8/5/2008 4:27:00 PM
Company Strengthens Balance Sheet to Support the Commercialization of Its First PicoP Product in 2009
REDMOND, Wash.–(BUSINESS WIRE)–Aug. 5, 2008–Microvision, Inc.
(NASDAQ:MVIS), a global leader in light scanning technologies, today
reported operating and financial results for the second quarter of
2008.
Operating Results
“We believe market interest in PicoP(TM) remains strong. During
the second quarter we received letters of intent from several
companies for the PicoP accessory product for a 2009 release,” said
Alexander Tokman Microvision President and CEO. “We are also very
pleased that our initial testing has demonstrated the drop
survivability of the new MEMS scanner, a key component in our PicoP
display engine, and that we raised $26 million to strengthen our
balance sheet to support the PicoP accessory commercialization.”
During the second quarter Microvision received non-binding letters
of intent from several companies for the PicoP accessory product
targeted for a 2009 release. The company expects to commence extended
field trials with OEM companies soon to solicit broader feedback for
the final accessory product requirements. The company expects that
successful completion of these trials would lead to firmer purchase
commitments.
Also, during the quarter the company made advancements in its core
technology including:
— Completed internal testing of the new wide-angle MEMS scanner,
an integral part of the PicoP engine, for shock and drop
survivability. These results show that Microvision’s MEMS
scanning mirror exceeds the shock and drop test requirements
consistent with mobile handset industry standards.
— Reduced the power consumption of the current MEMS scanner by
approximately 75% over the previous version initially shown in
mid-2007.
— Progressed its overall PicoP miniaturization and power
reduction efforts through the advancement of key ASIC
subsystems for the accessory and embedded products.
In June, the company joined the U.S. small-cap Russell 2000(R) and
Russell Global Indexes, which are widely used by investment managers
and institutional investors as benchmarks for investment strategies.
According to Russell Investments, an industry leading $4.4 trillion in
assets currently are benchmarked to the Russell indexes.
Subsequent to the end of the quarter, the company raised $26
million before issuance costs through the sale of common stock and
warrants. The additional cash is expected to support the company’s
overall operating requirements through launch and into volume
production of its PicoP accessory product.
Financial Results
For the six months ended June 30, 2008, the company reported
revenue of $4.2 million compared to $4.9 million for the same period
in 2007 and for the three months ended June 30, 2008, the company
reported revenue of $1.6 million compared to $2.7 million for the same
period in 2007. As of June 30, 2008, the backlog totaled $679,000
compared to $7.7 million at June 30, 2007. The decrease in backlog
from 2007 is primarily attributed to completion of government and
commercial development contracts in 2007 and early 2008. Many of the
company’s customers are currently using the prototypes that were
delivered under these contracts to market Microvision’s PicoP
technology to their customers with the goal of determining the next
steps in the commercialization process.
The company reported an operating loss for the six months ended
June 30, 2008 of $16.4 million compared to $12.3 million for the same
period in 2007 and $9.3 million for the quarter ended June 30, 2008
compared to $6.3 million for the same period in 2007. The increase is
primarily attributable to lower revenue for the quarter and increased
development costs and increased headcount in Strategic Sourcing, and
Business Development associated with the planned introduction of PicoP
enabled products.
The company reported a net loss of $14.3 million for the six
months ended June 30, 2008 compared to $9.0 million for the same
period in 2007 and $9.3 million for the quarter ended June 30, 2008
compared to $2.2 million for the same period in 2007. The net loss for
the three and six months ended June 30, 2007 included a gain on the
company’s sale of its investment in Lumera Corporation of $6.0
million. Excluding this gain, the adjusted net loss for the six months
and three months ended June 30, 2007 was $15.0 million and $8.1
million, respectively. The net loss per share was $0.25 for the six
months ended June 30, 2008 compared to $0.21 for the same period in
2007 and $0.16 for the quarter ended June 30, 2008 compared to $0.05
for the same period in 2007. Excluding the gain on the sale of Lumera
of $0.14 per share, the adjusted net loss per share was $0.35 and
$0.19, respectively, for the six months and quarter ended June 30,
2007.
Net cash used in operating activities was $14.9 million for the
six months ended June 30, 2008 compared to $11.5 million for the same
period in 2007. Cash used in operating activities during the second
quarter included a total of approximately $1.8 million from annual
payments to a MEMS development partner and employee bonuses for 2007,
as well as increased investment in operational infrastructure to
support the planned commercial product introduction. The company ended
the quarter with $20.7 million in cash, cash equivalents, and
investment securities and added approximately $24.2 million in net
proceeds from its sale of common stock and warrants in July 2008.
Strategic Outlook
“Since 2006, we have been successfully executing on the PicoP
commercialization strategy against our publicly communicated
operational milestones,” stated Tokman. “As we get closer to product
introduction, the specific timing of product launch is expected to be
determined by final commercialization of key components by our
strategic supply chain partners and by established commercial product
launch windows of our customers.
“With respect to key components, most of our strategic suppliers
continue to meet original product development timelines. Some have
experienced longer development and commercialization cycles than were
originally anticipated. This is not unusual for bringing new
technologies to market. The good news is that in the instances where
progress has been delayed, these companies have invested millions of
dollars and continue to communicate their commitment to bring their
components to market because of the large market opportunity. In
addition, we have been pursuing dual supply chain capabilities in
several key areas and consequently remain optimistic about getting the
PicoP display engine to market in 2009.
“Based on what we know today about critical component availability
and consumer electronics sales cycles, we can provide the following
update about the introduction timing of PicoP based products:
Consumer Accessory and Embedded PicoP Offerings
“As we have discussed in the past we require red, blue, and green
lasers to build our full color pico projector. Red and blue lasers
have been successfully commercialized and adopted by various
industries in the past, while green laser technology is currently
being commercialized. The green laser development has experienced
longer development cycles than originally anticipated. Based on the
ongoing discussions with our green laser suppliers, we believe that we
will be in a position to introduce initial quantities of the accessory
PicoP in the first half of 2009 and move to higher volumes in the
second half of 2009. Based on our communications with prospective
customers we anticipate that an embedded PicoP product will be
commercialized approximately nine to twelve months after introduction
of the accessory product.
Automotive PicoP Offerings
“We have provided vehicle display samples to all three of our tier
one automotive integrators which are marketing them to their OEM
customers. Typical automobile design cycles take approximately 3
years. In response to global economic changes and 3 year automotive
design cycles, we are focusing more attention on after-market HUD
opportunities because the commercialization timelines are shorter. We
have developed and demonstrated a proof of concept after-market HUD
that could be installed in existing vehicles. We are marketing this
concept to segments where the safety need is greatest with a target
product introduction in 2010.
Eyewear PicoP Offerings
“In addition to the progress we’ve made on the PicoP display
engine which is expected to be an integral part of Microvision’s
eyewear solution, we made important progress in creating a
lightweight, thin optical design that could be incorporated into
fashionable eyeglasses. We believe that market pull factors for our
wearable display products are the same as they are for pico
projectors: the proliferation of broadband mobile devices and content
and the tiny display bottleneck that minimizes usability and enjoyment
of mobile media. We expect the demand for wearable displays to
increase over the next few years. We are targeting to meet this demand
with a wearable display product in 2011.
“We remain confident about our PicoP commercialization strategy
despite the delays in some supply chain components. We are excited
about the opportunity to fundamentally change the way people view and
share information with their friends, family, colleagues and
customers,” concluded Tokman.
Conference Call
Microvision will host a conference call to discuss its second
quarter 2008 results and current business operations at 4:30 p.m. ET
on August 5, 2008. Participants may join the conference call by
dialing 888-680-0869 (for U.S. participants) or 617-213-4854 (for
International participants) ten minutes prior to the start of the
conference. The conference pass-code number is 23845046. Additionally,
the call will be broadcast over the Internet and can be accessed from
the Company’s web site at www.microvision.com/investors. The web cast
and information needed to access the telephone replay will be
available through the same link following the conference call.
About Microvision (www.microvision.com)
Microvision is creating a display technology platform which is
expected to enable next-generation display and imaging products for
pico projectors, vehicles displays, and wearable displays that
interface to mobile devices. The company also manufactures and sells
its bar code scanner product line which features the company’s
proprietary MEMS technology.
Forward Looking Statement
Certain statements contained in this release, including those
relating to future product introductions, applications, business
partnering expectations, sales, growth and business prospects, as well
as statements containing words like “intend,” “expect,” “target,”
“plan,” “believe,” and other similar expressions, are forward-looking
statements that involve a number of risks and uncertainties. Factors
that could cause actual results to differ materially from those
projected in the Company’s forward-looking statements include the
following: our ability to raise additional capital when needed; the
risk of market acceptance of our technology and products, our
financial and technical resources relative to those of our
competitors; our ability to keep up with rapid technological change;
our ability to enforce our intellectual property rights and protect
our proprietary technologies; the timing of commercial product
launches and delays in product development; the ability to achieve key
technical milestones in key products; our ability to secure needed
third party manufacturing and sales resources, dependence on third
parties to develop, manufacture, sell and market our products;
potential product liability claims and other risk factors identified
from time to time in the Company’s SEC reports, including the
Company’s Annual Report on Form 10-K filed with the SEC. Except as
expressly required by the federal securities laws, we undertake no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events,
changes in circumstances or any other reason.
Microvision, Inc.
Statement of Operations
(In thousands, except earnings per share data)
(Unaudited)
Three months Six months ended
ended June 30, June 30,
----------------- -------------------
2008 2007 2008 2007
-------- -------- --------- ---------
Contract revenue $ 1,006 $ 2,219 $ 3,287 $ 4,121
Product revenue 616 443 905 776
-------- -------- --------- ---------
Total revenue 1,622 2,662 4,192 4,897
-------- -------- --------- ---------
Cost of contract revenue 374 1,217 1,136 2,227
Cost of product revenue 529 446 868 730
-------- -------- --------- ---------
Total cost of revenue 903 1,663 2,004 2,957
-------- -------- --------- ---------
Gross margin 719 999 2,188 1,940
-------- -------- --------- ---------
Research and development expense 5,881 3,208 10,307 6,553
Sales, marketing, general and
administrative expense 4,103 4,087 8,238 7,637
-------- -------- --------- ---------
Total operating expenses 9,984 7,295 18,545 14,190
-------- -------- --------- ---------
Loss from operations (9,265) (6,296) (16,357) (12,250)
Interest income 279 152 691 334
Interest expense (12) (17) (25) (485)
Gain (loss) on derivative
instruments, net (254) (1,940) 1,419 (2,592)
Other expense (14) (17) (32) (17)
-------- -------- --------- ---------
Net loss before Lumera
transactions (9,266) (8,118) (14,304) (15,010)
Gain on sale of investment in
Lumera - 5,963 - 5,963
-------- -------- --------- ---------
Net loss $(9,266) $(2,155) $(14,304) $ (9,047)
======== ======== ========= =========
Net loss per share - basic and
diluted $ (0.16) $ (0.05) $ (0.25) $ (0.21)
======== ======== ========= =========
Weighted-average shares
outstanding - basic and diluted 56,782 43,572 56,756 43,336
======== ======== ========= =========
Microvision, Inc.
Balance Sheet
(In thousands)
(Unaudited)
June 30, December
31,
2008 2007
---------- ----------
Assets
Current Assets
Cash and cash equivalents $ 10,039 $ 13,399
Investment securities, available-for-sale 10,650 22,411
Accounts receivable, net of allowances 303 1,885
Costs and estimated earnings in excess of
billings on uncompleted contracts 166 443
Inventory 1,406 761
Other current assets 1,145 1,180
---------- ----------
Total current assets 23,709 40,079
Property and equipment, net 3,759 4,047
Restricted investments 1,475 1,125
Other assets 49 47
---------- ----------
Total assets $ 28,992 $ 45,298
========== ==========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 1,848 $ 2,146
Accrued liabilities 3,175 4,154
Billings in excess of costs and estimated
earnings on uncompleted contracts 91 970
Liability associated with common stock
warrants 1,122 2,657
Current portion of capital lease obligations 47 44
Current portion of long-term debt 68 65
---------- ----------
Total current liabilities 6,351 10,036
Capital lease obligations, net of current
portion 67 88
Long-term debt, net of current portion 358 393
Deferred rent, net of current portion 1,565 1,720
---------- ----------
Total liabilities 8,341 12,237
---------- ----------
Commitments and contingencies - -
Shareholders' Equity
Common stock at par value 57 57
Additional paid-in capital 294,307 292,374
Accumulated other comprehensive income 12 51
Accumulated deficit (273,725) (259,421)
---------- ----------
Total shareholders' equity 20,651 33,061
---------- ----------
Total liabilities and shareholders' equity $ 28,992 $ 45,298
========== ==========
CONTACT: Microvision, Inc.
Matt Nichols (media), 425-882-6657
or
Tiffany Bradford (investors), 425-936-6847
SOURCE: Microvision, Inc.