MicroVision(US:MVIS)2021-04-30 00:04markdown PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Unaudited Q1 2021 financial statements detail increased cash and equity from stock offerings, a revenue shift to royalties, and a wider net loss [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) As of March 31, 2021, the company's financial position strengthened significantly compared to December 31, 2020, with total assets increasing to $79.6 million, primarily driven by a substantial rise in cash and cash equivalents to $75.3 million, leading to a surge in total shareholders' equity from $9.0 million to $68.0 million Condensed Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash and cash equivalents | $75,338 | $16,862 | +$58,476 | | Total current assets | $75,903 | $17,560 | +$58,343 | | **Total assets** | **$79,611** | **$21,006** | **+$58,605** | | **Liabilities & Equity** | | | | | Total current liabilities | $10,101 | $10,028 | +$73 | | Total liabilities | $11,650 | $11,997 | -$347 | | **Total shareholders' equity** | **$67,961** | **$9,009** | **+$58,952** | | **Total liabilities and shareholders' equity** | **$79,611** | **$21,006** | **+$58,605** | [Condensed Statements of Operations](index=5&type=section&id=Condensed%20Statements%20of%20Operations) For the three months ended March 31, 2021, MicroVision reported total revenue of $0.48 million, a significant decrease from $1.47 million in the same period of 2020 due to the cessation of product sales and a shift to royalties, resulting in a wider net loss of $6.2 million from $4.9 million year-over-year Q1 2021 vs Q1 2020 Statement of Operations (in thousands, except per share data) | Metric | Q1 2021 | Q1 2020 | Change | | :--- | :--- | :--- | :--- | | Total revenue | $479 | $1,469 | -67.4% | | Gross profit | $484 | $70 | +591.4% | | Research and development expense | $4,462 | $3,683 | +21.2% | | Sales, marketing, general and administrative expense | $2,247 | $1,771 | +26.9% | | Loss from operations | $(6,225) | $(4,934) | +26.2% | | **Net loss** | **$(6,231)** | **$(4,934)** | **+26.3%** | | **Net loss per share** | **$(0.04)** | **$(0.04)** | **0.0%** | [Condensed Statements of Shareholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Statements%20of%20Shareholders'%20Equity%20(Deficit)) Shareholders' equity increased dramatically from $9.0 million at the start of 2021 to $68.0 million by March 31, 2021, primarily driven by $61.5 million in proceeds from common stock sales, partially offset by a net loss of $6.2 million - Sales of common stock generated **$61.5 million** in cash during Q1 2021, significantly boosting shareholders' equity[17](index=17&type=chunk) - Share-based compensation expense for Q1 2021 was **$1.6 million**[17](index=17&type=chunk) [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) For the first quarter of 2021, net cash used in operating activities improved to $4.5 million, while financing activities provided $63.6 million, primarily from common stock issuance, resulting in a net increase in cash of $58.5 million and a total cash balance of $75.8 million Q1 2021 vs Q1 2020 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,531) | $(5,437) | | Net cash provided by (used in) investing activities | $(565) | $450 | | Net cash provided by financing activities | $63,572 | $1,475 | | **Change in cash, cash equivalents, and restricted cash** | **$58,476** | **$(3,512)** | | **Cash, cash equivalents, and restricted cash at end of period** | **$75,773** | **$2,760** | - Net proceeds from the issuance of common stock were **$57.4 million** in Q1 2021, compared to only **$1.5 million** in Q1 2020[20](index=20&type=chunk) [Notes to Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) The notes detail accounting policies, strategic focus on developing its **1st Generation Long Range Lidar (LRL) module**, ongoing pursuit of strategic alternatives, confirmation of sufficient cash for at least the next 12 months, and the fact that **100%** of Q1 2021 revenue came from a single customer - The company is focused on completing the development of its **1st Generation Long Range Lidar (LRL) module**[23](index=23&type=chunk) - Since February 2020, the company has been seeking strategic alternatives, including a potential sale or merger[24](index=24&type=chunk) - As of March 31, 2021, the company had **$75.3 million** in cash and cash equivalents and believes it has sufficient funds for at least the next 12 months[26](index=26&type=chunk) - In Q1 2021, one customer accounted for **100%** of total revenue (**$479,000**); this was also the case in Q1 2020, where one customer accounted for **100%** of revenue (**$1.5 million**)[42](index=42&type=chunk) - In February 2021, the company completed a **$50.0 million** **ATM equity offering**, issuing **2.5 million shares** for net proceeds of **$48.8 million**[54](index=54&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strategic shift to automotive lidar, revenue decline from royalty transition, increased expenses, and strong liquidity from stock offerings - The company's primary focus is now on developing a Long Range Lidar (LRL) sensor for automotive applications, with an **A-Sample** completed in April 2021[62](index=62&type=chunk)[63](index=63&type=chunk) - The company is simultaneously pursuing strategic alternatives, including a potential sale, merger, or strategic investment, but has no current agreements[66](index=66&type=chunk) - The company believes it has sufficient cash (**$75.3 million** at March 31, 2021) to fund operations for at least the next 12 months, but may require additional capital thereafter[91](index=91&type=chunk)[92](index=92&type=chunk) - Financing activities in Q1 2021 were dominated by **ATM equity offerings**, including a **$50.0 million** facility that yielded **$48.8 million** in net proceeds[96](index=96&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=20&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that its exposure to market risk, specifically interest rate risk and foreign exchange rate risk, is not material, as its cash and cash equivalents are held in variable interest rate accounts and major contracts are in U.S. dollars - The company believes its exposure to market and interest rate risk is not material, as all cash and cash equivalents have variable interest rates[99](index=99&type=chunk) - Foreign exchange rate risk is considered not material as major contracts are in U.S. dollars, though the company may enter into foreign currency purchase orders[101](index=101&type=chunk) [Item 4. Controls and Procedures](index=20&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Principal Executive Officer and Principal Financial Officer, concluded that the company's disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures are effective as of the end of the reporting period[102](index=102&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[102](index=102&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=21&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is subject to various claims and lawsuits in the normal course of business but is not currently a party to any legal proceedings that management believes could have a material adverse effect on its financial position, results of operations, or cash flows - The company is not currently party to any legal proceedings expected to have a material adverse effect on its financials[105](index=105&type=chunk) [Item 1A. Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) Key risks include substantial losses, future capital needs, uncertain strategic alternatives, COVID-19 impacts, single customer reliance, and stock volatility - The company has a history of substantial losses, with an accumulated deficit of **$592.5 million** as of March 31, 2021, and expects to incur significant losses in the future[107](index=107&type=chunk)[112](index=112&type=chunk) - The company may require additional capital to fund operations beyond the next 12 months, and there is no assurance it will be available on acceptable terms[113](index=113&type=chunk) - The company's stock price has been and may continue to be extremely volatile, trading between **$0.15** and **$27.80** in the 12 months prior to the report[132](index=132&type=chunk) - The company is dependent on a small number of customers, with a single customer accounting for **100%** of revenue in Q1 2021 and Q1 2020[126](index=126&type=chunk) - The COVID-19 pandemic has had an adverse effect and its future impact on capital raising, technology development, and strategic transactions remains uncertain[111](index=111&type=chunk)[119](index=119&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q report, including certifications from the Principal Executive Officer and Principal Financial Officer as required by the **Sarbanes-Oxley Act of 2002**, as well as **XBRL Interactive Data Files** - Lists certifications by the Principal Executive Officer and Principal Financial Officer pursuant to **Sarbanes-Oxley Act Sections 302 and 906**[161](index=161&type=chunk) - Includes **XBRL data files** (Instance, Schema, Calculation, Definition, Label, and Presentation documents) as exhibits[161](index=161&type=chunk) Signatures The report is duly signed and authorized on April 29, 2021, by Sumit Sharma, the Chief Executive Officer, and Stephen P. Holt, the Chief Financial Officer - The report was signed on **April 29, 2021**, by Sumit Sharma (Chief Executive Officer) and Stephen P. Holt (Chief Financial Officer)[164](index=164&type=chunk)