Microvision Reports Third Quarter of 2004 Revenue of $2.7 Million; Microvision Segment Revenue is up 25% Compared to the Second Quarter of 2004 and up 40% Compared to Q3 2003.BOTHELL, Wash. -- Microvision The Microvision was a hand-held game console released by the Milton Bradley Company in 1979. The Microvision was designed by Jay Smith, the engineer who would later design the Vectrex gaming console. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :MVIS MVIS Microvision Inc (Redmond, Washington) ), a leader in light scanning technologies, today reported financial results for the third quarter of 2004. Consolidated revenue for the three months ended September September: see month. 30, 2004, was $2.7 million compared to $2.6 million for the same period in 2003. Consolidated revenue for the three months ended September 30, 2004, includes $82,000 attributable to Lumera. Lumera was Microvision's consolidated subsidiary until it completed an initial public offering in July July: see month. 2004. Consolidated revenue for the three months ended September 30, 2003, included $676,000 attributable to Lumera. Consolidated contract revenue was $2.2 million for the third quarter of 2004 ($2.1 million excluding Lumera) compared to $2.5 million for the same period last year ($1.8 million excluding Lumera). Consolidated product revenue was $572,000 for the third quarter of 2004 compared to $42,000 last year. Consolidated product revenue in the third quarter of 2004 was comprised of $224,000 from sales of Nomad and $348,000 from sales of the Flic bar code scanner A device specialized for reading bar codes and converting them into either the ASCII or EBCDIC digital character code. Pen scanners, also known as wand scanners, were the first type of bar code scanner developed in the 1970s. . Consolidated revenue for the nine months ended September 30, 2004, was $8.1 million ($7.4 million excluding Lumera) compared to $10.6 million ($9.2 million excluding Lumera) for the same period in 2003. Revenue for the nine months of 2004 was down due to lower contract revenue, partially offset by higher product revenue. Contract revenue for 2004 was negatively impacted by the delay in the $3.85 million VCOP VCOP Virtual Cockpit Optimization Program (military aviation) VCOP Vocabulary, Connectives, Openers and Punctuation (UK education) contract award, which was awarded late in the second quarter and the loss of an expected contract award by the government of approximately $1.7 million. As of September 30, 2004, backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. totaled $3.2 million of which $2.9 million was for development contracts, $194,000 for Nomad and $86,000 for the Flic laser bar code scanner and accessories. The company reported a consolidated net loss available for common shareholders of $10.1 million or $0.47 per share for the third quarter of 2004 compared to $6.9 million or $0.39 per share in the same period in 2003. The third quarter of 2004 net loss includes inventory writeoffs totaling $800,000 related to Nomad and the Flic scanner (1) See also antivirus program. (2) An optical device that reads a printed page or transparency and converts it into a graphics image for the computer. The scanner does not recognize or differentiate in any manner the content of the material it is scanning. ; increased production costs for starting up the production line for Nomad of $300,000; an increase in sales and marketing costs of approximately $1.0 million related to the Nomad product launch and a net loss attributable to Lumera of $1.6 million, of which $750,000 relates to Microvision's portion of Lumera's net loss after Lumera's IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. and consequent con·se·quent adj. 1. a. Following as a natural effect, result, or conclusion: tried to prevent an oil spill and the consequent damage to wildlife. b. deconsolidation. Microvision's cash used for operations in the third quarter of 2004 was $7.1 million. The company ended the quarter with $8.8 million in cash and cash equivalents. Microvision ended the quarter with an investment in Lumera of $11.2 million, representing the company's ownership of Lumera's net book value after the IPO. The company owns approximately 5.5 million shares of common stock of Lumera. "We made important progress in the third quarter at getting contract revenue 'back on track' as we indicated as a key objective in our last quarterly report," said Microvision CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Rick Rutkowski. "Contract revenue was down for the first six months of this year and for the nine month period due to a protracted pro·tract tr.v. pro·tract·ed, pro·tract·ing, pro·tracts 1. To draw out or lengthen in time; prolong: disputants who needlessly protracted the negotiations. 2. delay in the award of a US Army contract and the delayed release of our Nomad product. During the third quarter contract revenue increased significantly over the prior quarter and also versus the third quarter of last year. Given our current contract backlog of $2.9 million and prospects for new commercial and government contract bookings during the current quarter and the first half of next year, we expect this trend to continue. "We also overcame production challenges that delayed the commercial introduction of our Nomad Expert Technician See PC technician and software technician. System until late in the past quarter. Production is now running smoothly and we have been consistently achieving our current production and quality goals. "We are very pleased with market acceptance in the automotive maintenance and repair sector for Nomad and have noted an increase in sales activity across the board during the month of October October: see month. . We currently have over 400 dealers that have requested product demonstrations. To date, we have installed 102 Nomad units in 23 dealerships in 18 states and across a wide number of brands, including Honda honda a quick release metal eyelet for the end of a lariat. When the restrained animal is no longer required it is not necessary to slacken off the loop and pull it over the head—a very great advantage when working with wild cattle or unbroken horses. , Volvo Volvo Cars is the luxury car maker using the Volvo Trademark. The Volvo Group is a Swedish supplier of commercial transport solutions providing products such as trucks, buses and construction equipment, drive systems for marine and industrial applications, aerospace , Saab, Lexus Lexus is the luxury vehicle division of Japanese automaker Toyota Motor Corporation. Lexus brand name vehicles are sold in North America, Europe, Asia, the Middle East, Oceania, Africa, and Latin America; in the United States, Lexus is the highest-selling make of luxury cars. , Ford and General Motors dealerships. "Our Reference Account program has been very successful, resulting in a sharp increase in brand awareness in each of the regions that we have installed reference accounts. We have 4 high profile dealers in our Reference Account program, including the largest Honda dealer in the world, the largest Lexus dealer in the U.S., the 4 largest Chevrolet Chevrolet (IPA: /ˌʃɛvroʊˈleɪ/ - French origin), (colloquially Chevy) , is a brand of automobile, produced by General Motors (GM). dealer in the U.S. and one of the largest auto dealers in the mid-Atlantic Adj. 1. mid-Atlantic - of a region of the United States generally including Delaware; Maryland; Virginia; and usually New York; Pennsylvania; New Jersey; "mid-Atlantic states" middle Atlantic region. Additionally, Nomad was named a 'Top 20 Tool' by Motor Magazine News. We currently have 41 independent sales representatives in place. We continue to build our sales channel by adding additional sales representatives and we expect to see sales per representative increase during the fourth quarter and beyond. We also have initiatives underway to partner with leading software and solutions providers to the automotive parts and service market. "To date we have sold 132 units, including 57 sold in the third quarter. Sales were constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. in the third quarter by production issues that were resolved only a few weeks before the quarter's end. We ended Q3 with 38 units in backlog and had our best Nomad revenue months in October. "We have responded to a solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual notice from the U.S. Army Reserve to negotiate the purchase of 37 Nomad units plus accessories for use in Army Reserve vehicle maintenance depots. We recently completed a highly successful test and evaluation with US Air Force maintenance crews in Yokota Yokota can refer to:
When an individual or a company is involved in a large-scale project, a contractor is often hired to see that the work is done. to support the needs of Air Force depots and the Defense Logistics Agency Noun 1. Defense Logistics Agency - a logistics combat support agency in the Department of Defense; provides worldwide support for military missions Defense Department, Department of Defense, DoD, United States Department of Defense, Defense - the federal department . The FAST contract has $7.4 billion available to spend over the next 7 years and is to acquire products and services in support of defense maintenance and logistics needs. This contract potentially gives us a vehicle from which to sell Nomad systems and Flic scanners as well as engineering development services to the Air Force. "With the sharp increase in qualified leads, growing product awareness, a larger sales force and increasing user experience and 'word-of-mouth' testimonials, we believe we are positioned for sales volumes for the Nomad product to begin to accelerate beginning in the current quarter. "On October 25, we received a presolicitation notice from the Army, stating that the U.S. government intends to negotiate, on a sole source basis, with Microvision for a contract to immediately purchase 2 Nomad units with an option to purchase up to 250 additional Nomad units within the next 12 months. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the notice, the Army anticipates awarding a contract by November November: see month. 30. The Army has concluded that the Nomad is the only commercially available day/night see-through heads-up display A display technology that superimposes images onto the inside of the windshield to enable drivers to view the information while keeping their eyes on the road. Heads-up displays (HUDs) are also used in goggles and helmets (see head mounted display). that connects to the FBCB FBCB Force XXI Battle Command Brigade (US Army) FBCB Fixed Bed Circulating Bioreactor 2 computer and weapons sensors
toggle - To change a bit from whatever state it is in to the other state; to change from 1 to 0 or from 0 to 1. This comes from "toggle switches", such as standard light switches, though the word "toggle" actually refers to between moving map information displayed by the FBCB2 system and other thermal imaging systems in the Stryker vehicle. We believe this is a very positive step toward the Army's goal to outfit OUTFIT. An allowance made by the government of the United States to a minister plenipotentiary, or charge des affaires, on going from the United States to any foreign country. 2. each Stryker vehicle, both now and in the future, with a Nomad unit. "The effort we began in the second quarter to focus on building OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and relationships for the Flic scanner continued to bear fruit in the third quarter. We announced a key distribution relationship with Smead, a global leader in office filing products and records management solutions. Smead intends to private label the Flic scanner and market an integrated solutions package for retail distribution to small and medium sized businesses. We believe that integrating the Flic scanner into supply chain solutions with OEMs is the 'sweet spot' for the Flic scanner and we plan to continue to build that channel with additional OEM relationships. We also announced a 1,000 unit order from Trax Retail Solutions to add the Flic scanner to its loss prevention products that is marketed to supermarkets, convenience stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. and general merchandisers. "We are very excited about the progress we are making on a number of development projects related to potential high-volume OEM products in our pipeline. We are very pleased with the development of the MicroHUD and the continuing support we have received from BMW BMW in full Bayerische Motoren Werke AG German automaker. Founded as an aircraft engine manufacturer in 1916, the company assumed the name Bayerische Motoren Werke and became known for its high-speed motorcycles in the 1920s. and Volkswagen of America Volkswagen of America (VWoA) is the U.S. subsidiary of the Volkswagen automobile company in Germany. Formed in April 1955 in Englewood Cliffs, New Jersey to standardize dealership service in the United States, it grew to 909 Volkswagen dealers in the United States by 1965 under the and a major European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Tier 1 auto supplier. We expect to install a prototype HUD Hud (h  d), a pre-Qur'anic prophet of Islam. Hud unsuccessfully exhorted his South Arabian people, the Ad, to worship the One God. in a Volkswagen car later this month
and we are encouraged about our prospects for continued development
opportunities and the potential for design wins. We believe that we are
entering this market at a very opportune op·por·tune adj. 1. Suited or right for a particular purpose: an opportune place to make camp. 2. Occurring at a fitting or advantageous time: an opportune arrival. time. Analysts expect that this product category will be the fastest growing segment of the automotive display market and will become a very large market over the next several years. According to information published by DisplaySearch at the SID Vehicle Display Conference in October, the market for heads-up displays in automobiles is expected to grow from 102,000 units in 2004 to over 4 million units (roughly 6% of vehicles) by 2010, a compound annual growth rate of 84%. Clearly this is a large and growing market opportunity and we are highly encouraged that our performance and package size advantages position us very well to benefit from this trend. "During the third quarter we delivered prototype devices to Canon for an electronic viewfinder An electronic viewfinder or EVF is a viewfinder where the image captured by the lens is projected electronically onto a miniature display. The image on this display is used to assist in aiming the camera at the scene to be photographed. for digital cameras, to an Asian company for a high-speed laser print engine, and a 2D bar code reader See bar code scanner. . Each of these prototypes is currently being evaluated and we are encouraged that we will have follow-on development opportunities. "We achieved a significant technological milestone in the third quarter, demonstrating what we originally reported as a 7.6 million pixel microdisplay. The actual pixel count was 9 million pixels See pixel. . The multi-zone scanning technique that we used to achieve this dramatic increase in resolution offers the flexibility of increasing display performance by adding inexpensive LEDs. The ability to combine lower cost and higher resolution are key considerations for development of consumer electronics products, especially those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc electronic gaming and media and entertainment. "Finally, one of the highlights of the quarter was the initial public offering of Lumera, which raised just under $42 million. "We took some very important steps in the third quarter to grow our business for the long term. We believe that Nomad and Flic are poised to begin ramping sales volumes and that one or more of our multiple development opportunities could begin to accelerate toward product development." Conference Call Microvision will host a conference call to discuss its third quarter of 2004 financial results at 4:30 p.m. ET today. Participants may join the conference call by dialing 800-706-7748 (for U.S. participants) ten minutes prior to the start of the conference. International participants can dial 617-614-3473. The conference passcode number is 67046555. Additionally, the call will be broadcast over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and can be accessed from the company's web site at www.microvision.com. A telephone replay of the call will be available through 5:00 p.m. ET November 11, 2004, and can be accessed by dialing 888-286-8010 (for U.S. participants) or 617-801-6888 (for international participants). The passcode is 51843989. Also, a replay of the conference call will be available on the company's web site. About Microvision: www.microvision.com Headquartered in Bothell, Wash., Microvision Inc. is the world leader in the development of high-resolution displays and imaging systems based on the company's proprietary silicon micro-mirror technology. The company's technology has applications in a broad range of military, medical, industrial, professional and consumer products. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Disclaimer (networking) disclaimer - Statement ritually appended to many Usenet postings (sometimes automatically, by the posting software) reiterating the fact (which should be obvious, but is easily forgotten) that the article reflects its author's opinions and not necessarily those of the Certain statements contained in this release, including expected results, projections of future revenues, plans for product development and production volume, future development contracts and commercial arrangements, growth in demand, future product benefits, future operations and the benefits of our equity interest in Lumera, as well as statements containing words like "believes,""estimate," "expects," "anticipates," "target," "plans," "will", "could" 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; market acceptance of our technologies and products; our financial and technical resources relative to those of our competitors; our ability to keep up with rapid technological change; our dependence on the defense industry and a limited number of government development contracts; government regulation of our technologies; our ability to enforce our intellectual property rights and protect our proprietary technologies; the ability to obtain additional contract awards; the timing of commercial product launches and delays in product development; the ability to achieve key technical milestones in key products; dependence on third parties to develop, manufacture, sell and market our products; potential product liability claims, risks related to Lumera's business and the market for its equity and other risk factors identified from time to time in the company's SEC reports and other filings, including the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or or any other reason.
Microvision, Inc.
Consolidated Balance Sheet
(In thousands)
(Unaudited)
Sept. 30, Dec. 31,
2004 2003
--------- ---------
Assets
Current Assets
Cash and cash equivalents $ 8,752 $ 10,700
Investment securities, available-for-sale - 11,078
Accounts receivable, net of allowances 789 1,896
Costs and estimated earnings in excess of
billings on
uncompleted contracts 960 664
Receivable from Lumera 46 -
Inventory 2,781 331
Other current assets 800 1,684
--------- ---------
Total current assets 14,128 26,353
Investment in Lumera 11,162 -
Property and equipment, net 2,776 5,958
Restricted investments 1,238 1,269
Other assets 232 338
--------- ---------
Total assets $ 29,536 $ 33,918
========= =========
Liabilities, Mandatorily Redeemable Convertible
Preferred Stock
and Shareholders' Equity
Current Liabilities
Accounts payable $ 2,621 $ 1,223
Accrued liabilities 3,977 5,164
Allowance for estimated contract losses 31 -
Billings in excess of costs and estimated
earnings on uncompleted contracts 56 53
Current portion of capital lease obligations 48 62
Current portion of long-term debt 75 70
--------- ---------
Total current liabilities 6,808 6,572
Research liability, net of current portion - 1,948
Capital lease obligations, net of current
portion 12 34
Long-term debt, net of current portion 42 99
Deferred rent, net of current portion 43 107
Other long-term liabilities - 16
--------- ---------
Total liabilities 6,905 8,776
--------- ---------
Commitments and contingencies - -
Minority interest - 1,847
Mandatorily redeemable convertible preferred
stock 7,487 -
--------- ---------
Shareholders' Equity
Common stock at par value 22 21
Additional paid-in capital 197,096 180,354
Deferred compensation (462) (846)
Subscriptions receivable from related
parties (166) (166)
Receivables from related parties, net (1,823) (1,823)
Accumulated other comprehensive income - 25
Accumulated deficit (179,523) (154,270)
--------- ---------
Total shareholders' equity 15,144 23,295
--------- ---------
Total liabilities, mandatorily redeemable
convertible preferred stock and
shareholders' equity $ 29,536 $ 33,918
========= =========
Microvision, Inc.
Consolidated Statement of Operations
(In thousands, except earnings per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
---------------------------------------
2004 2003 2004 2003
--------- ------- -------- --------
Contract revenue $ 2,157 $ 2,523 $ 6,267 $ 10,290
Product revenue 572 42 1,834 323
--------- ------- -------- --------
Total revenue 2,729 2,565 8,101 10,613
--------- ------- -------- --------
Cost of contract revenue 1,580 1,469 3,977 4,825
Cost of product revenue 886 30 2,189 284
--------- ------- -------- --------
Total cost of revenue 2,466 1,499 6,166 5,109
--------- ------- -------- --------
Gross margin 263 1,066 1,935 5,504
--------- ------- -------- --------
Research and development
expense 4,666 5,524 12,628 18,403
Marketing, general and
administrative expense 4,722 3,615 14,486 12,286
Non-cash compensation expense 212 544 1,828 1,461
--------- ------- -------- --------
Total operating
expenses 9,600 9,683 28,942 32,150
--------- ------- -------- --------
Loss from operations (9,337) (8,617) (27,007) (26,646)
Interest income 43 76 224 290
Interest expense (40) (11) (137) (35)
Gain (loss) on disposal of
fixed assets (1) 64 (1) 33
Realized gain on sale of
investment securities - - - 39
--------- ------- -------- --------
Loss before minority interests
and equity in losses
of Lumera $ (9,335) $(8,488) $(26,921) $(26,319)
Minority interests in loss of
consolidated subsidiary 54 1,623 2,438 5,366
Equity in losses of Lumera (750) - (750) -
--------- ------- -------- --------
Net loss $ (10,031) $(6,865) $(25,233) $(20,953)
Less: Stated dividend on
preferred stock (20) - (20) -
Non-cash accretion of
discount on preferred
stock (43) - (43) -
--------- ------- -------- --------
Net loss available for common
shareholders $ (10,094) $(6,865) $(25,296) $(20,953)
========= ======= ======== ========
Net loss per share before non-
cash compensation expense $ (0.46) $ (0.36) $ (1.09) $ (1.13)
Non-cash compensation expense (0.01) (0.03) (0.09) (0.09)
--------- ------- -------- --------
Net loss per share - basic and
diluted $ (0.47) $ (0.39) $ (1.18) $ (1.22)
========= ======= ======== ========
Weighted-average shares
outstanding -
basic and diluted 21,508 17,799 21,488 17,188
========= ======= ======== ========
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