, general and administrative expense rose 27% to $2.247 million. Management attributed much of the increases to higher non-cash share-based compensation, which totaled $1.638 million versus $0.189 million a year earlier.
At March 31, cash and cash equivalents were $75.338 million, versus $16.862 million at year-end 2020; restricted cash was $0.435 million. Total current assets were $75.903 million and current liabilities were $10.101 million. Total liabilities were $11.650 million, including $1.585 million of long-term debt, current and noncurrent. Shareholders’ equity was $67.961 million. The accumulated deficit was $592.464 million.
Cash, cash equivalents, and restricted cash increased $58.476 million during the quarter, principally reflecting $63.572 million of financing cash flow. This included $57.445 million in net proceeds from common stock issuance and collection of $6.135 million in subscriptions receivable. Operating cash use was $4.531 million; investing cash use was $0.565 million.
Material changes and financing
- Total revenue declined 67% year over year as product revenue fell to zero, following the transfer of component production to the customer in March 2020. Royalty revenue increased 126% to $0.479 million, principally reflecting the customer royalty arrangement.
- Net loss increased by $1.297 million year over year, while operating cash use declined by $0.906 million.
- In February 2021, MicroVision completed sales under a $50 million at-the-market (ATM) offering, issuing 2.5 million shares for $48.8 million net proceeds. It also completed a separate $13 million ATM program, with total net proceeds of $12.7 million, including proceeds received in January. Shares outstanding were 157.952 million at March 31, compared with 152.926 million at December 31.
Outlook, commentary, and risks
- Management said available cash was expected to fund operations for at least the next 12 months under its current operating plan. It may need additional capital thereafter; additional funding may not be available on acceptable terms or in time. The company warned that inadequate resources could require substantial operating cuts.
- Management expected significant losses in 2021 and stated that losses and negative cash flow could continue at least through 2021 and likely thereafter. It did not provide revenue or profit guidance.
- MicroVision reported completing its A-Sample LRL module in April 2021, after the quarter. Verification, reliability, and compliance testing remained to be conducted. The company said the first-generation module might be available for sale in small quantities in Q3 or Q4 2021; this was a possibility, not a firm commitment.
- One customer accounted for 100% of Q1 revenue. The company also cited reliance on single- or limited-source suppliers and COVID-19-related supply-chain, workforce, development, financing, and transaction risks.
- The $7.286 million current contract liability relates to a prior customer prepayment. MicroVision expected to apply an additional $2.743 million to license and royalty revenue during the remainder of 2021; timing of recognition of the remaining liability was uncertain and may extend beyond 12 months.
- The company intended to seek partial forgiveness of a $1.6 million Paycheck Protection Program loan and estimated approximately $0.690 million could be forgiven, subject to lender approval.
- Management said it was not aware of legal proceedings reasonably likely to have a material adverse effect. Disclosure controls were concluded effective, with no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Progress and test results for the LRL module, and whether the potential Q3–Q4 2021 limited sales timing was achieved.
- Any subsequent developments in strategic alternatives; the filing reported no specific transaction commitment.
- Cash burn, additional financing needs, and the effects of further equity issuance on share dilution.
- Royalty revenue durability and the extent to which revenue remains dependent on one customer.
- Supplier availability, COVID-19-related disruptions, and the timing of contract-liability revenue recognition.
- Whether the estimated PPP loan forgiveness was approved.