10-Q

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission file number

001-34170

MicroVision, Inc.

(Exact name of registrant as specified in its charter)


Delaware		91-1600822
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

18390 NE 68

Street

Redmond, Washington 98052

(Address of Principal Executive Offices, including Zip Code)

(425)

936-6847

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	MVIS	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). YES ☐ NO ☒

The number of shares of the registrant’s common stock outstanding as of May 5, 2023 was

176,521,083.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
		Page

Item 1. Financial Statements (unaudited)

Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022		3

Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022		4

Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2023 and 2022		5

Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2023 and 2022		6

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022		7

Notes to Condensed Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

Item 3. Quantitative and Qualitative Disclosures About Market Risk		23

Item 4. Controls and Procedures		23

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		24

Item 1A. Risk Factors		24

Item 6. Exhibits		32

Signatures		33

PART I.

ITEM 1.

FINANCIAL STATEMENTS

MicroVision, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)


	March 31,			December 31,
	2023			2022
Assets
Current assets
Cash and cash equivalents	$	23,187		$	20,536
Investment securities, available-for-sale		44,544			62,173
Restricted cash, current		3,263			—
Accounts receivable, net		506			—
Contract assets		192			—
Inventory		3,116			1,861
Advance to Ibeo		—			4,132
Other current assets		2,182			2,306

Total current assets		76,990			91,008
Property and equipment, net		10,284			6,830
Operating lease right-of-use asset		14,746			14,579
Restricted cash		961			1,418
Intangible assets, net		19,000			75
Other assets		1,281			1,086

Total assets	$	123,262		$	114,996

Liabilities and shareholders’ equity
Current liabilities
Accounts payable	$	3,629		$	2,061
Accrued liabilities		4,223			2,058
Accrued liability for Ibeo business combination		6,191			—
Contract liabilities		5,676			4,601
Current portion of operating lease liability		2,210			1,846
Current portion of finance lease obligations		15			21
Other current liabilities		211			839

Total current liabilities		22,155			11,426
Operating lease liability, net of current portion		13,729			13,829
Deferred tax liabilities		823			—
Other long-term liabilities		17			—

Total liabilities		36,724			25,255

Commitments and contingencies (Note 10 )
Shareholders’ equity
Preferred stock, par value $0.001; 25,000 shares authorized; zero and zero shares issued and outstanding		—			—
Common stock, par value $0.001; 210,000 shares authorized; 176,026 and 170,503 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively		176			171
Additional paid-in capital		787,856			772,221
Accumulated other comprehensive loss		57			(127	)
Accumulated deficit		(701,551	)		(682,524	)

Total shareholders’ equity		86,538			89,741

Total liabilities and shareholders’ equity	$	123,262		$	114,996

The accompanying notes are an integral part of these financial statements.

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MicroVision, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


	Three Months Ended
	March 31,
	2023			2022
Revenue	$	782		$	350
Cost of revenue		544			4

Gross profit		238			346

Research and development expense		12,692			7,593
Sales, marketing, general and administrative expense		8,737			5,877

Total operating expenses		21,429			13,470

Loss from operations		(21,191	)		(13,124	)
Bargain purchase gain, net of tax		1,706			—
Other income (expense), net		639			(44	)

Net loss before taxes		(18,846	)		(13,168	)
Provision for income taxes		(181	)		—
Net loss	$	(19,027	)	$	(13,168	)

Net loss per share - basic and diluted	$	(0.11	)	$	(0.08	)

Weighted-average shares outstanding - basic and diluted		174,703			164,563

The accompanying notes are an integral part of these financial statements.

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MicroVision, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2023			2022
Net loss	$	(19,027	)	$	(13,168	)
Other comprehensive loss:
Unrealized gain (loss) on investment securities, available for sale		77			(105	)
Foreign currency translation adjustments		107			—
Total comprehensive income		184			(105	)

Comprehensive loss	$	(18,843	)	$	(13,273	)

The accompanying notes are an integral part of these financial statements.

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MicroVision, Inc.

Condensed Consolidated Statements of Shareholders’ Equity

(In thousands)

(Unaudited)


	Common Stock				Additional paid-in capital		Accumulated other comprehensive loss						Total shareholders’ equity
	Shares		Par value		Additional paid-in capital		Accumulated other comprehensive loss			Accumulated deficit			Total shareholders’ equity
Balance at January 1, 2022		164,363	$	164		742,042		(19	)	$	(629,433	)	$	112,754
Share-based compensation expense		334		1		3,733		—			—			3,734
Exercise of options		190		—		253		—			—			253
Net loss		—		—		—		—			(13,168	)		(13,168	)
Other comprehensive loss		—		—		—		(105	)		—			(105	)

Balance at March 31, 2022		164,887		165		746,028		(124	)		(642,601	)		103,468

Balance at January 1, 2023		170,503	$	171		772,221		(127	)	$	(682,524	)		89,741
Share-based compensation expense		463		—		2,949		—			—			2,949
Sales of common stock		5,060		5		12,686		—			—			12,691
Net loss		—		—		—		—			(19,027	)		(19,027	)
Other comprehensive loss		—		—		—		184			—			184

Balance at March 31, 2023		176,026	$	176	$	787,856		57		$	(701,551	)	$	86,538

The accompanying notes are an integral part of these financial statements.

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MicroVision, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2023			2022
Cash flows from operating activities
Net loss	$	(19,027	)	$	(13,168	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization		2,524			483
Bargain purchase gain, net of tax		(1,706	)		—
Impairment of property and equipment		—			60
Inventory write-downs		29			—
Share-based compensation expense		2,949			3,734
Net accretion of premium on short-term investments		(396	)		160
Change in:
Accounts receivable		(506	)		—
Contract assets		(192	)		—
Inventory		(87	)		(35	)
Other current and non-current assets		647			389
Accounts payable		1,629			(1,292	)
Accrued liabilities		2,017			118
Contract liabilities and other current liabilities		(711	)		(1,057	)
Operating lease liabilities		(669	)		(299	)
Other long-term liabilities		17			—

Net cash used in operating activities		(13,482	)		(10,907	)

Cash flows from investing activities
Sales of investment securities		22,000			1,500
Purchases of investment securities		(3,898	)		(16,696	)
Ca s h paid for Ibeo business combination		(11,233	)		—
Purchases of property and equipment		(615	)		(884	)

Net cash provided by (used in) investing activities		6,254			(16,080	)

Cash flows from financing activities
Principal payments under finance leases		(6	)		(8	)
Principal payments under long-term debt		—			(294	)
Proceeds from stock option exercises		—			253
Net proceeds from issuance of common stock		12,691			—

Net cash (used in) provided by financing activities		12,685			(49	)

Change in cash, cash equivalents, and restricted cash		5,457			(27,036	)
Cash, cash equivalents, and restricted cash at beginning of period		21,954			83,739

Cash, cash equivalents, and restricted cash at end of period	$	27,411		$	56,703

Supplemental schedule of non-cash investing and financing activities
Non-cash additions to property and equipment	$	703		$	177

Acquisition of right-of-use asset	$	234		$	—

Settlement of preexisting Advance to Ibeo in exchange for net assets acquired	$	4,132		$	—

Amounts issued to escrow for acquisition consideration	$	3,263		$	—

Amounts held back for acquisition consideration	$	2,928		$	—

Foreign currency translation adjustments	$	107		$	—

The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of March 31, 2023 and December 31, 2022:


	March 31, 2023		December 31, 2022
Cash and cash equivalents	$	23,187	$	20,536
Restricted cash, current		3,263		—
Restricted cash		961		1,418

Cash, cash equivalents, and restricted cash	$	27,411	$	21,954

The accompanying notes are an integral part of these financial statements.

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MicroVision, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. MANAGEMENT’S STATEMENT

The Condensed Consolidated Balance Sheets as of March 31, 2023, the Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Loss and Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2023 and 2022, and Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022, have been prepared by MicroVision, Inc. (“we” or “our”) and have not been audited. In the opinion of management, all adjustments necessary to state fairly the financial position at March 31, 2023 and the results of operations and cash flows for all periods presented have been made and consist of normal recurring adjustments. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules of the Securities and Exchange Commission (SEC). The

year-end

condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. You should read these Condensed Consolidated financial statements in conjunction with the financial statements and notes thereto included in our Annual Report on Form

10-K

for the fiscal year ended December 31, 2022. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the operating results that may be attained for the entire fiscal year.

We are developing lidar sensors and perception software to address the needs of the Level 2+, or L2+, and Level 3 or L3, advanced driver-assistance systems (ADAS) markets to be used in automotive safety and autonomous driving applications. Our micro-electromechanical systems, or MEMS-based high-speed lidar sensors, which we call MAVIN

™

, use our pioneering laser beam scanning (LBS) technology. Our solution-based development approach recognizes two key realities of the L2+ and L3 markets: that safety is mission critical and that OEMs require cost efficiency and integration adaptability. With these factors in mind, we believe that our

best-in-class

MAVIN lidar sensors support critical safety needs by providing the highest resolution at range and velocity of moving objects with a dynamic field of view while running at 30 hertz, thus enabling ADAS features, such as automatic emergency braking, forward collision warning, and automatic emergency steering, at higher speeds of operation than most competing products.

We completed the acquisition of Ibeo Automotive Systems GmbH (“Ibeo”) assets on January 31, 2023 pursuant to the terms and subject to the conditions of the Asset Purchase Agreement, dated December 1, 2022, by and between our wholly owned subsidiary, MicroVision GmbH organized under the laws of The Federal Republic of Germany, and Ibeo for a purchase price of EUR

15.0 million, or approximately $

16.3

million, subject to potential reduction on the terms set forth in the Asset Purchase Agreement. Pursuant to the Asset Purchase Agreement, the purchase price also included advanced funds to Ibeo so that it could continue its operations while in insolvency during the period between signing and closing. Specifically, we advanced to Ibeo EUR 3.9 million, or approximately $

4.1

million in December 2022; EUR 2.7 million, or approximately $3.0 million in January 2023; and EUR 599,000, or approximately $650,000 in February 2023. These fund advances included amounts related to headcount reductions carried out by Ibeo management, decreasing the number of employees to transfer in connection with the acquisition to approximately

250

employees. These headcount reduction costs of EUR 2.3 million, or approximately $2.5 million, will be reimbursed to MicroVision by way of deduction from the purchase price in accordance with the Asset Purchase Agreement.

We have incurred significant losses since inception. We have funded our operations to date primarily through the sale of common stock, convertible preferred stock, warrants, the issuance of convertible debt and, to a lesser extent, from development contract revenues, product sales and licensing activities.

At March 31, 2023, we had total liquidity of $67.7 million including $23.2 million in cash and cash equivalents and $44.5 million in short-term investment securities. Based on our current operating plan, we anticipate that we have sufficient cash and cash equivalents to fund our operations for at least the next 12 months.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of MicroVision, Inc. and MicroVision GmbH. MicroVision GmbH is a wholly owned subsidiary of MicroVision, Inc. All material intercompany accounts and transactions have been eliminated in consolidation.

Foreign Currency Translation

The functional currency for our German operation is the Euro, which represents the currency of its primary economic environment. The results of operations for the German operation are translated from the local currency into U.S. dollars using the average exchange rates during each period. All assets and liabilities are translated using exchange rates at the end of each period, with foreign currency translation adjustments included as a component of other comprehensive loss. All equity transactions and certain assets are translated using historical rates. The consolidated financial statements are presented in U.S. dollars.

Segment Information

We determine operating segments based on how our chief operating decision maker (“CODM”) manages the business, makes operating decisions around the allocation of resources, and evaluates operating performance. Our CODM is our Executive Management team, who reviews our operating results on a consolidated basis. We operate as one segment, which relates to sale and servicing of lidar hardware and software. The profitability of our product group is not a determining factor in allocating resources and the CODM does not evaluate profitability below the level of the consolidated company.

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2. NET LOSS PER SHARE

Basic net loss per share is calculated using the weighted-average number of common shares outstanding during the period. Net loss per share, assuming dilution, is calculated using the weighted-average number of common shares outstanding and the dilutive effect of all potentially dilutive securities, including common stock equivalents and convertible securities. Net loss per share, assuming dilution, is equal to basic net loss per share because the effect of dilutive securities outstanding during the period, including options and warrants computed using the treasury stock method, is anti-dilutive.

The components of basic and diluted net loss per share were as follows (in thousands, except loss per share data):


	Three Months Ended
	March 31,
	2023			2022
Numerator:
Net loss available for common shareholders - basic and diluted	$	(19,027	)	$	(13,168	)

Denominator:
Weighted-average common shares outstanding - basic and diluted		174,703			164,563

Net loss per share - basic and diluted	$	(0.11	)	$	(0.08	)

For the three months ended March 31, 2023 and 2022, we excluded the following securities from net loss per share as the effect of including them would have been anti-dilutive: outstanding options exercisable into a total of 943,000 and 1,338,000 shares of common stock, respectively, and 8,378,000 and 4,025,000 nonvested restricted stock units, respectively.

BUSINESS COMBINATION

On January 31, 2023, we completed the acquisition of certain net assets of Ibeo, a lidar hardware and software provider based in Hamburg, Germany. The purpose of the acquisition was to acquire certain Ibeo assets, intellectual property, and teams, which will enable us to expand our total addressable market and diversify our revenue profile.

Total consideration related to this transaction, subject to settlement of working capital adjustments, was approximately EUR 19.9 million or $21.6 million, consisting of approximately (i) EUR 7.0 million or $7.6 million in cash paid at closing, (ii) EUR 6.6 million or $7.1 million in cash advanced to Ibeo prior to closing, (iii) EUR 3.0 million or $3.3

million held in escrow for 13 months to be available to cover properly established claims by MicroVision, (iv) EUR 0.6 million or $0.7 million in costs paid on behalf of the seller, and (v) EUR

2.7 million or $2.9

million in cash held back at closing and to be offset by any working capital adjustments. In addition, we incurred $

0.6 million of acquisition-related costs associated with the acquisition during the three months ended March 31, 2023, which were included in Sales, marketing, general and administrative expense.

The transaction has been accounted for as a business combination. The results of operations for the acquisition are included in our consolidated financial statements from the date of acquisition onwards.

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The following table summarizes the preliminary purchase price allocation to assets acquired and liabilities assumed (in thousands):


	Amount			Weighted Average Useful Life (in years)
Purchase consideration:
Cash paid at closing (1)	$	8,245
Cash in escrow (2)		3,263
Holdback amount (3)		2,928
Advances to Ibeo (4)		7,120

Total purchase consideration	$	21,556

Inventory	$	1,197
Other current assets		703
Operating lease right-of-use asset		234
Property and equipment, net		5,330
Intangible assets:
Acquired technology		17,987			13
Order backlog		26			1
Contract liabilities		(1,178	)
Operating lease liabilities		(234	)
Deferred tax liabilities		(803	)

Total identifiable net assets	$	23,262

Bargain purchase gain (1)		(1,706	)

(1)	Represents $7.6 million in cash paid at closing and $0.7 million in cash paid shortly after close.

(2)	Recorded as restricted cash and accrued liability to Ibeo in our condensed consolidated balance sheet.

(3)	Recorded in accrued liability to Ibeo in our condensed consolidated balance sheet.

(4)	Represents $4.1 million and $3.0 million in cash advanced to Ibeo in December 2022 and January 2023, respectively.

(5)

SEC Form 10-Q filed by MicroVision Inc.