Ladies and gentlemen, thank you for standing by, and welcome to the MicroVision, Inc. annual meeting. I would now like to hand the conference over to your speaker today, Brian Turner. Sir, please go ahead.
Good morning, and welcome to the annual meeting of MicroVision, Inc. I am Brian Turner, chairman of the board, and I will be the chairman of this meeting. Thank you for joining us today. We're excited to be hosting our first virtual shareholder meeting, which allows more shareholders to attend via the web portal. As is our custom, we will conduct the business portion of our meeting first, then have some time to answer written questions that are germane to the meeting at the end. We may not be able to answer every question, but we'll do our best to provide a response to as many as possible. Validated stockholders as of March 25th record date may submit written questions using the designated field on the web portal. You will need the 16-digit proxy control number found on your proxy notice to vote or ask questions.
In keeping with the digital approach to this year's meeting, it's now shortly after 9:00 A.M. Pacific Time on May 19th, and this meeting is officially called to order. Now I'd like to turn the meeting over to Sumit Sharma, MicroVision's Chief Executive Officer and board member, to introduce the other members of the board and management at today's meeting. Sumit?
Thank you, Brian. I would like to introduce our other directors who are all attending the meeting today. Just one second. Simon Biddiscombe. Simon is currently CEO of MobileIron, the mobile security backbone of protecting corporate data. Simon is a member of the audit, compensation, and nominee committees. Bob Carlisle. Bob is a retired partner of KPMG LLP. Bob is the chair of the audit committee and member of the compensation committee. Yahlon Farhi. Yalon is a colonel in the Israel Defense Forces Reserves and has served as a motivational lecturer and educator. Perry Mulligan. Perry was Chief Executive Officer of MicroVision from November 2017 until last February and has been a member of the board since 2007. Bernee Strom. Bernee is chairman and CEO of Storm Group, a management consulting and business advisory firm focused on high technology companies.
Bernee serves as Chair of our Compensation Committee and is a member of our Nominating and Audit Committee. I would also like to introduce each of our other executive officers. Steve Holt. Steve is Chief Financial Officer and has been with the company since 2013. David Westgor. David is Vice President, General Counsel, and Corporate Secretary and has been with the company since 2007. Also with us today are Rob McCarron and Lisa Dion of our independent auditors, Moss Adams LLP. The agenda for today, we will conduct our Annual Meeting with balloting first, followed by report on the voting, then the meeting part will be adjourned. We now do a short presentation to introduce our company, products, and objectives, and finally, questions and answers. Determining that the quorum is present, I would like to introduce David Westgor, our corporate secretary.
I will turn to him with any procedural issues that may arise. David will establish that the meeting has been duly called and that a quorum is present. David?
Thank you, Sumit. This meeting is being held pursuant to the printed notice mailed beginning on April 3rd, 2020, to each shareholder of record at the close of business on March 25th, 2020. The board fixed March 25th as a record date for determining shareholders entitled to vote at this meeting. Holders of more than 33.3% of the shares of the company's common stock outstanding at that date are present by proxy. Therefore, a quorum is present for the purposes of transacting business. A copy of the notice is in place in the corporate minute book, and I will also serve as the inspector of elections for this meeting. Sumit.
Since notice was properly given and a quorum is present, I declare the meeting is formally open. After the formal meeting has been adjourned, we will provide some time for general questions that relate to this meeting. Only validated stockholders as of March 25th record date may ask questions in the designated field on the web portal. You will need the 16-digit proxy control number found on your proxy notice to vote or ask questions. Out of consideration for others, please limit yourself to one question. Please note that this meeting is being recorded. However, no one attending via the webcast or telephone is permitted to use any audio recording devices. We will consider and vote on the matters as stated. Proposal one, election of directors. The first proposal on the agenda is to elect individuals to the company's board of directors.
The current board of directors nominated seven individuals to be the directors of the company for a one-year term. These include Simon Biddiscombe, Robert Carlisle, Yahlon Farhi, Perry Mulligan, Sumit Sharma, Bernee Strom, and Brian Turner. Directors elected will begin their term at the end of this meeting and will hold the position until their successors shall have been elected and qualified at next year's annual meeting. Proposal 2. Approve an amendment of the restated certificate of incorporation to amend the total number of shares of the company's authorized common stock. I now move to vote on the second proposal to approve any amendment to the amended and restated certificate of incorporation to amend the total number of shares of the company's authorized common stock. Proposal 3, approve an amendment to the amended and restated certificate of incorporation to enable a reverse stock split of the company's common stock.
I now move to vote on the third proposal on the agenda to approve an amendment to the amended and restated certificate of incorporation to enable a reverse stock split of the company's common stock. Proposal four, approve the 2020 MicroVision, Inc. Incentive Plan. I now move to vote on the fourth proposal on the agenda to approve the 2020 MicroVision, Inc. Incentive Plan. Proposal five, ratify the selection of Moss Adams LLP as the company's independent registered public accounting firm. I now move to vote for the fifth proposal on the agenda to ratify the selection of Moss Adams LLP as the company's independent registered public accounting firm for the current fiscal year. Proposal six, advisory vote on executive compensation. I now move to vote for the sixth proposal on the agenda to approve on an advisory basis the compensation of the company's named executive officers.
It is 9:10 A.M. Pacific Time on May 19, 2020. The polls are now open. Any shareholders who haven't yet voted or wishes to change their vote may do so by clicking on the voting button on the web portal and following the instructions there. You will need your 16-digit proxy control number from your proxy notice to be able to vote. Shareholders who have sent in proxies or voted via telephone or internet and do not want to change their vote do not need to take any further action.
We will now pause for two to three minutes while people have a chance to vote. You will hear silence for a couple of minutes. For those of you listening in, votes are still coming in. We can see them on the Broadridge app. We will wait till people have voted. David, as Inspector of Elections, it appears that the last vote was cast a while ago. Oh, no. Another one just came in. Never mind. Again, for the people on the phone, votes are still being cast. We will wait till the votes are cast. David?
Yes.
As Inspector of Elections, it looks like the last vote was cast a while ago. Are we able to proceed?
Yes.
Okay. Now that everyone has an opportunity to vote, I declare the polls for the 2020 MicroVision, Inc. Annual Shareholder Meeting closed at 9:20 A.M. Pacific Time on May 19, 2020. Inspector of Elections, do we have the preliminary voting results?
We do. Broadridge will be tabulating the votes that were cast at the meeting today. The preliminary results of the vote show that proposal one, all nominees for election to the board have been duly elected. Proposal two, the amendments to the amended and restated certificates of incorporation to amend the total number of shares of the company's authorized common stock has not been approved.
Proposal 3, the amendment to the amended and restated certificate of incorporation to enable a reverse stock split of the company's common stock, has been approved. Proposal 4, the 2020 MicroVision, Inc. Incentive Plan, has been approved. Proposal 5, to ratify the selection of Moss Adams LLP as the company's independent registered public accounting firm for the current fiscal year, has been approved. Proposal 6, the advisory vote regarding compensation of the named executive officers, has been approved. These are the preliminary results, and we will be reporting the final vote results in a Form 8-K following confirmation of the votes entered at the meeting today.
Thank you. There being no further business to come before the meeting, the 2020 annual meeting of shareholders of MicroVision is now adjourned. The CEO will talk to you briefly about the company, its business and operations, and its prospects in the coming month, followed by your question and answer session. Sumit?
Thank you, Brian. First, I have to follow our lawyer's instructions and advise you that I will be making some forward-looking statements during our discussion about the company, and that our actual results may differ from the predictions and statements that we make today. Information regarding factors that could cause such differences are included in our SEC filings, including our annual report on Form 10-K and our quarterly report on Form 10-Q. I've talked about my personal belief that long-term, MicroVision technology will unlock billions of dollars of market revenue for us and our OEM partners. I would like to share some slides that are posted on our website and talk about this vision. Can you go to the slide, please?
With the help of our investors over the last 20-plus years, we have developed the deepest body of work in laser beam scanning from MEMS, ASIC, to full system modules. The high-risk core technology development is complete. We stand at an inflection point where a potential acquiring company could launch products with our technology and monetize the long investment path. Next slide, please. Next slide, please. It is. Okay. Our highly capable team has created not only 484 issued and pending patents, but also the full story of intellectual property that includes source code and know-how to apply the core technology to multiple verticals that are seeing interest in markets. We've also launched several generations of MEMS, ASIC that apply to various product verticals and product modules. Our company started 20 years ago in developing augmented reality micro display for military.
In the future, we expect growth in the AR market. MicroVision could enable headset products for multiple OEMs. Our proprietary technology would allow OEMs to develop products that could offer wide fields of view, high-resolution displays that work in full sunlight. Okay. With our interactive display vertical, we took the same core technology and developed our first-generation module product, preparing to launch on an automated production line for 2020. Our module product would enable smart speaker AI assistant products with smart displays. Again, positioned in the market that is seeing high growth according to industry data. For investors new to the company story, I've added some video links for this. This category has the potential to have future impact in mobile gaming as well. With our future automotive LiDAR module, we expected to apply the same core technology blocks and produce a module that would enable active collision avoidance systems.
MicroVision would have delivered a sensor that would finally provide the capability currently requiring an array of very expensive sensors in a single sensor from us. The outlook for this product line extends decades into a big addressable automotive market. With our consumer LiDAR product vertical, we hope to tackle smart home security with focus on user privacy without transporting private data to the cloud. This again could have the capacity to enable smart speaker AI assistants to further enhance user experience. As the company focuses on finding and working with interested parties for an acquisition of whole or part of the company and any other structure suitable for them, we work to bring their focus on the width and the depth of what your investments have enabled our team to develop and highlight how their path to generate cash with their investment exists.
I look forward to updating you in the future at the appropriate time on our progress. Thank you. As I mentioned, the presentation is posted on our website. We will now open things up for shareholder questions and comments that are being entered today on the web portal. Please note, we will attempt to answer as many questions as time allows, but only questions that are germane to the meeting will be addressed, and we will not answer multiple questions on the same topic. While we will try to address each of your questions, we are limited by public disclosure laws, including Regulation FD, from providing, in this forum, material non-public information. Examples of which include affirming financial guidance or providing updates on existing material contracts, potential new contracts, or potential strategic options. We will now open for questions.
Thank you, Sumit. As you mentioned, we seem to have several questions on similar topics, and we'll try to address them as they come in. One question, the preliminary approval of the reverse stock split, can you give us some color on that and can you give us an idea of what management is planning with respect to a reverse stock split and whether or not you feel it's necessary?
I think I'll ask Brian Turner to address this question.
Good question. For the board and management, it is important to maintain the company's listing on Nasdaq. The board has 90 days to implement a reverse stock split if needed to regain compliance, which provides us time for the company to regain compliance without a reverse stock split. If the company does implement a stock split, the ratio would be determined at that time. Back to you, Sumit.
We have a question regarding the process of selling the company. Sumit, you've mentioned that in the past. Can you give us an update on where we are in the process of pursuing these strategic alternatives that you've spoken about?
As everybody knows, we have retained Craig-Hallum as a financial advisor and are actively engaged, as we reported, in exploring strategic alternatives, which include the sale of the company. That remains our focus and we're exploring opportunities that we can't comment on specifics at this time.
We have a question. Can you give us some insight on, we note that the approval of authorized shares did not appear to pass? Can you give us a sense of whether or not the company will be seeking additional shares in future?
We currently do not have a plan to seek additional shares for common stock. I think that's mainly all I can say.
Okay. Thank you. Apparently, there was a video that was posted yesterday showing a teardown of a product. Do you have any comment on that?
While we typically do not comment on videos posted online by third parties, we did see this homemade teardown video, and our only comment is the product marked with the MicroVision name and logo is our part. I think that's the extent of what we're going to discuss.
Thank you. There's a question with respect to MicroVision intellectual property, can you comment on what the company is doing to protect its intellectual property and given movement of employees in the technology space in the Seattle area?
Good question. We're not going to comment on specific IP matters. However, we believe that we do a pretty good job of protecting our IP, whether we hire new employees from other companies or employees go elsewhere. We have confidentiality and invention agreements in place with all our employees, current and past. I feel pretty confident that we have protected the IP adequately.
Thank you. I have a few questions regarding the status of the display-only licensee partnership. Do you have any comments on that?
The licensee partner is still able to develop business, but do not have comments on their efforts. Beyond that, we're able to support them as needed.
Thank you. With the ongoing state of your pursuit of strategic alternatives, do you find it difficult to be able to continue with business?
Actually, not really. I think our focus is pretty solitary towards selling the company. I think we continue to just create the runway that we need, that we believe will be adequate to perhaps complete a transaction. Therefore, the distraction level is actually low, and we just focus on the mission at hand.
Thank you. There's a question with respect to the private call with retail investors last week. Can you give information or color on that?
I think there's no secret. I think majority of our investors are retail holders now, as we know. We thought it would be a good opportunity for me, as new CEO, to really hear the feedback directly from them and to have a communication. I think it was nothing more than just getting to know our diverse investor base personally.
I have a couple of questions regarding the OEM that we were working with, and we were looking at a launch in 2020. Can you give us any color on what happened there and what the status of that was?
As I said in our earnings call earlier, we were surprised by the decision by them, and there may have been many internal considerations behind their decision. Some of them I've mentioned in the last earnings call from, obviously, COVID-19, global economic headwinds, everything. We do believe the decision was related to the capabilities that they wanted to project into the market and had not a whole lot to do with anything beyond that. I think beyond that, I think what I've already said publicly, I can't really comment any more than that.
Thank you. Looking to see if we have any more questions? I think we can probably take one more. You had commented, or you had had a press release about the transfer of production to a customer. Can you provide some color on that, the production to a different customer?
I'm going to have Steve Holt cover that question. Steve?
Yeah. We had the customer take over production of the agreement, the production. As a result, MicroVision now receives a royalty on each unit they ship that's approximately equal to the amount of gross profit that we would've gotten had we maintained production. If the production levels increase and the volume of that product takes off, we still preserved some upside on that ability.
We have a question about the, I think this may be the last time we have, but the automotive LiDAR, and you've spoken about that in the past. Can you give us a sense of what the status of the work is on that?
I think, as I presented, if you think about all the verticals and parties that are interested in our technology and what we can enable for them, we want to make sure that our capability to deliver an automotive LiDAR in the future, we want to make sure the pool of people considering the company is wide. Automotive LiDAR is relevant to lots of folks out in the market right now. We make meaningful progress to make sure that any interested parties that are interested in that specific vertical can understand the full capability that we would've been able to unlock, and they should be able to unlock if they choose to acquire the company. In that sense, we continue to make some progress to make sure that all interested parties understand what the value that vertical would've offered.
It's a volatile market out there, but in the case of these kind of sensors for the future, all of us see news articles that talks about they are very relevant, and we've done everything possible to increase the pool of people that will consider acquiring MicroVision.
I think maybe we have time for this last question. It seems like a timely question. Can you comment on the effect on the company right now of the COVID-19 stay-in-place orders? Is the company able to continue to move forward at a regular pace?
We've been actually very lucky. Our entire company is healthy. We have not been affected by it, even though everything started in Seattle. In general, we have work from home. People continue to make progress. We are in the process of supporting conversations, so therefore the team is in place to do that remotely and make meaningful progress on the projects that are relevant to our mission. Any more?
No. I think there's some questions that are the same question.
Okay
that I think have already been answered, and I think thank you.
I'd like to express my sincere appreciation to the stockholders who are attending our first virtual shareholder meeting. Thank you all for your continued support of MicroVision.
Ladies and gentlemen, this does conclude the program. You may all disconnect. Everyone, have a great day.