MicroVision, Inc. — FY2020 Form 10-K
Business context and reporting period. This annual report covers the fiscal year ended December 31, 2020; quarterly figures are unaudited. MicroVision is developing a long-range automotive lidar sensor using its laser beam scanning technology. It reported no current manufacturing activity and has also developed AR display, interactive display and consumer lidar technologies. Since February 2020, it has pursued strategic alternatives, including a sale, merger, investment or licensing transaction, while continuing development of its first-generation lidar module.
Key financial results
| Metric | FY2020 | FY2019 |
|---|---|---|
| Revenue | $3.09 million | $8.89 million |
| Gross profit | $1.69 million | $0.32 million |
| Gross margin | 54.8% | 3.6% |
| Operating loss | $13.62 million | $26.47 million |
| Net loss | $13.63 million | $26.48 million |
| Net loss per share | $0.10 | $0.24 |
| Cash used in operating activities | $16.08 million | $24.04 million |
- Revenue fell 65% year over year. Product revenue declined 75% to $1.35 million; contract revenue fell from $3.44 million to $25,000. License and royalty revenue rose to $1.72 million, largely because a customer took over component production and began paying royalties.
- Gross profit improved mainly as lower inventory write-downs and product costs outweighed lower sales; inventory write-downs were $168,000 versus $2.2 million in 2019. R&D expense declined 47% to $9.84 million and sales, marketing, general and administrative expense declined 27% to $5.92 million.
- At December 31, cash and cash equivalents were $16.86 million, with restricted cash of $435,000. Current assets were $17.56 million and current liabilities $10.03 million. Total liabilities were $12.00 million. Debt included the $1.57 million PPP loan; operating and finance lease liabilities totaled $1.53 million.
- FY2020 financing activities provided $26.98 million, including $25.44 million net proceeds from common stock and $1.57 million of debt proceeds. Cash increased by $11.03 million, including restricted cash.
- Fourth-quarter 2020 revenue was $395,000, gross profit $395,000, net loss $3.57 million and basic and diluted loss per share $0.02.
Material changes and outlook
- MicroVision transferred production of a customer’s display components to that customer in March 2020, replacing product sales with royalties. At year-end, product and contract backlogs were both zero; the remaining customer prepayment/contract liability was $7.77 million. The filing expected to apply $3.2 million of it to revenue in 2021, with the timing of the balance uncertain.
- Management expected to complete A-Sample lidar hardware and selected benchmark data around April 2021, followed by internal verification and reliability and compliance testing. Small-quantity availability was described as possible in Q3 or Q4 2021, not assured.
- The company reported substantial historical losses and expected significant losses and negative cash flow at least through 2021 and likely thereafter. It had no committed strategic transaction. Management said post-year-end ATM proceeds of $61.4 million provided sufficient funding for at least the next 12 months and removed substantial doubt about continuing as a going concern; additional capital may be needed beyond that period.
- ATM offerings generated $12.7 million net in January 2021 and $48.7 million net in February 2021. These post-year-end equity financings increased liquidity but diluted shareholders.
- Key risks include dependence on one customer (97% of FY2020 revenue), single- or limited-source suppliers, COVID-19-related supply and productivity disruptions, competition and technology execution, the uncertain outcome of strategic alternatives, and potential need for further capital. The $1.6 million PPP loan carried 0.98% interest; the company intended to seek forgiveness of approximately $690,000, subject to approval.
- The Ragentek/distributor dispute was settled and arbitration dismissed; management did not identify other pending legal matters it believed reasonably likely to have a material adverse effect. The independent auditor issued an unqualified opinion and reported no critical audit matters. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor was not engaged to opine on internal controls.
Investor facts to verify
- Whether lidar development met the stated A-Sample, verification, testing and commercialization milestones, and whether any customer or production commitments followed.
- How much of the $7.77 million contract liability was recognized as revenue, and how royalty volumes and customer concentration evolved.
- Cash burn, remaining liquidity and financing needs after the $61.4 million of 2021 ATM proceeds, including the effects of share issuance and dilution.
- Whether PPP forgiveness was approved and the remaining repayment obligation.
- Whether a strategic transaction was completed; the filing disclosed no specific agreement or commitment as of its reporting date.