MicroVision, Inc.

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 a central 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 costs. 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 Munich in September, where we introduced both MOVIA-S and our tri-lighter architecture. MOVIA-S is an industry-leading, ultra-wide field-of-view solid-state sensor. The MOVIA-S 180-degree 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 slider-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. Mobius 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 and Radar have accomplished. It's why in most cars today, they have between three to five radars and six to nine cameras. LiDAR can and will follow the same path, not just for fully autonomous systems, such as level three or four cars or AGVs and AMRs, but for driver and operated assistance systems as well. The industry refers to this 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 of 2026. Additionally, we announced the asset purchase agreement of Scantino Photonics. This is a key move for MicroVision as it gives us access to 1515 nanometer FMCW ultra-long range lighter technology. Scantino's ultra-long-range capability perfectly complements our current 905 and 940 nanometer time-of-flight portfolio of Muvia 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 S and our tri-lighter architecture offerings. We are currently demonstrating Movia S to a number of automotive OEM, industrial, and autonomous vehicle customers. Another key differentiator for Movia S, 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 Muvia 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 LCAS feature libraries that they can set up and operate on their own. We're currently demonstrating our LCAS system with several customers and plan to launch in Q2 of 2026 with our Muvia 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 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 am here and with you today. With that, thank you for your attention, and I'll turn it over to Anubhav for his remarks.

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 Tri-LiDAR 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 SMCW 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 SMCW 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 Movia Epsilons, 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 Movia hardware to solve complex business problems. Since Mobia S has a significantly lower price point than Mobia L, most of our customers are looking to migrate from Mobia L to Mobia 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 Mobia L product, However, with our new strategy to transition customers to Mobia 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 Mobia L, we're actively managing our production commitments with ZS 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 a pursuit of revenue opportunities in the defense vertical. We recently added a small team in Virginia in the greater DC metro area with deep 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 and industrial and automotive protocols. From a cash burn standpoint, in the third quarter of 2025, our R&D and SG&A 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 CEO's departure, as well as $1.4 million in non-cash charges related to DNA. Excluding these items, our core R&D 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 a one-time $3.2 million payments related to the inventory buildup of Mobia Health. 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 our new DC office. Several senior hires aimed at strengthening our engineering and go-to-market functions. Additionally, we will incur expenses related to the Scandinavian 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-in-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 $1.60. 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 trend 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 temps. Operator, I would now like to open the call for questions.

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&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 1. Your first question is coming from Casey Ryan from West Park Capital.