(All dollar amounts are stated in thousands)
Forward Looking Statements This quarterly report on Form 10-Q contains "forward-looking statements" within the meaning of 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In particular, statements contained in the Form 10-Q, including but not limited to, statements regarding our future results of operations and financial position, business strategy and plan prospects, projected revenue or costs and objectives of management for future research, development or operations, are forward-looking statements. These statements relate to our future plans, objectives, expectations and intentions and may be identified by words such as "may," "will," "should," "expects," "plans," "anticipate," "intends," "target," "projects," "contemplates," "believe," "estimates," "predicts," "potential," and "continue," or similar words. Although we believe that our expectations are based on reasonable assumptions within the limits of our knowledge of our business and operations, the forward-looking statements contained in this document are neither promises nor guarantees. Our business is subject to significant risk and uncertainties and there can be no assurance that our actual results will not differ materially from our expectations. These forward looking statements include, but are not limited to, statements concerning: future financial performance and position and management's strategy, plans and objectives for research and development, product development, and commercialization of current and future products, including the commercialization of our biopolymer products. Such forward-looking 14
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statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated including, without limitation, risks related to our limited cash resources, uncertainty about our ability to secure additional funding, dependence on establishing a manufacturing source for our products, risks related to the development and commercialization of new and uncertain technologies, risks associated with our protection and enforcement of our intellectual property rights, as well as other risks and uncertainties set forth below under the caption "Risk Factors" in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended
December 31, 2013. The forward-looking statements and risk factors presented in this document are made only as of the date hereof and we do not intend to update any of these risk factors or to publicly announce the results of any revisions to any of our forward-looking statements other than as required under the federal securities laws. Overview Metabolixis an innovation-driven bioscience company focused on delivering sustainable solutions to the plastics and chemicals industries. We have core capabilities in microbial genetics, fermentation process engineering, chemical engineering, polymer science, plant genetics and botanical science, and we have assembled these capabilities in a way that has allowed us to integrate our biotechnology research with real world chemical engineering and industrial practice. In addition, we have created an extensive intellectual property portfolio to protect our innovations and, together with our technology, to serve as a valuable foundation for future industry collaborations. Our targeted markets of plastics and chemicals offer substantial opportunity for innovation and value creation. Our strategy is based on the performance and differentiation of our materials. With proprietary biopolymer formulations we aim to address unmet needs of our customers and leverage the distinctive properties of our PHAs to improve critical product qualities and enable our customers to enhance the value of their products and/or achieve savings through their value chain. As such, we are positioning our biopolymers as advanced specialty materials that offer a broad and attractive range of properties and processing options compared to other bioplastics or performance additives. In addition, we are leveraging our technology to utilize renewable feedstocks to produce biobased industrial chemicals for high value applications as alternatives to the primary synthetic routes currently deployed by the chemical industry. We believe that a substantial global market opportunity exists to develop and commercialize our technology to produce advanced biopolymer and biobased industrial chemical products. Metabolixwas formed to leverage the ability of natural systems to produce complex biopolymers from renewable resources. We have focused on a family of biopolymers found in nature called polyhydroxyalkanoates, or ("PHAs"), which occur naturally in living organisms and are chemically similar to polyesters. We have demonstrated the production of PHAs at the industrial scale to produce PHA biopolymers and PHA precursors to biobased industrial chemicals. We have also demonstrated the production of polyhydroxybutyrate ("PHB"), a subclass of PHAs, in agriculturally significant non-food crops. From 2004 through 2011, we developed and began commercialization of our PHA biopolymers through a technology alliance and subsequent commercial alliance with a wholly-owned subsidiary of Archer Daniels Midland Company ("ADM"), one of the largest agricultural processors in the world. Under the commercial alliance, ADM was responsible for resin manufacturing, and Metabolixwas primarily responsible for product development, compounding, marketing and sales. Through this alliance, the companies established a joint venture company, Telles, LLC("Telles"), to commercialize PHA biopolymer products. After ADM terminated the Telles joint venture early in 2012, we retained significant rights and assets associated with the PHA biopolymers business, which we used to relaunch the business with a new business model and a restructured biopolymers team that retained core capabilities in technology, manufacturing and marketing. We hold exclusive rights to the Metabolix technologyand intellectual property used in the joint venture. We acquired all of Telles's product inventory and compounding raw materials, all product certifications and all product trademarks including MirelTM and MveraTM, and we retained all co-funded pilot plant equipment in locations outside of the ADM commercial manufacturing facility in Clinton, Iowa. Today, we are focused on high value performance biopolymers and are in the process of identifying and securing the manufacturing capability needed to commercialize these products. During 2012, we took key steps toward implementing the new business model for our PHA biopolymers business. We worked closely with our core customers to supply product from existing inventory as a bridge to new supply. We evaluated the potential applications for our biopolymer products and narrowed our market development focus to certain high value market segments: (i) performance additives, including film and bag applications; and (ii) functional biodegradation. In March 2012, we began to directly record product sales and to ship product from inventory to our customers. During the second half of 2012, we developed, sampled and launched a compostable film grade resin and a polymeric modifier for polyvinyl chloride ("PVC"). 15 --------------------------------------------------------------------------------
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During 2013, we continued to use existing biopolymer inventory as well as biobased and biodegradable polymers sourced from third parties to continue developing the market and to supply new and existing customers. In the second half of 2013, we broadened our offering of film resins with the launch of Mvera B5010, a certified compostable resin for film and bag applications, and the launch of Mvera B5011, a certified compostable film resin for film and bag applications requiring transparency. We also launched I6003rp, a new polymeric modifier and processing aid for recycled PVC. Throughout 2013, we worked closely with customers developing applications using our materials. During 2013, we also engaged in discussions and collaborations with potential customers and suppliers in
Asiato expand our relationships there. In July 2013, we formalized a Memorandum of Understanding ("MOU") with Samsung Fine Chemicals, a company based in South Koreawith complementary biopolymer products and complementary regional positioning to Metabolix. Under the MOU, we each fund our respective costs separately, but work together with the goal of expanding the global market for biodegradable polymers. Our MOU with Samsung also provides access to additional biodegradable polymers that we can use in resin formulations designed to deliver the best performance and value to targeted customer applications. The MOU is not a binding commitment and may be terminated at any time by either party without liability or obligations to the other party. In 2014, we plan to increase our efforts in the areas of performance additives based on PHAs. We also expect to build on the performance, biodegradability and biobased content attributes of our PHA biopolymers as we continue to develop biobased and biodegradable resins targeted at applications for PHA performance additives that can improve performance and or reduce cost in other material systems such as PVC, PLA and coated paper. We will also continue to explore alternative options for biopolymer manufacturing with a supply chain properly sized to our business. In 2013, we conducted due diligence on several potential manufacturing sites, and we expect to select a site in 2014. Once our PHA supply chain is fully established, this captive capacity combined with access to additional biobased and biodegradable materials sourced from third parties will allow us to continue formulating proprietary high-performance solutions for our target segments. As previously noted, our current capital resources are not sufficient to fund our planned operations for a twelve month period, and we will, require significant additional financing to continue to support our operations and capital needs. Based on current plans and projections, which remain subject to numerous uncertainties, we intend to raise $50-$60 millionover the next 12 to 15 months. The timing, structure and vehicles for obtaining this financing are under consideration and it may be accomplished in stages. Our goal is to use this capital to build an intermediate scale specialty biopolymers business based on PHA additives that will serve as the foundation for our longer range plans and future growth of our business. Failure to receive additional funding by the end of June 2014, will force us to delay, scale back or otherwise modify our business and our manufacturing plans, our sales and marketing efforts, research and development activities and other operations, and/or pursue strategic alternatives. For our second platform, we are developing C4 and C3 chemicals from biobased sources, as opposed to the fossil fuels that are used to produce most industrial chemicals today. Our process for creating biobased industrial C4 and C3 chemicals involves engineering metabolic pathways into microbes that, in a fermentation process, produce specific PHA structures that serve as precursors for these chemicals. Through our PHA technology, we are able to control the microbe biology to achieve high concentrations of specific PHAs that accumulate inside cells as they metabolize sugars. This intracellular accumulation of the biopolymers inside the microbes is a unique and differentiating aspect of our technology. When the fermentation is completed, we use a novel internally developed recovery process known as "FAST" (fast-acting, selective thermolysis) that converts the biopolymer directly to the target chemical using heat. In the C4 program, we have produced biobased gamma butyrolactone ("GBL") at pilot scale and demonstrated a chemical profile that meets or exceeds the existing industrial specifications. In 2012, we completed the preliminary design for a commercial scale plant to enable production of biobased GBL which, through an established conversion process, the biobased GBL can be further converted to biobased butanediol ("BDO"). This plan, which could be implemented under a potential future collaboration, includes specifications for all of the components of our fermentation and recovery process. We believe that developing and commercializing biobased C3 chemicals could represent another attractive application of our technology. In 2012, after completing an analysis of the global market for acrylic acid, a C3 chemical, we continued scale up of fermentation and optimization of microbial strains to produce biobased C3 chemicals. We also successfully demonstrated recovery of acrylic acid from dried biomass using the "FAST" process in our Cambridgelaboratory and provided sample quantities of dried biomass for conversion to biobased acrylic acid for customer evaluation. While significant work remains to be done, particularly around scale-up of the "FAST" process for commercial quantities of biobased acrylic acid, this is another opportunity that could be pursued under a potential future collaboration.
In 2013, we achieved three technical milestones in our biobased chemicals program. We demonstrated a process to efficiently recover ultra-high purity GBL from fermentation broth and showed that our C4 technology can be adapted to produce deuterated bio-
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GBL. We also demonstrated that our C3 and C4 microbial strains and fermentation processes are suitable for production of biobased chemicals based on second generation feedstocks, or cellulosic sugars.
While we believe that strategic alliances will be required to successfully commercialize C3 and C4 chemicals, there can be no assurance that we will be successful in establishing or maintaining suitable partnerships. We plan to continue seeking such alliances in 2014, with the goal to secure funding from potential partners to continue development of our biobased industrial chemical processes. In our third technology platform, we are harnessing the renewable nature of plants to make renewable chemicals and bioenergy from crops. The focal point of our crop technology efforts is around PHB, the simplest member of the broad PHA family of biopolymers. While applications for PHAs have focused mainly on their use as biodegradable bioplastics, these polymers have a number of other unique features that will allow their use in other applications, such as the production of chemical intermediates and their use as value-added animal feeds. We are working to create proprietary systems to produce PHB in high concentration in the leaves of biomass crops or in the seeds of oilseed crops for these multiple applications. In doing this, we have been developing tools and intellectual property around enhancing the photosynthetic capacity of plants, a core capability for improved crop yield. Our work in crops highlights our leading edge technical capabilities, and researchers at
Metabolixhave designed novel, multi-gene expression systems to increase production of PHB in plant tissue. The science behind this shift in metabolism is complex since the goal is to significantly increase production of PHB to be viable at industrial scale without impairing the ability of the plant to thrive in its natural environment. In 2011, Metabolixwas awarded a $6 milliongrant by the U.S. Department of Energy("DOE") to engineer switchgrass to produce 10 percent PHB, by weight, in the whole plant and to develop methods to thermally convert the PHB-containing biomass to crotonic acid and a higher density residual biomass fraction for production of bioenergy. During 2012 and 2013, Metabolixwas awarded additional grants for leading-edge crop research targeting multi-gene expression and transformation of plants including important biofuel and food crops. Funding from these additional grants is expected to total approximately $1.6 millionand will run through 2015. In 2014, we plan to continue research under grants, focused primarily on increasing PHB production in switchgrass and developing a thermal conversion process to recover crotonic acid. We may also seek to establish alliances with industry partners to commercially exploit this platform and the intellectual property we have gained in our work in this area. However, there can be no assurance that we will be successful in establishing or maintaining suitable partnerships.
Collaborative Arrangements We are not currently participating in any collaborative arrangements. Our historical strategy for collaborative arrangements has been to retain substantial participation in the future economic value of our technology while receiving current cash payments to offset research and development costs and working capital needs. By their nature, our collaborative agreements have been complex, containing multiple elements covering a variety of present and future activities. Government Grants As of
March 31, 2014, expected gross proceeds of $2,719remain to be received under our U.S. and foreign government grants, which includes amounts for reimbursement to our subcontractors, as well as reimbursement for our employees' time, benefits and other expenses related to future performance. 17 --------------------------------------------------------------------------------
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The status of our
United Statesand foreign government grants is as follows: Total Total received Remaining amount Funding Government through available as of Contract/Grant Program Title Agency Funds March 31, 2014 March 31, 2014 Expiration Renewable Enhanced Feedstocks For Advanced Biofuels And Department of Bioproducts Energy $ 6,000$ 4,032 $ 1,968 September 2015 Subcontract from University of California ( Los Angeles) project funded by ARPA-E entitled "Plants Engineered to Replace Oil: Energy Department of Plant Design" Energy 566 465 101 September 2014 Capacity Buildingfor Commercial-Scale PHB Camelina National Research Development Council Canada 307 211 96 September 2014 Subcontract from University of Massachusetts (Amherst) project funded by ARPA-E entitled "Development of a Dedicated High Department of Value Biofuels Crop" Energy 663 305 358 December 2014 Development of a Sustainable Value Added Fish Feed Using PHB Producing National Research Camelina Council Canada 110 71 39 January 2015 Screening and Improvement of Polyhydroxybuyrate (PHB) Production Canadian Camelina Sativa Agricultural Lines for Field Adaptation Cultivation Program (CAAP) 49 49 - December 2013 Central Innovation Program for Medium-Sized Companies (ZIM) - Cooperation Project (KF)- Development of New PHB Blends for Innovative Applications AiF Project GmbH 167 10 157 September 2015 Total $ 7,862$ 5,143 $ 2,719
Critical Accounting Estimates and Judgments
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in
the United States of America("GAAP") for interim financial information. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition and stock-based compensation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The significant accounting policies used in preparation of these condensed consolidated financial statements for the three months ended March 31, 2014are consistent with those discussed in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2013. The critical accounting policies and the significant judgments and estimates used in the preparation of our consolidated financial statements for the three months ended March 31, 2014, are consistent with those discussed in our Annual Report on Form 10-K for the year ended December 31, 2013in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates and Judgments." 18 --------------------------------------------------------------------------------
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Comparison of the Three Months Ended
Revenue Three Months Ended March 31, 2014 2013 Change Product revenue
$ 539 $ 790 $ (251 )Grant revenue 467 724 (257 ) Research and development revenue - 380 (380 ) License fee and royalty revenue 63 49 14 Total revenue $ 1,069 $ 1,943 $ (874 )Total revenue was $1,069and $1,943for the three months ended March 31, 2014and 2013, respectively. During the three months ended March 31, 2014and 2013, we recognized $539and $790, respectively, of revenue related to the sale of biopolymer products. Product revenue recognized during the three months ended March 31, 2014and 2013 includes $426and $736, respectively, of previously deferred revenue from shipments to customers made during 2013 and 2012, respectively. The Company's product revenue recognition policy is to defer product revenue recognition until the later of sixty days or cash receipt. At March 31, 2014and December 31, 2013, short-term deferred revenue on the Company's balance sheet included $600and $537of deferred product revenue, respectively. Grant revenue was $467and $724for the three months ended March 31, 2014and 2013, respectively. The decrease of $257was primarily due to decreased revenue generated from our Renewable Enhanced Feedstocks for Advanced Biofuels and Bioproducts ("REFABB") grant. During the three months ended March 31, 2013, we recognized $380of research and development revenue, which was attributable to a funded research and development arrangement with a third party that ended during the second quarter of 2013. We anticipate that product revenue will increase in 2014 as we plan to continue to gain market acceptance for our products, although there will be fluctuations from quarter to quarter, and product sales would be impacted if we are forced to delay, scale back or otherwise modify our business and manufacturing plans or sales and marketing efforts, in the event we fail to secure additional funding by the end of June 2014. Costs and Expenses Three Months Ended March 31, 2014 2013 Change Cost of product revenue $ 695 $ 557 $ 138Research and development expenses 4,900 4,859
Selling, general, and administrative expenses 3,634 3,312
322 Total costs and expenses
$ 9,229 $ 8,728 $ 501Cost of Product Revenue Cost of product revenue was $695and $557for the three months ended March 31, 2014and 2013, respectively. These costs primarily include the cost of inventory associated with product revenue recognized during the respective periods. The increase of $138is primarily attributable to selling newer product formulations having a higher cost per pound during the three months ended March 31, 2014. We routinely evaluate inventory in order to determine whether its current book value is below the cash value we expect to realize from its sale. No charges for inventory impairment were recorded during the three months ended March 31, 2014or 2013. Cost of product revenue for each year shown also includes the cost of sample inventory shipped to prospective customers, warehousing, product packaging and certain freight charges. Although there will be fluctuations from period to period, we expect our overall cost of product revenue will continue to increase during the next twelve months, commensurate with our increasing product sales. However, failure to receive additional funding by the end of June 2014, will force us to delay, scale back or otherwise modify our business and manufacturing plans, sales and marketing efforts, all of which could impact our product sales and associated cost of product revenue. In addition, cost of product revenue will increase as our lower cost inventory acquired from Telles is depleted and replaced with our new formulated high-performance products that have higher costs than the material acquired from Telles. We may also incur costs to produce inventory at small scale commercial manufacturing operations either on our own or with third parties. Due to the expected high per unit cost of these smaller scale manufacturing operations, any inventory costs in excess of our expected saleable market price will be immediately expensed as 19 --------------------------------------------------------------------------------
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cost of product revenue. We also anticipate that our cost of product revenue as a percentage of product sales will fluctuate during the next twelve months as our sales mix of biopolymer products changes.
Research and Development Expenses
Research and development expenses were consistent at
$4,900and $4,859for the three months ended March 31, 2014and 2013, respectively. The small increase of $41was primarily due to increased cost of product trials being performed, partially offset by declining depreciation expense due to our property and equipment reaching full depreciation at a rate faster than the acquisition of new capital assets. We expect research and development expenses to remain consistent during 2014. However, we may incur additional design and engineering costs in connection with the expected selection of a manufacturing site. However, failure to receive additional funding by the end of June 2014will force us to delay, scale back or otherwise modify our business, including our research and development activities.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses were
$3,634and $3,312for the three months ended March 31, 2014and 2013, respectively. The increase of $322was primarily related to increases in employee compensation, related compensation benefit expenses and professional fees. Employee compensation and benefit related expense increased to $2,154from $2,019for the three months ended March 31, 2014and 2013, respectively. The increase of $135was primarily attributable to annual merit increases in compensation to employees that became effective in January 2014. Professional fees increased to $680from $513for the three months ended March 31, 2014and 2013, respectively. The increase of $167was primarily the result of increased general legal and patent filing fees. We expect our selling, general and administrative expenses to increase during 2014, as we continue to expand our biopolymer sales and marketing activities. However, failure to receive additional funding by the end of June 2014will force us to delay, scale back or otherwise modify our business, including our sales and marketing activities. Other Income (Expense), net Three Months Ended March 31, 2014 2013 Change Interest income, net $ 5 $ 10 $ (5 )Other expense, net 1 12 (11 )
Total other income (expense), net
Other income (expense), net was
$6and $22for the three months ended March 31, 2014and 2013, respectively. Other income (expense), net during both periods consisted primarily of income from our investments, offset by investment management and custodial fees.
Liquidity and Capital Resources
Currently, we require cash to fund our working capital needs, to purchase capital assets and to pay our operating lease obligations.
The primary sources of our liquidity have been:
† equity financing;
† our former strategic alliance with ADM;
† government grants;
† product revenues; and
† interest earned on cash and short-term investments.
We have incurred significant expenses relating to our research and development efforts. As of
March 31, 2014, we had an accumulated deficit of $280,692. Our total unrestricted cash, cash equivalents and investments as of March 31, 2014were $10,418as compared to $19,209at December 31, 2013. As of March 31, 2014, we had no outstanding debt. Our cash and cash equivalents at March 31, 2014were held for working capital purposes. We do not enter into investments for trading or speculative purposes. The primary objective of our investment activities is to preserve our capital. As of March 31, 2014, 20
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we had restricted cash of
$619. Restricted cash consists of $494held in connection with the lease agreement for our Cambridge, Massachusettsfacility and $125held in connection with our corporate credit card program. Investments are made in accordance with our corporate investment policy, as approved by our Board of Directors. Investments are limited to high quality corporate debt, U.S. Treasury bills and notes, bank debt obligations, municipal debt obligations and asset-backed securities. The policy establishes maturity limits, concentration limits, and liquidity requirements. As of March 31, 2014, we were in compliance with this policy. The accompanying condensed consolidated financial statements have been prepared on a basis which assumes that Metabolixwill continue as a going concern, and which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. However, with the exception of 2012, when we recognized $38,885of deferred revenue from the terminated Telles joint venture, the Company has recorded losses since its inception, including its fiscal quarter ended March 31, 2014. As of March 31, 2014, the Company held unrestricted cash, cash equivalents and investments of $10,418. Our present capital resources are not sufficient to fund our planned operations for a twelve month period, and therefore, raise substantial doubt about our ability to continue as a going concern. We will, during 2014, require significant additional financing to continue to fund our operations and to support our capital needs. Based on current plans and projections, which remain subject to numerous uncertainties, we intend to raise $50-$60 millionover the next 12 to 15 months. The timing, structure and vehicles for obtaining this financing are under consideration by the Company and it may be accomplished in stages. Our goal is to use this capital to build an intermediate scale specialty biopolymers business based on PHA additives that will serve as the foundation for our longer range plans and future growth of our business. Failure to receive additional funding by the end of June 2014, will force us to delay, scale back or otherwise modify our business and its manufacturing plans, our sales and marketing efforts, research and development activities and other operations, and/or pursue strategic alternatives. We continue to face significant challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly than currently expected due to (a) lower than expected sales of our biopolymer products as a result of slow market adoption; (b) increases in capital costs and operating expenses related to the establishment and start-up of commercial manufacturing operations either on our own or with third parties; (c) changes we may make to the business that affect ongoing operating expenses; (d) changes we may make to our business strategy; (e) changes in our research and development spending plans; and (f) other items affecting our forecasted level of expenditures and use of cash resources. If we issue equity or debt securities to raise additional funds, (i) we may incur fees associated with such issuance, (ii) our existing stockholders will experience dilution from the issuance of new equity securities, (iii) we may incur ongoing interest expense and (iv) the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. In addition, utilization of the Company's net operating loss and research and development credit carryforwards would likely be subject to significant annual limitations under Section 382 of the Internal Revenue Code of 1986 due to cumulative ownership changes resulting from financing transactions. If we raise additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to our potential products or proprietary technologies, or grant licenses on terms that are not favorable to the Company. Net cash used in operating activities was $8,965and $8,498for the three months ended March 31, 2014and 2013, respectively. Operating cash flows during the three months ended March 31, 2014, reflect our net loss of $8,154, noncash adjustments of $1,145for depreciation, charges for 401(k) Company common stock match and stock-based compensation, and a net cash outflow of $1,956due to the timing of our disbursements, including annual employee bonus payments of $1,659made in the quarter ended March 31, 2014. Net cash provided by investing activities was $4,598and $14,441for the three months ended March 31, 2014and 2013, respectively. Net cash provided by investment activities for the three months ended March 31, 2014consisted of $6,206provided by sale and maturity of short-term investments partially offset by $1,508used to purchase short-term investments and $100used to purchase capital equipment. Net cash provided by financing activities was $300and $5for the three months ended March 31, 2014and 2013, and was solely attributable to the proceeds received from the exercise of stock options. During the three months ended March 31, 2014, all stock option exercise proceeds were attributable to the purchase of shares by our Chief Executive Officer pursuant to his employment agreement. 21
Table of Contents Contractual Obligations The following table summarizes our contractual obligations at
March 31, 2014. Payments Due by Period Less than 2-3 4-5 More than Total 1 year years years 5 years Purchase obligations $ 25 $ 25$ - $ - $ - Operating lease obligations 8,939 1,448 2,820 2,959 1,712 Total $ 8,964 $ 1,473 $ 2,820 $ 2,959 $ 1,712
Off-Balance Sheet Arrangements
Related Party Transactions
See Note 14 to our unaudited consolidated financial statements for a full description of our related party transactions.
Recent Accounting Pronouncements
March 2013, the Financial Accounting Standards Board("FASB") issued ASU No. 2013-05, Foreign Currency Matters (Topic 830), clarifying the applicable guidance for the release of the cumulative translation adjustment. ASU 2013-05 was effective for the Company in the period beginning January 1, 2014. The adoption of this update did not have a material impact on the consolidated financial statements. In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or Tax Credit Carryforward Exists. ASU 2013-11 requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with certain exceptions. ASU 2013-11 was effective for the Company beginning January 1, 2014and the adoption of this standard did not have a material impact on the consolidated financial statements.