Microvision sets ambitious goals for LiDAR technology, aiming for $200 price point to drive market entry and revenue growth.

OPERATOR - (00:00:00)

Participants are on a listen only mode. At the end of today's presentation there will be an opportunity to ask questions via the chat line. Investors can submit their questions within the meeting webcast by typing them into the Q&A button on the left side of the viewing screen. Analysts who publish research may ask questions through the phone line. For analysts to ask a question on the phone line, please press Star one on your phone. Please note this event is being recorded. I would now like to turn the conference over to Drew Marcum, our host. Please go ahead.

Drew Marcum - Moderator - (00:00:34)

Thank you and good afternoon everyone. I'm here today with our CEO Glenn DeVos and our CFO Anubhav Verma. Following their prepared remarks, we will open the call to questions. Please please note that some of the information you will hear in today's discussion will include forward looking statements including but not limited to expectations regarding business product and go to market strategies, products and solutions and market needs and timing, status of commercial engagement and future demand, level of customer and partner engagement, market landscape and opportunities, acquisition benefits and risks and collaborations, projections of future operations and cash flow, cash liquidity and the impacts of recent financing activities, availability of funds and conditions for raising capital, as well as statements containing words like believe, expect, plan and other similar expressions. These statements are not guarantees of future performance. Actual results could differ materially from the future results implied or expressed in the forward looking statements. We encourage you to review our SEC filings, including our most recently filed Annual report on Form 10-K and quarterly reports on Form 10-Q. These filings describe risk factors that could cause our actual results to differ materially from those implied or expressed in our forward looking statements. All forward looking statements are made as of the date of this call and except as required by law, we undertake no obligation to update this information. In addition, we will present certain financial measures on this call that will be considered non-GAAP under the SEC's Regulation G. Reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure, as well as for all the financial data presented on this call. Please refer to the information included in our press release and in our Form 8K dated and submitted to the SEC today, both of which can be found on our corporate website@ir.microvision.com under the SEC Filings tab. This conference call will be available for audio replay on the Investor Relations section of our website. Now I would like to turn the call over to Glenn DeVos, our chief executive Officer. Glenn.

Glenn DeVos - Chief Executive Officer - (00:03:04)

Thank you Drew and it's great to be with all of you today. I'd like to Start today's call by answering a question I've been asked quite a bit over the past few months, which is Would you join Microvision? The reason I joined first as CTO back in April and now as CEO is that Microvision has a unique opportunity to transform the LIDAR industry. I've been directly involved with this industry for more than 10 years, from the first CES automated car demonstrations in 2015, the Autonomous Cross country drive, our Robotax fleet deployments in Singapore and Vegas, and the very first level 3 OEMs system deployments. These were truly exciting times for LIDAR. But as of today the adoption rate of LIDAR sensors has been very limited and we remain a niche product. The reason for this is simple, it's cost. Lidar sensors are too expensive and this has limited our market penetration. There are three developments that are required to bring costs down to the levels required for mass adoption. The first is the move from electromechanical systems to solid state. The cost score for electromechanical systems is significantly higher than that of solid state. As a result, LIDAR is only used when it is not possible to do the job with cameras or other lower cost alternatives. For example, while automotive level 2 plus systems would benefit greatly from the use of LiDAR, they are typically deployed with only vision and radar. We must move to wafer level processes that have a much lower cost structure than current electromechanical systems can ever achieve. Roughly 25 years ago, radar started as large, complex and expensive assemblies with very limited adoption. So where are we now? In 2024 over 140 million were produced for the automotive market alone. To Mitar can follow a very similar path. The second development is related to system architecture and the move to satellite sensors. We started this in Automotive roughly 15 years ago with the introduction of satellite, radar and camera sensors working with the central Advanced Driver Assistance Systems (ADAS) domain controller. This approach breaks down the perception challenge and simplifies the individual sensors, delivering the highest level of performance at the lowest total system cost. The third is to further simplify and reduce the cost of the hardware through software. We'll talk more about this in future calls, but solving the perception and the processing challenges in software enables the further optimization of the hardware, again resulting in lower total cost. These are the steps to mass adoption and if they sound familiar it is because this is exactly what has been done for vision, radar and other sensing modalities. And this is exactly what we're doing at Microvision and it is the reason why I am so excited to be part of the Microvision team. So let's talk about Q3 and how it relates to the key issues we just covered. I'll start with our recent announcements at IAA in Munich in September where we introduced both Movia S and our Trilidar architecture. Movia S is an industry leading ultra wide field of view solid state sensor. The Movia S180° Field of view sensor we demonstrated at EAA is the first of a full family of short range sensors for the automotive, industrial and defense sectors. It is easily configurable and can deliver full perception and advanced LiDAR based driver assistance features such as Microvision's localization and collision avoidance functions or simply provide a clean point cloud. It is the right product at the right time, delivering performance at a breakthrough cost level enabled by its solid state design and Microvision's proprietary image and signal processing software. This is that first step to achieving mass adoption, dramatically lowering the cost of LiDAR perception for our customers. Movia S is an amazing standalone product, but it also enables the implementation of the satellite architecture I referred to earlier, what we call Trilidar for automotive applications. Low cost, compact, high performance sensors are the key to unlocking satellite architectures and it is exactly what Vision Radar have accomplished. It's why in most cars today they have between three to five radar and six to nine cameras. Lidar can and will follow the same path not just for fully autonomous Systems such as Level 3 or 4 cars or Automated Guided Vehicles (AGVs) and Autonomous Mobile Robots (AMRs), but for driver and operated assistance systems as well. The industry refers to this as as the democratization of safety and that's what microvision's products are enabling. Movia S is currently being demonstrated with numerous customers and its production launch is planned for Q4 2026. Additionally, we announced the asset purchase agreement of Scantonol Photonas. This is a key move for Microvision as it gives us access to 1515 nanometer FMCW ultra long range LiDAR technology. Scantinel's ultra long range capability perfectly complements our current 905 and 940 nanometer time of flight portfolio of Movia and Maven products. Microvision will be unique in its ability to offer our customers a complete range of solutions for their perception challenges across all end market sectors. We will share more details of our ultra long range product plans and timing at the upcoming ces. Regarding our defense related activity, I'm excited to share a few more details about our recently announced Aerial Systems team which is responsible for our drone based LIDAR developments. The addition of this team dramatically accelerates our work in the space of drone based real time mapping, ISR and Denied environment navigation. We are on track to complete the initial proof of concept phase for both fixed wing and rotor drones by the end of the year and the Aerial Systems team is now up and operational at our airstrip office in Virginia. We've also been working closely with our Defense Advisory Board and have started initial customer engagements this month. We'll share more details about next steps and about the technology at CES in January. Now let me shift to our commercial engagements. In the Q2 earnings call we talked about the number of ongoing industrial and automotive RFQs and RFIs. These remain active and we continue to be engaged with our customers as they work through their sourcing processes. What has changed significantly are the post IAA engagements where we have experienced strong interest in both Movia apps and our Trilidar architecture offerings. We are currently demonstrating Moovia S to a number of automotive, OEM, industrial and autonomous vehicle customers. Another key differentiator for movies beyond price point, compact size and its ultra wide field of view is its Open Software Framework which enables our customers to embed their software on the microvision sensor. This dramatically changes how perception systems are developed. Microvision's Open Software framework gives our customers the ability to develop, optimize and validate their systems with the most advanced and Most efficient software DevOps model. This is another example of how Microvision is leading the industry and how we are helping our customers solve their perception system development and their deployment challenges. We also see tremendous interest in our Movia Network LIDAR Collision Avoidance System, what we call LCAs. These are for applications where the customer wants to have a solution that is ready to go out of the box, easily installed with pre programmed and configurable LCAST feature libraries that they can set up and operate on their own. We're currently demonstrating our LCAST system with several customers and plan to launch in Q2 of 2026 with our Movia L platform. Finally, let me bring you up to speed on several developments as we strengthen our leadership team. Fraser McMahon has joined Microvision as our Vice President of Global Sales. Fraser brings decades of sales and commercial experience in the automotive and adjacent sector markets. Fraser will be expanding our commercial team and I'm looking forward to working closely with him as we accelerate our customer acquisition plans. Also, Greg Scharenbrock has joined as our Vice President of Global Engineering with his experience with Toyota, Delphi as well as Intel. Greg brings proven technology, leadership and management capability for our global engineering organization. These are key additions to ensure that Microvision has the leadership capabilities as well as the experience to execute and deliver our growth plans across the automotive, industrial and defense markets. We have the opportunity to transform the LiDAR industry and Microvision is making that happen. As I said at the beginning, that is why I'm here and with you today. With that, thank you for your attention and I'll turn it over to Anubhav for his remarks.

Anubhav Verma - Chief Financial Officer - (00:12:44)

Thanks Glenn. I want to start by welcoming our new CEO Glenn and marking a new era for microvision. The progress we've made under his leadership in just a few short months has been phenomenal. The lidar industry is ready for a revolution much like the one we saw with radar. Glenn was a key architect of that evolution and he's now bringing his 30 years of automotive experience to do the same for LiDAR. I'm excited about the Microvision's game changing strategy number one the simplified sensor architecture. Our Trilidar system transforms the traditional single sensor model into a cost effective trial of sensors two short range and one long range and the second is economic disruption. We're setting a new industry standard with solid state products priced at $200 for short range and $300 for long range sensors. This strategy addresses OEM demands and positions MicroVision to accelerate LiDAR adoption while securing a competitive edge. To accelerate our long term vision, I am excited to announce our strategic investment in Scantinel a leader in 1550 nanometer FMCW LIDAR technology based in Bavaria, Germany. This partnership secures our leadership in next generation ultra long range lidar. Just as FMCW revolutionized radar with superior performance and interference resistance, it is ideal for long range sensing in LiDAR. This move positions MicroVision as one of the few companies offering both FMCW and time of flight technologies, enabling us to deliver a comprehensive product suite that meets the diverse and evolving needs of OEMs. After the success related to the Mobia S launch, we are very energized by IT and are now driving momentum in the industrial AGV AMR market to drive near term revenue opportunities, leveraging our Perception software and Mobia hardware to solve complex business problems. Since Mobia S has a significantly lower price point than Movia L, most of our customers are looking to migrate from Movia L to Movia S. We believe this will be a transformational for the industrial and warehouse automation markets. Our prior visibility of 30 to 50 million over the next 12 to 18 months was primarily driven by the Movia L product. However, with our new strategy to transition customers to Movia S and ongoing delays on part of our customers. We anticipate that this revenue pipeline will take longer to realize given that we're moving away from Movia L. We're actively managing our production commitments with ZF as we plan to bring up manufacturing capabilities for MOBIA S next year. We plan to provide an update as part of Q4 earnings and full year 2025 results early next year. Moving on, we continue to press ahead with the pursuit of revenue opportunities in the defense vertical. We recently added a small team in Virginia in the greater D.C. metro area with deep extreme experience in aeronautical engineering and avionics. We will be demonstrating a complete solution with multimodal sensors and our full stack software capable of enabling unmanned drones to complete specific missions in first half of 2026. I'm also excited about the addition of key executives with rich backgrounds from intel and Visteon to join us and build the engineering and go to market functions of Microvision. Now let's review our third quarter financial performance. For the third quarter we reported revenues of 0.2 million. This quarter's revenue was driven by our sales in industrial and automotive verticals. From a cash burn standpoint, in the third quarter of 2025 our RND and SGA expenses totaled 12 million. This includes 1.2 million of severance payments related to CEO transition, 1.6 million of non cash income related to a stock based compensation income expense reversal resulting from the forfeiture of executive PRSUs from former CEOs departure, as well as 1.4 million in non cash charges related to DNA. Excluding these items are core, RND and SG&A expenses were approximately 11 million for the quarter flat. With respect to the second quarter. In line with our expectations, the cash burn for the quarter was 16.5 million. That includes one time 3.2 million payments related to the inventory buildup of Movia L Q4 CapEx was 0.1 million in line with our expectations. Now looking ahead, we anticipate an increase in current spending levels to support several strategic initiatives. These include the onboarding of the Aerial Systems team and related costs for a new D.C. office. Several senior hires aimed at strengthening our engineering and go to market functions. Additionally, we will incur expenses related to the Scandinaval acquisition in Bavaria, Germany. We plan to provide further updates on this transaction and associated funding during our next call once the closing occurs later this year. We anticipate that these new initiatives will lead to an increase in our annual spending by approximately 1.5 to $2 million per quarter. To summarize, we're modestly ramping up our expenses from Q4 onwards to invest in three key areas. Number one accelerate product readiness, number two invest in industrializing our products and number three accelerate time to revenue by investing in go to market and sales organization for building a solid pipeline for the products. We look forward to sharing more updates and providing full year cash burn guidance for 2026 in conjunction with our 2025 year end earnings. Now let's talk about our balance sheet. We finished this quarter with $99.5 million in cash and cash equivalents. In addition, the company has availability of an additional 46.2 million under our current ATM facility and $30 million of undrawn capital under the convertible note facility as of Q3. As of today, approximately $18 million in principal is outstanding on the convertible note that converts at a fixed price of $1.6. With $99.5 million cash at hand at the end of third quarter, we are adequately capitalized to make these debt payments in cash or through stock. If the holders choose to exercise their option due to favorable market conditions, the 30 million second tranche remains undrawn. As previously highlighted, Microvision's average trading volumes have experienced a substantial increase since last year, driven in part by committed investment exceeding $90 million from a single investor. This investment has also enabled the company to raise approximately $30 million in net proceeds during the third quarter to its ATM program, strengthening our balance sheet. While we will continue to pursue opportunistic capital raising strategies as appropriate, the combination of recent funding activities and our operational cost management has extended our financial Runway into 2027. The LiDAR industry is evolving with the once biggest LiDAR company by market cap, which is now facing significant financial challenges. In contrast, Microvision stands out due to its strong capital structure, financial discipline, corporate governance and superior product portfolio. Our approach remains centered on diversifying revenue streams through targeted disciplined investments. This long term outlook makes Microvision an attractive investment for large scale institutional investors and has notably increased its visibility within the institutional investment community. We're confident that our new leadership team is well positioned to successfully execute our current business strategy to be the frontrunners of the autonomy enablers for the three end markets with significant camps Operator, I would now like to open the call for questions.

OPERATOR - (00:22:05)

Thank you. At this time we're conducting a question and answer session. Investors can submit their questions within the meeting webcast by typing them into the Q and a button on the left side of their viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press Star one Your first question is coming from Casey Ryan from West Park Capital. Your line is live. And once again, Casey, your line is live. Hello.

Casey Ryan - Equity Analyst - (00:22:47)

Hello. Sorry, I was on mute. Thank you. A lot to discuss today. Thank you for the update. So the acquisition in Germany of FMCW Technology is really interesting in light of your comments about driving the cost point down down in general. I guess my view has been that's been an even costlier product. But do you think you can get it down to the targets that you talked about for your core products in terms of LIDAR and the ASP being consumable? Because I guess a lot of the FMCW I think has been concentrated in long haul trucking and sort of higher-end markets, you know, end markets previously.

Glenn DeVos - Chief Executive Officer - (00:23:30)

Yeah, maybe love. I'll take this. Hey, Casey. Yeah. The key here is where FMCW is today and you're spot on. Historically it has been a higher cost alternative in terms of material cost, but ultimately the technology gets you to essentially wafer level and chip scale packaging for really where all the high value silicon is. And basically that evolution of going from discrete components into highly integrated chip scale packages is where you drive the cost down. And then as well, longer term, it's fundamental advantages that it has relative to eye safety, the ability for. The ability for getting real time relative velocity measurements as well and overall range capability that brings that total system cost. So as we roadmap it, we do see this being able to hit the kind of cost targets that we think are required to be able to initially be attractive for commercial vehicle. That's where the initial market looks most advantageous as well as ultimately for passenger car. It also has another advantage of it's when you operate it behind the windscreen, it just has less losses associated with transmission through the windshield of the vehicle. And again, that's another way that fundamentally you're not having to compensate for that and so you can deliver a lower cost system. But right now that's the whole plan that we have with Scantinel is to accelerate that roadmap.

Casey Ryan - Equity Analyst - (00:25:22)

Okay, terrific. So you're raising one other thing that I'll try to be quick about, which is the importance of putting a LIDAR sensor behind the windscreen versus a bubble or some other part of the car. Are you hearing from customers that that's a really important component for solutions to be able to operate behind the windscreen and operate effectively?

Glenn DeVos - Chief Executive Officer - (00:25:51)

Yeah, in general it's just an ideal location if you think about, you know, in the vehicle, the rear view mirror for a passenger car. And that area in front of it. That's where typically your cameras are mounted. Today it has the advantage of, you know, the cleaning system of the windshield, basically the windshield wiper and then the defrost functions on the windshield. So heating and cleaning are, you know, basically already in place. It has a disadvantage of having to basically transmit through the the windshield itself. So that's where transmission loss has become concerning. But that we're seeing that emerge as, you know, both from a vehicle packaging standpoint, so you don't have that bump in the top of the car when you put it above the roof line. So from a vehicle packaging standpoint and then from an inherent cleaning and heating standpoint, and then finally from a point of view standpoint, what I mean by that is the long range lidar being mounted there gives it the best viewpoint in terms of its field of view looking down the front of the car and looking down the road. So when you think about all three of those factors, it's a very attractive location for it. That said, it's a crowded space up there. You've got cameras, you've got the roof module controls,, ultrasonic glass breakage, detectors, switches. There's a lot out there. And so that's why miniaturizing that sensor to the greatest extent possible become so important.

Casey Ryan - Equity Analyst - (00:27:31)

Okay, yeah, thank you, that's helpful and actually quite exciting. Quickly, another quick detour, I guess, should we expect Gantt to now, whenever it's closed and sort of fully integrated, does that business already have revenues is my question. Will we see some revenue show up from that or is it sort of a low for sort of de minimis revenue type business today?

Glenn DeVos - Chief Executive Officer - (00:27:56)

No, it's pre-revenue at the moment. Go ahead, Len. Oh, no, I was going to just say at this point, no, it's pre revenue. And really what we'll be doing right now, and this is what I'll talk about here as we come into CES and end of the year, is we're putting that plan together to take that technology and industrialize it into an automotive grade sensor. So where Microvision can basically wrap around Scannels technology, all the supporting processing, packaging hardware, software, you know, integrating their 1550 FMCW imaging capability. That's how the two really combine effectively. We'll put that plan together now, then we'll be sharing specific dates and expectations on timing of product and revenue here later this year.

Anubhav Verma - Chief Financial Officer - (00:28:56)

Yeah, and if I can just add, Casey, that's why we don't anticipate this acquisition to add a lot of cost into the system. Because as I mentioned in my remarks we're really only getting about about 20 engineers, adding them to the workforce because we would be utilizing some of the talent that we have at Microvision as well to develop some of the packaging capabilities, etc. So all in all, I think the cost that we're adding to the system is not going to be more than 2 million a quarter from that perspective.

Casey Ryan - Equity Analyst - (00:29:37)

Oh, right. Okay. And then correct me if I'm mistaken, but I believe you all have an office in Germany. And will the offices be combined or are they near each other or does that not matter?

Anubhav Verma - Chief Financial Officer - (00:29:49)

No, they're not near each other because the other office we have is in Hamburg while the scantinal office is in Bavaria, south of Germany in a city called Ulm, so near Munich and Stuttgart.

Casey Ryan - Equity Analyst - (00:30:06)

Okay, all right, well, thank you for all that. One last big area that was exciting on the call was, I think on above you started laying this out, sort of talking about a target ASP of 200 for short range and 300 for long range. Did I hear that right?

Anubhav Verma - Chief Financial Officer - (00:30:24)

First of all, yes.

Casey Ryan - Equity Analyst - (00:30:27)

And did you put a target date? I mean, even if it's aspirational, I like wasn't sure if I heard that or if that was just a long term goal.

Anubhav Verma - Chief Financial Officer - (00:30:36)

No, I think our goal is to get that product Formovia s out and next year. So we will be providing more exact dates probably as part of our next earnings call because that's sort of what we are accelerating right now in the product readiness to get from Mobia L to Mobia S and obviously setting up the manufacturing capabilities, et cetera, to be able to fulfill customer demands starting next year.

Casey Ryan - Equity Analyst - (00:31:08)

Because those price points are extremely competitive with radar in particular. Right. And then, you know, functionality versus cameras and would certainly put you well ahead of, as far as I know, any competitors in the LIDAR space from from an ASP perspective. Does that track with what you guys are thinking?

Glenn DeVos - Chief Executive Officer - (00:31:29)

I think that's why. That's exactly right. You know that and that gets us. I think that's the price point that really gets level three or maybe even level two plus systems. Essentially a great value for the OEMs, where they can sell those systems at a very high, at the right price for their end customers and still have a really high margin with that, you know, long term to get into adas, you even have to drive it further down, really.

Casey Ryan - Equity Analyst - (00:32:00)

Okay. And tell me if you think is it right to be comparing it against camera and radar ASPs and is that relevant? I mean, yes, it's relevant in some sense, but is it more just about the overall sensor cost is maybe a concern or an issue for some concepts for cars and maybe some categories of cars, mid tier cars, low end cars and things like that.

Glenn DeVos - Chief Executive Officer - (00:32:27)

Yeah. If you think about radar and cameras, which are now fully commoditized cameras as a passive sensor which frequently kind of hit somewhere between the 50 to $100 range, radar for short range, below 50, between 50 and $100 for long range. When you think about those price points, LiDAR, and as it achieves, I mentioned 140 million a year for radar, when you get into those kind of numbers and you really standardized across an industry, we would expect to be sub $100 in that range as an active sensor with lens and lens assemblies and everything else. So it's going to be in that neighborhood hundred dollars or less. Now that's a ways off obviously, but you got to get there stepwise. And the first big step we want to take is with Movia S as a short range sensor, getting down to 200, unlocking satellite sensor architectures for LiDAR and then as volume comes and you continue to standardize, continue to drive that cost down.

Casey Ryan - Equity Analyst - (00:33:40)

And then the second piece of my question was it feels like that would put you in a fairly dramatic leadership position from an ASP standpoint against potentially all the, all the, let's call them, Western lidar competitors. I don't know what we're seeing out of China, but does that sound accurate to you that the gap between what I'm hearing from other western vendors is significantly higher when we talk about ASPs?

Glenn DeVos - Chief Executive Officer - (00:34:09)

Yeah, that's exactly right. We think that's where you have to be in this market to drive volume. And we're very mindful, we're very mindful of where the price points in China are and we know we have to be competitive with those as well. And so, you know, at the end of the, end of the day, this is where you got to get to. And so James has done a great job really designing the cost and coming up with a product that, that gets us on that path.

Casey Ryan - Equity Analyst - (00:34:39)

Yeah. Okay, last question. I promise with defense and the opportunities with defense, it feels like there's a significant push to sort of enable new platforms and new form factors. And do you find that price is a key consideration or is it more just about functionality and maybe availability of product are sort of more important in those markets today?

Glenn DeVos - Chief Executive Officer - (00:35:07)

Price is still, you know, cost is still a factor. I mean it. If you think about drones in particular, sometimes you can describe them as attritable assets and you know, within an attritable asset cost is a factor. Now the reality is ASPs in those applications are significantly higher than what we've been talking about with regard to automotive or industrial, but it's still a factor. And that's where you know, our sensors, with the scale and the design approach that we've taken. Because we can use exactly the same sensor that we're developing in automotive, that we're developing in industrial, we can use that for what we're doing with drones and defense. And ultimately that makes it very, that makes it very attractive, both from a, the functionality it brings, but also from the fact that it is a very cost effective solution. It's just a different price point. A very different price point.

Casey Ryan - Equity Analyst - (00:36:10)

Right, okay, terrific. Well, thank you for the feedback and the answers to these questions. It's a very exciting update, Glenn, for your first call and we'll look forward to the next one for sure. Thank you.

Glenn DeVos - Chief Executive Officer - (00:36:22)

Yep, thank you.

OPERATOR - (00:36:26)

I will now turn this call back over to Anubhav Verma to read questions submitted through the webcast. Thank you.

Anubhav Verma - Chief Financial Officer - (00:36:33)

Thank you, Matt. All right, so the question is, what is the status of the RFQs? Are there any updates on the timing? Are we stuck? What more do OEMs want and how can we compete against the Chinese lidar makers?

Glenn DeVos - Chief Executive Officer - (00:36:55)

So the RFQs and I mentioned this in my remarks. The RFQs that we talked about last quarter, they're still ongoing. And it's not a question of being stuck, it's more that we're following the pace of the OEMs. Let me talk to automotive first and then I'll pivot over to industrial for automotive. I mean, we've seen it in the news. You know, the amount of churn that the OEMs are going through on their platform definitions, ICE platforms versus electrification, other managing costs. You know, there's a lot happening there. And as a result, the sourcing process for the, basically the safety systems that go in those vehicles is also taking quite a bit of time. And that's not unusual, especially for new type of features that LiDAR enables. But we're continuing to process through that. What typically happens is the OEMs go through a broad round with the supply base. They get a lot of feedback and a lot of different proposals. They analyze those and then the next wave comes out reflecting what they've learned, the OEM has learned through that initial wave of responses. And that's the process that we're in now. So in terms of what more do they want, they're going to want more updates and More Q and A sessions as they go, but that's just going to take the time it takes. And so we're still engaged with those and following them relative to industrial, not very similar to that in terms of the kind of bigger engineered solution activities that were involved with. Those are still proceeding through their evaluation phases. So that's continuing on and we're supporting those customers as they do their evaluations. So nothing new to announce this call, but again, we continue to stay engaged with those and driving those to a successful outcome. But that's, you know, that. And the last comment regarding or question regarding Chinese LiDAR, I think you kind of picked a little bit up on that in the last questions that we had ultimately, and I've been doing this myself for 25 years now, competing with Chinese suppliers across all areas of certainly the automotive space. And how do you compete with them is you can't just simply compete on price and hardware. That's very difficult. You have to compete through other innovation channels. And one of those is like I talked about the open software framework where we can provide a sensor that is highly flexible and fully transparent to what the perception system integrator or developer wants to do. They can put their software on it. We can provide greater levels of innovation through how we use our software. So there are levers that we have that we can use to position our product to be competitive with the Chinese, either adding more value or more price competitive. And that's just the reality of the automotive market and the industrial market today. You got to become if you're not competitive, you're not going to win the business. We feel that with our approach, we have a competitive offering against really all of the participants in this space.

Anubhav Verma - Chief Financial Officer - (00:40:38)

Thank you, Glenn. Next question. We're concerned that the $200 price tag could be unprofitable or unsustainable customer deals, the type of deals that led to Luminar losing money on every unit being sold to Volvo. How are we going to be different?

Glenn DeVos - Chief Executive Officer - (00:41:00)

Yeah, that's a great question. You can't get yourself into a position where volume production is upside down on margins. That's just simply not an acceptable outcome. You do all that work to develop, win a business, develop a product, and then every product is costing you money to ship it. And we're not in a position to do that. And we don't have to relative to that $200 price point. The reason we're confident in stating that is because that was based on a detailed buildup of costs from the ground up and looking at what Is it going to cost us produce the product that can provide that kind of performance and looking through all of those cost elements and as well as manufacturing and the capital it takes to support production. So we're confident in the cost model associated with that. That is what then guides our design and development direction for that part. And then I can tell you, and this is just my experience, certainly with automotive over these years, you just have to be maniacal about those costs. You can never, you have to watch them at every step, constantly be working them down. And I'm confident that our team can do that. So for me, it's $200. It's a great number to have and to start with. But our goal, just to be clear, is to drive the cost well below that.

Anubhav Verma - Chief Financial Officer - (00:42:30)

Thanks, Len. Glenn, you indicated in public comments at IAA in Munich that Microvision has been working with a couple customers on what I would call pre development contracts to validate our system. We expect those products to be sold very quickly. Can you clarify those comments as a pre development? Because a pre development would indicate that we are in early stages of engagement. But prior comments by management indicated that the company was much further along in testing and validation with those customers. And where do we stand with these customers today and the timing for sales?

Glenn DeVos - Chief Executive Officer - (00:43:11)

Yeah, great question. And so for me, pre development is that whole phase before really launching that product, the production platform. And so when I was talking about pre development here, what I'm referring to is where we have sensors, where we're still, you know, the customers are still evaluating and looking at how that feature would work on their system. An example of that is the Bolt on LCAST system that we talked about based on the movie L, where they're just doing exploratory work and looking at, okay, how do we feel about this? How does this work? How would we integrate it? The customer really hasn't kicked off any formal development activity on that. We're also doing, as you just mentioned, we're also in what you would call qualification phases where the customer has our product on their vehicle or on their robot and is actively qualifying or validating the technology to make sure it can hit the KPIs they think they need to hit to move forward with a LIDAR solution and Microvision as the provider of that LiDAR. So we're doing both. And really the feedback, you know, the feedback we're getting has been very positive. Ultimately we have to, you know, we have to get it over the line to a commercial contract. But both activities are occurring a lot of a Lot of uptick in that pre development area with interest in lcas as well as in Movia S. And my expectation is that'll move fairly quickly. But ultimately we work at the pace of our customers, but based on kind of how they're looking at it, how they've, the feedback we're getting on it, I'm excited about. I think my belief is that we'll be successful there.

Anubhav Verma - Chief Financial Officer - (00:45:20)

Well, thanks, Glenn. Next question. How does the recent upheaval at Luminar affect our opportunity to make inroads at Volvo automotive and Volvo trucks?

Glenn DeVos - Chief Executive Officer - (00:45:33)

Yeah, I may not speak to the specifics involved in the whole situation, but I would tell you, you know, historically, if there's a. A supplier that has issues providing or with an oem, whatever those might be, then typically that provides the opportunity for those programs to be reopened and for those OEMs to look at alternate sources. And so we need to be mindful of that and take advantage of those opportunities as they develop. You know, that's just a. This certainly wouldn't be the first time that this kind of thing has happened in the industry. And the OEMs, you know, they're very active in terms of their risk management and will look for alternate sources or how to protect their vehicle builds. You know, that said, it also just puts that much more, that much more importance on your credibility as a supplier. You have a product that's mature, that's proven. You have a product that you can produce at volume. You have supply, security and resilience, that you're going to be there for the long haul. And essentially that you don't pose a risk to them and you will never jeopardize their production. And so it just is another point to emphasize that as a supplier to the OEMs, you have to have that credibility. You have to have those pieces put together, which I'm confident the Microvision team has. But again, those are opportunities that we'll watch very carefully and see what kind of opportunity they truly present for us.

Anubhav Verma - Chief Financial Officer - (00:47:33)

Thanks, Len. Next question. Are the industrial deals still in play? How should investors think about the timing when the efforts in the industrial sector start to show revenue? And perhaps the same question for defense and automotive.

Glenn DeVos - Chief Executive Officer - (00:47:52)

Yeah, so for the first point, industrials are still in play with Movia L and we're now expanding those with Movia S. We would expect revenue really in 2026 more on the moviel platform with Movia S launching in the fourth quarter of 2026, maybe a little bit of revenue in the tail end of the year from that platform. 27 will really be about Movia S for industrial and either as a standalone product or integrated as part of a null cast solution for automotive. You know, the timelines we're talking about with automotive, whether it's robo taxis or it's traditional PAS car, tend to be in my opinion the 29 timeframe. Some still show a 28. We're going to be here in 26, you know, in two months. That would be highly aggressive. I think 28 could be some, but I think it'd be fairly minor. 29 really strikes me as more of a viable launch year for automotivemotive revenue. Again starting and then building out more in 30 and 31. As it relates to defense. A little bit too early to predict at this time. I think you can see there's a lot of activity there over the course of the next year or two as we come into it. I think our timing is very good to catch that wave. We'll be able to demonstrate and go public essentially with our product offerings here going into next year. And I think at that time we'll generate a lot of interest and we'll be able to give a much better feeling for what we think the revenue projections and when that market would develop for us. Near term it'll probably be more on the kind of the non recurring engineering piece of it, the development costs getting paid to develop. But obviously longer term we want it to be more on the product sales side. And with defense, given what drone technology is now in terms of the platform itself was fairly ubiquitous, commoditized. You've got what we're developing is going to be very mature coming into next year. This could have a shorter time to market, if you will, than automotive. So kind of fits in between industrial and automotive. The other comment I would make about this question, I think it highlights something important because we do get the question about why these three markets. And, and I just want to point out for all three of these markets it's the same core technology that we're providing in terms of the imaging hardware, the sensor itself, the image processing software and then the perception whether it's mapping, localization, navigation or LCAs, it's all under all of it is the same technology that underlines each of those end markets. So that means we have really nice revenue diversity across our business. So these aren't all these markets don't move in the same cycle that automotive or industrial does. So it's a nice revenue diversity which is very, very attractive for a business to have in terms of top line resilience. So I would again put defense kind of in between automotive and industrial. We'll know more about that coming into next year.

Anubhav Verma - Chief Financial Officer - (00:51:36)

And actually perhaps a related question for me, this question is Microvision had 6.1 million inventory on 630 and this number has gone up on the 930 balance sheet. Where are these sensors? What happened in them and what's the plan? And why the stockpile without sales? So let me answer that question because I think this just adds context to what you just described. We have built this inventory for Mobia L from the ZF automotive grade quality product line in France. And I think this was in anticipation of the demands from the industrial customers which was ultimately fueling our visibility of, of the 30 million to $50 million pipeline. We still think that while there are some delays, but as the opportunities open up for LCAs and some of the attractive price points, because I think the single most important price point that I think we're very excited about at the price at which you can sell these sensors to the customers because we are significantly lower than the nearest competitor. And I think as we sort of build up our commercial organization and bring on quality people and build out the sales team, we do expect to see traction on the revenue side from this inventory that's being built up to translate into revenue next year just from Movia L. And obviously Mobia S is expected to be started up next year. But this is in anticipation of the sales that we can get to next year from the commercial traction that we have gotten since Glenn has come on board. Next question. Does the scantinel acquisition replace Maven or is it complementary? And is SMCW technology better than Tofu? How does the scantinal product compare with Ava, which is the nearest SMPW product in the market?

Glenn DeVos - Chief Executive Officer - (00:53:52)

So three questions. So it doesn't replace Maven. Those are complementary, not in conflict. And where Maven really shines is kind of that 50 to 200 meter range where scanty knows tech shines is nearly more than 50 up to a kilometer. And so but for commercial vehicle applications we really look more at 400 meters and those kind of numbers. So they're very complementary technologies, not just a replacement or overlapping in terms of FMCW and kind of what you have to think, not so much where it's better than time of flight or one is better than the other. It's more about what is each one really good at. And time of flight has certainly some advantages for our shorter range. Detection works very well. We can use in many cases off the shelf components. And so we can get to a lower cost point sooner. FMCW, on the other hand, has, as we talked earlier tonight, some really attractive performance with eye safety, inclement leather range, as well as transmission through the glass and then the inherent measurement of velocity with the waveform. So at the end of the day, they offer different pros and cons, but that's why having all three Maven or Movia, Maven and MouScantinel is really an advantage for us. And then ultimately our goal has to be how do we then bring down that cost of the FMCW technology so that it can ultimately get onto paas cars and not just on CV or higher cost applications in terms of how it compares with Aeva. I'm going to hold off on that, particularly for the short term as we finish our plans. We'll come out later this year with a much more detailed description of what our Scantinel, what the MicroVision Scantinel product will look like and be able to compare it head to head. But I can say that the thing that impressed me about what the Scantinel team had done was the work they had done to get it into a single, basically a single photonic IC and again getting to wafer level packaging for really the whole imaging head unit or the imaging part of the system. So I think that's the part that's exciting. We'll talk a lot more about that in the future. But that's the work the team is doing right now pulling those plans together.

Anubhav Verma - Chief Financial Officer - (00:57:01)

Thanks, Len. Next question. It's about the AR vertical. Does the company have any plans to update investors on the status of the vertical? And is the technology being actively marketed to potential customers? And there have been talks of HoloLens 3 launching in 2026. Is Microvision tech in HoloLens 3?

Glenn DeVos - Chief Executive Officer - (00:57:24)

Yeah. I'll maybe start with the last question first. Not to our knowledge. And that's consistent with the fact that we're really not actively pursuing AR related markets at this time. We have the ip, we have capability, we'll kind of monitor those right now. If you think about our resources and where we're allocating our capital, it's really in the three verticals that we've talked about with industrial, defense and automotive. And you know, AR is always an interesting topic at this point. We're just watching to see, you know, does that, can that be interesting for us? But there's no active development or pursuits in that space as of today. Thanks, Glenn. Next question. Each MicroVision CEO can be seen as failing the promise of the Microvision technology was not realized by any CEO. Will Glenn carry us to the promised land? And how, how does Glenn proposed to succeed where all others have failed? And by what measure should you be held accountable and within what time frame? Yeah, so great question. I would kind of put this in the context, not necessarily of just Microvision. I would kind of broaden the context to the whole industry. You know, you look across the industry and it has, you know, if you think back to that exciting time that I Talked about in 2015, 16, 17, you know, kind of the late teens where there was a lot of optimism and very great expectations around where LiDAR would go. And the reality is we haven't realized those expectations so far. And as I mentioned in my remarks, the issue has been cost. It's just an expensive system and at the end of the day, if you can't afford to put it on your product, you figure some other way to do it. Like I said, vision or radar, ultrasonics or something else. But I am confident and again, this is why taking on the role of CEO of Microvision was so interesting for me. I am confident that when I look at what we did with radar and I look at what we do with vision systems and early ADAS systems, we can do the same thing with LiDAR. There's really no reason not to. LiDAR is a brilliant sensor technology and it's, it works just perfectly with radar and vision. It's, it's that tri modal package gives you the highest performing perception system. Now it's up to us though, to drive the cost down such that it can fit into the budget of the vehicles or the platforms that want to use it. And that's what we're doing now. We're not going to take 25 years to do it. Like radar tent, you know, radar first radar I was involved with was back in 2000 and 25 years later, 140 million. Well, we're not going to take that long. We need to do it now and really achieve that market penetration. Maybe not to 140 million by 2033 or 4, but really get on that growth curve where we're accelerating adoption and we're on the path to mass adoption. On the path to mass adoption for the technology. And as I look at the team we have with Microvision and the IP and the technologies we have, I'm very confident this team can deliver that. And so what measures are there for me as CEO? Well, it starts with, are we hitting the product now milestones that we talked about we talked about a launch of Movia S in Q4, we talked about LCAST in Q2 with movie L. We've talked to the Scantano plans and we have to deliver on those. We have to hit those dates with the right content, with the right product and the right technologies at the right cost to be able to move the market. The other part is we have to be able to convert from showing great technology to commercial contracts. And that's why we're strengthening the commercial team with Fraser and his guys. And he'll be adding to his team to make sure we have the right sales motion to be able to convert to contract. And that has to be reflecting in backlog bookings over the course of next year and into 27 and a robust and a really resilient backlog volume that doesn't go away. And so, you know, that's what my board, all my bosses will be looking at. Ultimately, you know, our goal is always, hey, we have to be able to drive shareholder value by delivering and driving customer value. And I'm convinced we have the team to do it. We have the dates in place, when we got to do what and now it's a matter of execution. And so that's, as CEO, that's what I have to focus on and then share progress with this group, the shareholders and the analysts along the way to give you confidence that we're on track. So I think we have a good plan, we have a good team. Now it's about executing.

Anubhav Verma - Chief Financial Officer - (01:03:01)

Thanks, Glenn. We are over time, but maybe I'll take one last question and it's a tough one. So maybe that's why I want to answer this question. Why did the company sell so many shares and caused dilution in the last six months? And how do we plan to sustain the company? The reason why I call this a tough question is because I do get a lot of emails and concerning emails from investors. And while I realize that because I myself am a shareholder in the company, but I think what I would like to take the credit on behalf of Microvision Management and the board is the reason why we are here talking to you guys and you have seen the others, the mighty have fallen. It just sort of represents the ethos of what this company has been all about. We have been very disciplined. We have been able to fund the company and we have been fortunate enough to attract people like Glenn to, I mean, having somebody like Glenn and the senior executives he's bringing to the table, it's kind of never happened in this company's history. And to have people like Glenn leading us through this time is sort of a statement which I think we can as a company be proud of because no other company has an experienced professional or a resume and experience like Glenn. And that's why I'm confident more than ever of what the future looks like. Because we have the priorities right to not make the best product, but to make the most efficient product for customers at the price point that will drive the volumes. And part of the tough part is you have to incur dilution in the initial phases to have that Runway, to have that stability, to attract talent. And also keep in mind this is a game about customer stability. Because I have been here four years and in my four years, the number of LIDAR companies which are now I can call competitors, I can literally count them on my single hand. Before I joined four years ago, there were so many companies and I think this will continue to change and I think I continue to iterate. This is a game of the survival of the fittest and the guy who will survive this game. And I think our financial position puts us in a very good position of standing and also our continued partners, the high trail guys who have continued to help us as well to get to this point. So I am very confident and we can perhaps see the increasing positions in our institutional investor holdings which is also a representation of the fact that we are here to stay. We are here for the long run, which is why I'm very excited and maybe last comment I will make is the recent financing for Ava. The debt funding actually is a very positive sign for the entire industry. That actually tells you that the quality of credit investors and the quality of credit is actually increasing with more significantly large institutions coming to play in the LIDAR sector. Which just means that the business and the sector itself is gradually becoming or moving up the chain from equity financing up convertible to someday in future debt flow finance. And we would be having revenue growth and cash flow. So all in all, while dilution is painful, but I think it is the necessary tool to put us in a spot where we can compete and have a future which is truly, truly bright. With that I would like to thank everybody. I know we went over the hour mark but we look forward to chatting with you at our year end call early next year. Thank you everybody.

OPERATOR - (01:07:11)

Thank you. This concludes today's conference. All parties may disconnect and have a great day.