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Microvision Inc. Reports Operating Results (10-Q)

May 10, 2010 | About:
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10qk

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Microvision Inc. (MVIS) filed Quarterly Report for the period ended 2010-03-31.

Microvision Inc. has a market cap of $243.03 million; its shares were traded at around $2.74 with and P/S ratio of 63.4.

Highlight of Business Operations:

Level 1 Level 2 Level 3 Total ------------ ------------ ------------ ------------ Assets Corporate equity securities $ -- $ 17,000 $ -- $ 17,000 Auction rate debt securities -- -- 2,600,000 2,600,000 ------------ ------------ ------------ ------------ $ -- $ 17,000 $ 2,600,000 $ 2,617,000 ============ ============ ============ ============ Liabilities Liability associated with common stock warrants $ 447,000 $ 447,000 ============ ============ We valued the auction rate securities using significant unobservable assumptions and inputs and classified these securities at Level 3 in the inputs hierarchy. The corporate equity securities and liability associated with common stock warrants are valued using inputs and common methods with sufficient levels of transparency and observability to be classified at Level 2.

March 31, December 31, 2010 2009 ------------ ------------ Raw materials $ 2,764,000 $ 626,000 Finished goods 843,000 300,000 ------------ ------------ $ 3,607,000 $ 926,000 ============ ============ The inventory at March 31, 2010 and December 31, 2009 consisted of raw materials for our pico projector product, and finished goods of $630,000 for our accessory pico projector and the remainder for ROV, our hand-held barcode scanner. Because our cost is currently higher than our selling price for our accessory pico projector product, inventory also included write downs of $756,000 for lower of cost or market adjustments. Approximately $300,000 of finished goods had been shipped to customers and were awaiting acceptance as of March 31, 2010.

Weighted Average Weighted Remaining Average Contractual Aggregate Exercise Term Intrinsic Options Shares Price (years) Value ---------------------------------------- ----------- --------- ------------ ---------- Outstanding as of March 31, 2010 8,373,000 $ 3.46 6.7 $3,096,000 Exercisable as of March 31, 2010 5,257,000 $ 3.97 5.9 $1,364,000 As of March 31, 2010, our unamortized share-based compensation was $3.2 million which we plan to amortize over the next 2.2 years.

% of % of contract contract (in thousands) 2010 revenue 2009 revenue $ change % change --------- --------- --------- --------- --------- --------- Three months ended March 31 Government revenue $ 71 23.8 $ 420 59.0 $ (349) (83.1) Commercial revenue 227 76.2 292 41.0 (65) (22.3) --------- --------- --------- Total contract revenue $ 298 $ 712 $ (414) (58.1) ========= ========= ========= We earn contract revenue from performance on development contracts with the U.S. government and commercial customers and from the sale of prototype units and evaluation kits based on our PicoP display engine. Our contract revenue from development contracts in a particular period is dependent upon when we enter into a contract, the value of the contracts we have entered into, and the availability of technical resources to perform work on the contracts. Our contract revenue from sales of prototype units and evaluation kits may vary substantially due to the timing of orders from customers and potential constraints on resources.

% of % of product product (in thousands) 2010 revenue 2009 revenue $ change % change --------- --------- --------- --------- --------- --------- Three months ended March 31 Bar code revenue $ 106 28.6 $ 239 100.0 $ (133) (55.6) Pico projector revenue $ 264 71.4 $ -- -- $ 264 n/a --------- --------- --------- Total product revenue $ 370 $ 239 $ 131 54.8 ========= ========= ========= Our product sales generally include acceptance provisions. We recognize product revenue upon acceptance of the product by the customer or expiration of the contractual acceptance period, after which there are no rights of return. Our quarterly revenue may vary substantially due to the timing of product orders from customers, production constraints and availability of components and raw materials.

"Inventory" During the three months ended March 31, 2010, ending inventory increased by $2,681,000, primarily attributed to our accessory pico projector product. "Accounts Payable" During the three months ended March 31, 2010, accounts payable increased approximately $862,000, primarily due to increased inventory purchases for the pico projector product line. "Accrued Liabilities" During the three months ended March 31, 2010, accrued liabilities increased approximately $893,000, primarily as a result of increased accruals for employee benefit and compensation related expenses. Cash used in investing activities totaled $412,000 for the three months ended March 31, 2010 compared to $354,000 during the three months ended March 31, 2009. During the three months ended March 31, 2010, we used cash of $512,000 for capital expenditures, compared to $354,000 during the same period in 2009.

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