AGM 2020

May 19, 2020

Slides

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. 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 and 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 25 record date may submit bridging 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 the this year's meeting, it will now shortly it's now shortly after 9AM Pacific time on May 19, and this meeting is officially called to order. And 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. Simon Bitscom. Simon is currently CEO of MobileIron, the mobile security backbone of protecting corporate data. Simon is a member of the audit, compensation, and nominate committees. Bob Karla, Bob is retired partner of KPMG LOP. Bob is the chair of the audit committee and member of the compensation committee. Yalon Fahri, Yalon is a colonel in the Israeli Defense Force reserves and has served as a motivational lecturer and educator. Harry Mulligan. Harry was chief executive officer of MicroVision from November 2017 until last February and has been a member of the board since 02/2007. Bernie Storm. Bernie is chairman and CEO of Storm Group, a management consulting and business advisory firm focused on high technology companies. Bernie 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 Westcore, David is vice president, general counsel, and corporate secretary and has been with the company since 02/2007. Also with us today are Rob McCarron and Lisa Dion of our independent auditors, Moss Adams LLC. 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. Then I'll 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 Westcor, 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 the quorum is present. David? Thank you, Smith. This meeting is being held pursuant to the printed notice mailed beginning on 04/03/2020, to each shareholder of record at the close of business on 03/25/2020. The Board fixed March 25 as a record date for determining shareholders entitled to vote at this meeting. Holders of more than 33 and a third percent 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 has been placed in the corporate netbook, and I will also serve as the inspector of elections for this meeting. Submit. This notice was properly given and a quorum is present. I declare the meeting is formally opened. 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 25 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 the for one year term. These include Simon Bidiscom, Robert Carlisle, Yalon Fari, Harry Mulligan, Sumit Sharma, Bernie Storm, and Brian Turner. Directors elected will begin their term at the end of this meeting and will fold the position until their successor shall have been elected and qualify at next year's annual meeting. Proposal proposal two. Approve an amendment of of 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 prove any amendment to the amendment amended and restated cert certificate of incorporation to amend the total number of shares of the company's authorized common stock. Proposal three, proven amendment with 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, pro approve the twenty twenty MicroVision Incorporated incentive plan. I now move to vote on the fourth proposal on the agenda to approve the twenty twenty MicroVision 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 with the sixth proposal on the agenda to approve on an advisory basis the compensation of the company's named executive officers. It is 09:10AM Pacific time on 05/19/2020, and the polls are now open. Any shareholders who hasn'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 actions. We will now pause for two to three minutes while people have a chance to vote. So you will hear silence for a couple 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. Nope. 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 twenty twenty MicroVision Inc. Annual shareholder meeting closed at 09:20AM Pacific time on 05/19/2020. 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. But the preliminary results of the vote show that proposal one, all nominees for election to the board have been duly elected. Proposal two, the amendment 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 three, 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 four, the 2020 MicroVision Inc. Incentive Plan, has been approved. Proposal five, 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 six, 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 eight ks following confirmation of the votes entered at the meeting today. Thank you. There being no further business to come before the meeting, the twenty twenty Annual Meeting of Shareholders of MicroVision is now adjourned. Now 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 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. Please give me a second, please. With the help of our investors, over the last twenty plus years, we have developed the deepest body of work in laser beam scanning from MEMS, ASIC, to full system modules. The higher risk core technology development is complete. We stand at an inflection point where we expect to and now a potential acquiring company could launch products with our technology and monetize the long investment path. That's it. Nice. I think it is. Okay. Our high highly capable team has created not only 484 issued and pending patents, but also the 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 market. We've also launched several generation of MEMS ASICs that apply to various product verticals and product modules. Our company started twenty years ago in developing augmented reality microdisplay 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 prepared to launch on an automated production line for 2020. Our module product would enable smart speaker AI system products with smart displays. Again, positioning 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 required 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 line of 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 systems 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 teams 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 to remain for 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 for 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 Furner 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 ninety 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. So we have a question regarding the process of selling the company. Sumit, you've mentioned that in the past. And can you give us an update on where we are in in the process of pursuing these strategic alternatives that you've spoken about? As everybody knows, we have a date Craig Hallum as a financial adviser 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, you know, additional shares in the future? We currently do not have a plan to seek additional shares for common stock. I think that's plainly all I can say. Okay. Thank you. Can you apparently, there was a a video that was posted, yesterday showing a a teardown of a product. 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 products marked with the MicroVision name and logo is our part. I think I that's the extent of what we're gonna discuss. Thank you. There's a question with respect to MicroVision intellectual property. And 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 about regarding the status of the display only licensee partnership. You have any comments on that? 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 the your pursuit of strategic alternatives, do you find it difficult to be able to continue with business? Actually, not really. I think, you know, our focus is pretty, solitary towards selling the company. I think, you know, we we continue to just, we've created the runway that we need, that we believe, would be adequate to perhaps, complete a transaction. So, therefore, you know, the distraction level is actually low, and we just focus on the vision at hand. Thank you. Can 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 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 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, you know, obviously, COVID nineteen, global economic headwinds, everything. But we do believe the decision was related to the were was related to the capabilities that they wanted to project into the market, and it had not a whole lot to do with anything beyond that. So think beyond that, think, know, what 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 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 have 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. And can you give us a sense of what the status of the work is on that? I think, as I presented, you know, if you think about all the verticals and, parties that are interested in our technology and what we can enable for them, We wanna make sure that our capability to deliver an automobile driver in the future we wanna make sure the pool of people considering the company is wide, and automobile driver is relevant to lots of folks out in the in the market right now. So, 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 have been able to unlock, and they should be able to unlock if they choose to acquire the company. So in in that sense, we continue to make some progress to make sure that all interested parties understand what the value that vertical would have offered. And, you know, it's a it's a volatile market out there. But in the case of these kind of sensors for the future, we see, you know, news 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. Maybe we have time for this last question. Seems like a timely question. Can you comment on the effect on the company right now of the COVID-nineteen stay in place orders? Is the company able to continue to, you know, move forward at a regular pace? So we've been actually very lucky. You know, our entire company is healthy. You know, we have not been affected by it even though, you know, we were in Seattle where it is starting to everything started in Seattle. In general, you know, we have work from home. People continue to make progress. You know, 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. No. I think, you know, there's some questions that are the same questions 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 and you may all disconnect. Everyone, have a great day.