Q4 2020 MicroVision Inc Earnings Call
[music].
Good afternoon, and welcome to the Microvision fourth quarter and full year 2020 financial and operating results call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
Ask your question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Lindsey differed. Please go ahead.
Thank you good afternoon, and welcome everyone to Microvision fourth quarter and full year 2020 financial and operating results Conference call. Joining me on today's call are Sumit Sharma, Chief Executive Officer, and Steve Holt Chief Financial Officer.
The information in today's conference call includes forward looking statements, including statements regarding exploration of strategic alternatives sale of our product verticals or technology sale or merger of the company or completing any such strategic transaction.
Maximizing shareholder value managing costs expected customer orders future royalties progress under and benefits of existing contracts and license agreements and the negotiation of future agreements customer product launches.
Advantages of our technology litigation.
Business execution projections of future operations and financial results availability of funds product development applications and benefits availability and supply of products and key components commercialization of our technology market opportunities.
<unk> and future demand as well as statements containing words like opportunity potential, possibly intend believe goals paths expects plans will could would likely and other similar.
Rations.
These statements are not guarantees of future performance.
Actual results could differ materially from the future results implied or expressed in the port where it look statements.
We encourage you to review our various SEC filings, including our annual report on form 10-K filed on March 12, 2020, and form 10-Q filed on October 30th 2020, as well as various other SEC filings.
Made from time to time in which we discuss risk factors associated with investing in Microvision.
These risk factors could cause 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.
The financial numbers presented on the call today are included in our press release and in the 8-K filed today.
Both are available from the Investor Relations section of our website.
This conference call will also be available for audio replay in the Investor Relations section of Microvision website at Www Dot Microvision Dot com and now I'd like to turn the call over to Sumit Sharma Sumit.
Thank you Lindsay and good afternoon, everyone.
As we look back at 2020, I see it as a defining year for us.
A year ago, we faced a very challenging business environment and global outlook.
Might this we made important progress that allowed us to stabilize the company for 2021.
And positioned us to advance our technology, while pursuing strategic alternatives.
I would like to start by thanking our employees for their dedication creativity innovation and execution.
The potential value of this work is just starting to come into focus.
The market segment, and advanced driver safety and autonomous driving she's established multinational technology companies.
Software companies focused on delivering mobility as a service and traditional automotive Oems and tier one companies start start to invest in and engage in preparation for this emerging market.
I would also like to thank our shareholders for their support that allows us to focus on obtaining the right value, while exploring strategic alternatives, including a possible sale of the company.
This support has enabled us to have a stronger balance sheet as we continue evaluating our options, while we work to complete our long range Lidar sample, which we expect to be best in class.
I will expand on this a bit later in this call.
Stronger balance sheet allows us to add staff that we believe increases the value of our company for potential strategic partners as well as reduces risk to our 2021 development goals.
I expect us to continue adding key staff through 2021 to enhance our ability to demonstrate to the market and potential strategic partners to sustainable strategic advantages of our technology.
First the ability to deliver a high performance long range Lidar sensor that are designed to meet or exceed current OEM requirements.
And second scalability of our sensor to support future price targets.
Over the last 12 months, we also welcomed three new board members to our board of directors.
With considerable expertise in automotive and augmented reality market segments.
I believe adding these new expertise.
And insight to our current board to augment existing expertise in business.
Moving expertise in mergers and acquisition strengthens our ability to create value for our shareholders.
Over the past decade, we have leveraged our strength to solve some of the toughest technical problems anticipated by multinational Oems as they look to new market opportunities using laser beam scanning technology.
And our augmented reality interactive display and consumer and other product verticals. We pioneered scalable solutions that we believe we're far ahead of global competitors.
The impact and value of what we achieved was hard to measure since there were no competitive solutions for these verticals.
Our automotive lidar product addresses an emerging market segment that has the potential to impact millions of lives and mobility and safety with potentially billions of dollars of sensor and vehicle sales for Oems and multinational technology companies over coming decades.
I believe this market demand represents a great opportunity for Microvision to showcase our competitive advantage of high performance and scalability.
We expect our long range Lidar sensor to demonstrate what we believe will be the high performance required for advanced driver assistance systems and autonomous driving.
This performance is calibrated to meet current OEM requirements and what are the mood range of up to 250 meters and beyond.
The high resolution point clock without from $10 8 million points per second from a single return.
After velocities relative to Eagle vehicle from a time of flight Lidar.
Low latency intensity inertial output and interference immunity from sunlight another like ours.
With such capabilities and our first potential product, we believe a future product could that include a lidar and the camera module combined in a single sensor.
We expect such a future product could reduce the number of sensors required per vehicle to achieve features for advanced safety and autonomous driving.
This improvement in cost per vehicle could support faster adoption.
We believe our capability to demonstrate scale is important in this segment.
We have successfully demonstrated our solid state technology to achieve scale over more than a decade.
Our custom Mems and Asics scale from 200 millimeter wafer technology, where we have successfully delivered product for OEM programs.
Our Lidar is based on 95 nanometer laser diode technology that is currently available and is the plan of record for anchor technology companies.
Additional innovation and injection molded free form plastic optics, and multiaccess active alignment automation automated.
Automated testing.
And closed loop control algorithms among others have prepared us to show scalability from a pilot line.
As I mentioned in our call last October regarding our Ace Apple timing, we expect the hardware for demonstration along with select benchmark data from our development platform will be available to interested parties in the April timeframe, followed by continued benchmarking and testing.
I also expect that a version of our solid state long range Lidar sensor could be available for sales in small quantities in Q3 or Q4 this year.
Our solid state long range Lidar sensor could enable any interested party to perform testing with our sensor on their moving platforms, such as cars and long haul trucks.
This is important because we believe scalability as being a key strategic advantage of our technology needs to be demonstrated to help realize value for our shareholders.
Also we expect to establish a pilot line with appropriate capacity to demonstrate scalability as we have done well.
Over the last decade from multinational technology partners.
Let me be specific on this our capabilities include delivering process maps control plant supply chain partnerships automation and product integrity qualification for high yield designs that can ramp.
We have confidence in our ability to scale our sensor from a pilot line.
In addition to our automotive lidar vertical.
We believe we remain well positioned and augmented reality interactive display and consumer lidar product vertical for strategic alternatives.
The impact of the global pandemic on consumer devices. In these segments is evolving as it clarity about opportunities from Oems focus in these markets.
In conclusion, we remain committed to exploring strategic alternatives, including a potential sale of the company in part or whole to maximize value for our shareholders.
I believe with our advanced technology and continued dedication of our employees our vision on product in market and strength of our balance sheet. We can deliver a scalable best in class long range Lidar sensor.
I am profoundly optimistic about our path forward.
Finally today, the company announced that David West score, who retired from Microvision.
David has been a key contributor for over 15 years.
He is stepping down from his current role, but will be available to support the transition to new General counsel.
As he approaches 68th birthday. He feels it is time to look to his planned retirement enjoy the time with family.
The company on a solid path forward.
On behalf of our employees and shareholders I would like to thank David for his dedication and service to Microvision.
I will Miss our time, together and his counsel and I wish him a wonderful retirement.
Now, let me turn over the call to Steve to discuss our fourth quarter and full year results Steve. Thanks.
Thank you Sumit good afternoon, everyone.
Before I move on with my prepared remarks, let me just echo assume it assume it's sentiments about David's retirement.
Well, Mitch Miss the daily interaction and wish him the best in retirement.
Sure.
For the fourth quarter revenue was $395000.
All of the fourth quarter's revenue was royalty revenue was attributable to our April 2017 customer.
In comparison in the third quarter, we recognized 639000.
539000 royalty revenue and about 100000 in product revenue.
Revenue for the full year was $3 1 million.
$1 7 million from royalty revenue and $1 3 million in product revenue.
The product revenue was mainly from shipments to our April 2017 customer in Q1 before we move to a royalty model model starting on March one 2020.
As a reminder, I want to point out the royalties.
That are due to microvision related to our April 2017 customer.
We will be credited against the prepayment made by the customer in 2017.
When the prepayment is exhausted the customer will begin making cash payments for royalties due.
At the end of Q4, the balance of the prepayment stood at $7 $8 million.
As I previously reported the $7 $8 million prepayment is not refundable to the customer.
From the $7 $8 million on the balance sheet as a contract liability.
During the year ended December 31, 2020, we applied a total of $2 million against the prepayment.
Royalties have no cost of revenue.
Fourth quarter cost of revenue was zero, resulting in a gross profit of $395000 in comparison gross profit was 639000 in the prior quarter.
Operating expenses were $4 million in the fourth quarter up from $3 5 million in the prior quarter.
The increase was due to additional expenses related to our development work on our first generation Lidar sensor and personnel additions we've made to our engineering staff.
We talked a minute for about head count.
A year ago in February 2020, we reduced our head count approximately 60% because we were not sure what the future held.
While lowering head count was essentially at that time, we have concluded that we need more people to advance our lidar product to a point, where it would be easy or ready to scale.
Additionally, we believe having a more rounded out a complete team makes us more attractive to those who may consider strategic transactions.
Fortunately we.
We've been able to retire some of the employees that were forced to lay off in February 2020, and we've added some new personnel today, our head count stands at 53.
For the fourth quarter, our net loss was $3 $6 million per <unk> per share and this compares to a loss of $2 8 million or <unk> <unk> per share in the prior quarter.
From the fourth quarter cash used in operations was $4 $2 million, which compares to cash used in the prior quarter of $3 5 million.
We expect that our cash used in operations for Q1, 2021 will be in the range of five to $5 $5 million.
The expected increase will.
We will be due to continued spending on parts to Helene and contractors to develop the first generation long range Lidar Lidar and the increase in head count.
I'm very pleased to announce that we ended the fourth quarter with total cash and cash equivalents of $16 $9 million up from $5 million in the prior quarter.
In addition to the $16 $9 million cash balance we raised net proceeds of 61 4 million from 200 Atms, We completed in January and February of 2021.
This puts our balance sheet in the strongest position it has been in for many years.
And based on the December 31 cash balance in the 2021 proceeds from our Atms, we anticipate the financial statements that we will be releasing shortly will no longer have a going concern opinion.
We are very pleased where the company is today.
We will now open the call for questions.
Yes.
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Our first question will come from Glenn Mattson with Ladenburg Thalmann.
Hi, yes, thanks for taking the question I have a few so just bear with me so.
Just a quick on so on the interactive display as we're trying to kind of think about what that could be worth as far as to a third party a strategic buyer or something.
It was about a year ago and thinking about that this time that the large customer that you were potentially working with kind of <unk>.
Net back from that project so.
Perhaps could you give us an update on like has there been any further discussions on new products is that customer come back I mean, theres a lot of applications, where that could be useful obviously theres a lot of home speaker companies, who would maybe be interested in.
Differentiating themselves and.
That product has been available now for few years more or less I know, it's been improved over time, but maybe you can give us some color.
Summit on how.
How much interest there is right now and that's part of the business.
Yes, I think that's a good question, but as I mentioned in my remarks.
The impact of global Pandemics, and what's that done to consumer device demand that gets stabilized based on OEM.
OEM outlook would be but at this point, we are well positioned in the three verticals I mentioned on the consumer side.
Beyond that we're not giving any more clarity.
But you're right there is as I as a consumer myself and yourself, we can recognize in our line, especially in the last year. There is multiple opportunities to have a technology like that especially when it's a class one and it could have been in a lot of different places for a lot of different applications.
On the April 17 customer.
On the.
That display piece is there.
Ben.
[noise] out for a while now so maybe can you talk about are they seeing an uptake in usage or anything there is a lot more.
Our VR stuff going on these days. So if so can you just give us do you have any sense or are you completely separated now that you.
More of a licensed partner rather than.
The solutions provider for them.
Yes on the April 2017 customer.
We're expecting that royalties in 2021 will increase over 2020.
And we're rooting for that product to do well.
And for it to really be successful.
We do think there'll be some increase.
Okay.
And then moving on to the Lidar stuff. So congrats on the progress nice to know I think you said the April timeframe.
Which I assume being how do you think you'll have product for shipment late in the back half is like just plus or minus a few weeks I guess.
So.
I guess.
It's clearly it's a big market and some of you talked a lot about all the ways that new product differentiate from <unk>.
<unk> Lidar.
Makers out there, but the biggest one I think I heard about was kind of the ability to reduce the number of sensors on a vehicle.
So I'd just like some clarity on that I think.
This is important I think and then.
Are you, suggesting that there would not be a need for any redundancies or that instead of three or four centers you can get down to one or two or just a sensor system. So maybe you could just kind of clarify or maybe expand on that I think that's interesting.
That's a great question is from our favorite topics. So I'll try to keep it concise without talking too much about it.
So I think if you think about a.
These sensors a lot of them redundancy is going to be dictated by regulation.
Our sensors capability, what will happen over a long period of time with actual miles driven on enough cars from consumers are testing.
Regulatory bodies like net Euro end cap day will decide what's required.
But as you can imagine for every but the big businesses as Oems, obviously, a single OEM lesser shipping 10, plus million vehicles compared to like some shipping only half a million.
Things are going to change as we know but.
They will decide which is the most scalable product long term accommodate for the regulation requirements, but anybody who would want a solution regardless of regulation requirement solution thats. The most concise that gives us the best opportunity possible to ship a product at a competitive price adoption prices increases the lower the number of sensor.
Accounts, so I think everybody knows this.
If you're just watching the news.
Cars have radar and ultrasonics, and lidar and multiple camera modules, but then there's another bigger proportion of it that is not talked about often which is called <unk>, where all of this is fused together and thats, where the decisions are made based on planning and maneuvering. So.
So if you think about some of the choices. We've made some of the heart problems that we chose to solve for multiple years before launching our product.
Obviously range is important.
<unk> you have to have a bit range. So certainly have that but this high resolution where something at 250 meters.
So all of those me, probably even shorter than me insignificant shorter than me you could identify that is a very compelling things. The resolution is very important one on top of that clustered velocity. So you can predict how things are moving in relation to the car youre driving the ego vehicle, that's very important again in the same sensor.
Just one point I'd like 30 hurts, our low latency.
This is very important because camera camera modules that are in the cars right now the operate theres a sensor fusion becomes a lot simpler unlike.
If a sensor was let's say five <unk> 10, <unk> 15 Hearts.
Some people will say Oh, it's all the way to 120, <unk> well, we can be there as well, but what we do know is sensor fusion requires a very very sim.
Simple computing to merge them simple relative speaking, but then you can start seeing pieces come together that makes the entire system, including the computing and essentially required to deliver true <unk> features.
As Greg regulations are written for them. So in general having a sensor a lidar with such high resolution at the latency, which is about the same as a camera module.
And our computer system that can actually fueled the sensor and perform all the analysis on the fly that's the path to a scalable product in general now what else state in there what are the features out of there. It's regulation of course with OEM one offer what their differentiation would be so this is the data all the way back from my time at <unk>.
<unk> and other places. This is the problem that everybody has been looking to solve is how do you take the number of sensors required to achieve autonomous driving and advanced safety features.
And this is the path. So so again this is what I believe is what we believe.
And you cannot you can see in the market right now you see different people feeling different moving platform testing.
And we're excited about having this product available for them to put it on their moving platform and.
Explore this.
Great that's great color. Thanks.
Thanks for that.
So just to.
Question is kind of about the balance sheet number one I guess now that you have this big pile.
Pile of cash, which probably equates to somewhere to the tune of like three to four years at the current burn rate.
Assuming there.
No revenue coming in the door.
Is there some part of some element of the of the.
The thought process that maybe go it alone at this point like.
There's less urgency necessarily defined.
For sure so just curious about.
If youre thinking about.
Maintaining yourself as an independent entity.
With now that you have this cash.
Alright, so I think.
Consolidation is actually happening in the market as you know rather than as more than 100 lateral company. So thats part of it. So we have to keep that in mind.
And consolidations are horizontal vertical depending on the market by itself is settling the best solution. The best scalable solutions with most likely going to win so that's the premise. Let me just have to sort of remember so the concept of strategic alternatives as the most pragmatic way I can describe how one would have to approach. This is we think about going forward. So this concept of as a standalone.
Company.
I think for US we've mentioned on the call we continued.
The advanced development and expect to have the best in class Lidar as we said that so that positions us for that one key part of the conversation about why is this such a differentiated product. The second piece is also extremely important which is scalability. So if you think about all the consolidation its going to whittle down to a small group of companies that have the most.
Gravity around their solution and it is not the one that's got the.
The flash in the Pan kind of like what conversation. They can have this has to be the.
The protein of the fiber part of it where you have actually thought about what problem you want to solve and Youre way ahead of everybody. That's the conversation. So that's how I look at it so.
Question about Standalone company I think is a good one but I think the way to really think about it consolidation to the point that is happening strategic alternatives out there. We certainly have a pilot line that I think.
We can ramp to anything that is required on our <unk> sample.
P&C sample I can give a little bit more color on that later, but those are done when theyre, specifically something a OEM that they want to customize and that goes towards our product. So right now that's not there. So the Standalone company I mean of course, we can go there about strategic alternatives and how to think about it because where the market isn't the lidar space.
Is anybody can justify all these valuations with the kind of revenue that would have to be in.
Reasonable multiple to that in the future right, Glenn So I am saying that strategic alternatives is the right way to think about it and we are a standalone company right now, but we are up for sale. So.
Thank you.
I think that's the best way I can answer it.
Sure. So the last one from me just the the so the third ATM that you did I've never seen one that was announced and completed inside of six days. So I understand the first two like we're done.
They were a little longer than that obviously, but they were had to be done and it was kind of imperative that you got that done quickly to get enough balance sheet power to hold out long enough to do negotiations for a sale and everything but the third one.
You weren't necessarily under extreme balance sheet pressure now the stock had run up a lot. So I guess I'm just trying to think about.
How you feel.
In other words, if you thought the stock had a lot of room to run you might have taken a longer time, because you weren't on any time crunch balance sheet wise to get that done so.
Just kind of think about.
If you could just discuss your thoughts about how you execute it so quickly.
Yes, I think I think the.
The volumes at the time.
After that we're very high on the share trades and so we were able to really quite be quite patient.
It didn't take very long to sell through those that amount.
Shares.
But the price was high and the <unk>.
Volume was quite high so we were able to take advantage of that I guess I'd also say that on some of the earlier Atms, we were able to clear those in relatively short amount of time too.
Largely because of the volume and the share trading was high and the prices were also good at those times as well, although not as high as on the third one.
Alright, okay. Thanks, Steve.
Okay.
Our next question comes from Kevin Dede with H C Wainwright.
Hi, good afternoon, gentlemen, thank you very much growth from the call and taking my questions I realize that.
So a lot of background noise.
I apologize I'm not sure if you can even hear me at this level.
Let me know that first before I continue.
We can hear you Kevin.
Oh good okay. Thanks.
So you mentioned the compatibility with cameras. So can you talk about that.
I mean, I I get the whole 30, Hertz thing, but I'm wondering how much further youre going to go or are you going to try to.
Continue to work on your module and integrate it with the camera on your own or do you think you're just going to be able to pass off the lidar technology separately go with that.
As a view.
Review the comments I made today, we're focused on our lidar product.
It was trying to draw.
If future vision of part of the roadmap or anybody reasonable would be to accommodate that and what does that benefit to that so by making this lidar to the level. We've done what are the real benefit that later by itself is extremely valuable right I mean, I'm always optimistic about the company a year ago.
Regarding people asked what do you think Microvision, where it is I think even back then I said, it's worth billions retro took year, so thats sort of market valuation. So if you think about the value of the Lidar is where I'm trying to say that what problem has it sort of like how it is just a lot of another widget that another company day restaurants company Hasnt widget and how do you differentiate so I'm trying to draw.
That bigger picture of how important it is to actually solve these problems in these segments that point number one so that's how you think about it so we're not developing that product.
Is it part of the current plant and obviously not I'm, just saying that that would be the next one.
If a partner comes along and if they want to do something with that Brett that's perfectly fine, but I wanted just to have to provide the color. So people understand what the benefit.
Rand.
And everybody hears about this company ex is makes half a million units and their CEO doesn't believe in lidar.
Got all sorts of questions all the time, so I've never really.
Broader point about that but it's about that lidar will be coming together.
Item <unk> in <unk> safety as you go forward, but the ultimate solution is the number of sensors that are required to make a car to that level of safety is too big. So therefore adoption rates will be low. So therefore over longer period of time, if you want to go to higher volume and.
Whatever time frame I think there's other competitors that have financials out that project years into the future.
That's the point I'm trying to bring out is what's all of that a lidar by itself will not solve it it will completely go to the level that requires a very important piece, but you still have a more expensive BARDA holistic part of that entire system is also the computing. If you have a five or eight kilowatt waterfall continuing a trunk is the only way you can do this is Thomas.
<unk>, that's non scalable people either from some other thing so again, that's where it puts in context, where that technology is so I'm, just saying, it's a future roadmap that how to visualize why the problem to solve are extremely important.
Yes, no understood I think you did a great job, making those points clear so I mean I guess.
I was just sort of thinking of the next step in terms of convenience for your potential future.
Partners or customers.
Yeah right right.
Yes, Amit.
I'll be very crisp about that right. We're focused on a lidar ace ample exactly what I said Scott job overall growth strategic alternatives. We know what we really have to do but just because we know ultimate solutions years out because we have experiences and we have fortunate to have some really great board members.
That does not mean that we're embarking on that I think being very crisp about what we're working on in our commitment strategic alternatives. Because that's just kind of makes sense, where the game is right now.
Fair enough fair enough I didn't I apologize if you thought I'd read too much into it it just seemed like the logical next step.
I apologize Kevin.
My direct this was not like as if it's a great question is valid question right. It's just I want to make sure that.
Lots of people listening to these call range, it's kind of important that people have clarity of thought of exactly what we're working on right does introduce net concept is to say why we would be winning so if you think about there is consolidation happening in the market if anything else my comments as to why would we be the one of the final companies. If you've solved the key problem and you are extremely valuable of course are optimistic about this company here.
The optimistic what it could actually enable.
So that's why I'm, just trying to get Chris like I don't want my optimism to somehow mixed stand with what our plan. Our plan is exactly what I said, so that's 100, we pretty crisp about that.
Fair enough I appreciate the candor.
Hi.
Okay, So I know Glenn.
Net.
Got a couple of words in non cash burn, but I wish I was hoping maybe Steve if you go back to that topic.
What's your expectations for head Count, Steve I think you mentioned the 53.
Total DAU, where do you think that goes year end and how does that change your cash burn.
Well, we haven't given our given our forecast and where it's going to go where should we see that we'll be adding some.
Throughout the year, but.
Just to sort of kind of book ended I think it would be.
And they are in the realm of.
80 ish would be was high as I would think it would it would be potentially lower but it's not it's not ramping tremendously.
About a year ago. When we were in February of 2020, I think we were at like 70, 880 people around that around that time frame.
You've got to remember that we made in February was pretty deep.
So.
As far as the cash burn as far as I am projecting out right now are giving guidance on is this $505 5 million next quarter and as you can imagine there is a fair amount of materials and stuff going into building. This product and then those spent those expenses would come down and then.
So I don't have a long term forecast, but it wouldn't.
Didn't go up too much more.
Okay last question from me.
I know summit spent a lot of time on this too but can you just kind of go over.
Exactly what will be tangible within the April time frame.
Yeah.
So we are enabled timeframe, we will have the sample hardware.
That can be demonstrated.
And shown.
And also we would have some benchmark data from from the sample device as well as from our development platforms that we can share that data as well.
Folks understand what the sample is capturing sales.
Okay, and then beyond that worked you this.
Yes, sorry, Jonathan.
Thanks Mark.
Resting on that.
Further testing just continues including any other requests that may come back for customer testing. So that the work continues after that.
Of course of course.
Understood and then <unk>, that's your beat sample.
No no that's that's where its upper sales so as I said potentially if somebody wants to port their piece of hardware on a moving platform testing because obviously, we are not investing in moving platform testing.
On cars or long haul trucking whoever however that could be utilized revenue would have the capability to build that but it's a pilot line in the sense that it can be ramp obviously, that's always been our wheelhouse.
We're just being reasonable about what the future would be beyond that and I think we're not giving any more guidance yeah. Yeah. Let me fair enough I appreciate the time gentlemen.
I'm sorry go ahead, yes.
Yes, let me make clear.
Demonstration, we're doing would be to potential customers or other interested parties.
A public demonstration per se, but it's.
Ex to folks that were in conversation with.
Understood understood. Thank you very much gentlemen for taking the questions and thanks again for us from the call.
Very much appreciated I think summit most everybody that's listening in feels the same way that you do right. There is a lot of technology and it has a lot of value.
Yeah, Yeah, and I think this.
This is like a fight for the future. The last time I remember feeling this kind of excitement was.
And what we call the Internet age right in late 90 days or the mid nineties knew that there was a big revolution that would impact of revised so.
All of Us are.
Thanks, Kevin very good thank you Jim.
Okay.
So we're going to go on to some other questions. We've received over 70 questions from investors. Many of the questions are variations of the same topic in most of the questions were addressed in our prepared remarks as we did last quarter. We tried to consolidate the questions on the same topic to address the basic issues.
We won't be able to answer every question every question that was submitted but we will go through several.
And so the first question is.
Sumit can you provide any more color.
About your automotive Lidar <unk> sample, the outdoor testing and customer customer validation and also will there be a b or C samples.
Second question.
So as I mentioned a sample.
Back in October also we gave color on this a sample is a specific thing that.
It's a general part that everybody can utilize to evaluate the impact of technology will have on the path to have so therefore, it's funded by Microvision obviously.
<unk> enables us to address it to every potential partner.
Interest ekati.
It's got advanced features in our sensor hub they must go through appropriate verification as you can imagine so when you say 250 meters or resolution you have to demonstrate that and of course all the other.
Other custom request that may or may not be there to evaluate for a specific part of it for somebody confidentially specifically for them. So it's a great platform is how do you think about it a sample it allows us to that's why we say like we have the example hardware, but we also have a development platform so depending on what's happening.
Readdress that and Thats why that data is I think a lot of the retail investors ask for is that data going to be made public. The answer was no because it can be confidential stuff in there. So this is benchmarking data that it provides us with party okay.
So I'll go testing is a very important one obviously one of the big features here is with our active scan locking that allows us to have a time of flight lidar in the nine to five nanometer laser which is pretty unbelievable and outdoor testing you have to verify these these feature so.
That is something that is the most basic verification you have to do trade a very beautiful day in Seattle Redmond area.
It's Brian up to like what's called 70000 locks, it's pretty bright day. Some of the brightest days that are and all of U S is about 100000, unless youre in death Valley. It's about 127000 lots. So its very bright day. So you have to verify.
The performance over a wide range of.
Conditions, that's very important so you have to produce that is going to imagine a broad body of data with all sorts of things.
Sorts of modifications at somebody who may or May not have asked for that's one important thing to remember so a sample again like we said.
There is a timeline for the hardware, but then the work starts of getting all of this data to get everybody's questions answer any interested party.
<unk>.
And we would probably most likely are going to get asked by interested parties further along to explore capabilities constant to them. So this is not something that all of the standard data sheets up. This is specifically for something of interest to an interested party.
Nothing else to continue as well so that's why you know the period just embark on a big verification testing.
Everybody is thirst for data would be done who's working with us on under NDA right.
This was done on the cycle and the developer platform I've said, so thats important to remember.
And our cash.
<unk> focus is the development of <unk> samples. So there is no BRC sample.
<unk> sample the best way to think about these other like lets say you go through a RF <unk> Inc.
As a party like an OEM.
That enabled somebody to customize their based solution for that and should partner.
And that customization design it could be a full redesign of partial design in most cases, a partial redesign and qualifications with their standard whatever day required for their customization.
And those are the <unk> samples and then goes towards the OEM launch cycle and it's got its own cadence. So at this moment I think I want to be pretty clear our focus of day sample, but it is an actual pretty valuable because you have the precursor to every potential.
Derivative of that that people could consider so we have a platform, which they can actually.
We will be more than happy to accommodate their request for custom data and they could without any.
Investment are waiting they could actually see how we would have aligned to their plan or how we do align to their plan right. So that's pretty important now we expect the same in lots of pilot line and Thats actually a pretty important step because regardless of what customization happens when it be sample. The ingredients I mentioned those are very important if you can demonstrate them at <unk>.
Sample you have significantly more mature and your probability of success for PNC sample increase of force. So again. This is something that we have to show something that would show a benchmark data we have to have build confidence we have unfortunately that we have a decade long history of doing that.
And then your inbox of P&C sample they are on the spectrum, but they are not part of our day to day planning right now.
Okay.
Second question.
As it.
It's related to the $50 million ATM that we did in February what are you spending $50 million on why do you need so much money.
I'll take that question.
We're trying to become an important player in the automotive lidar market.
And in the automotive Lidar market, the staying power of our business is important.
Yeah.
Also we need a balance sheet that gives confidence to others in our ability to execute our plans.
We we need to have be able to give confidence to customers.
Perhaps in a strategic transaction as well as two employees and future employees.
And so that's another reason to have a strong balance sheet to show that confidence and then and then it just seemed out of sync to be two to $2 billion to $3 billion market cap company.
Having such a low cash balance, particularly when you compared it to some of the other public lidar companies.
Third question.
Why are you hiring employees, if youre working on a strategic transaction.
This weekend.
So first let me just remind you of the significant reduction we had in 2020 that really brought us down to a very low level.
Staff.
And so you know.
Why do we need some employee hire more employees will first we're working on aggressive timelines to complete the development improve scalability.
And for that work, we need more people and some additional skill sets.
Second we want to make sure that we have backups and critical skills and positions.
I don't want to be in a place where one person if they got it all for example.
One person being out could seriously affect our ability to execute our plan.
And then thirdly, we need to have an infrastructure in place to support the work that's going on so we need we need people operations and.
And we need accounting and finance.
At the appropriate levels to support the business. So those are all the reasons that we're bringing out some folks.
Number four.
Fourth question.
Was can you provide an update on the April 2017 customer.
I think Glen asked that question as well.
Not much more to add in terms of what I mentioned with Glen asked the question, which the customer continues to ship product with our components.
We continue to report their shipments in the quarterly royalties. We expect 2021 royalties are going to increase over 2020, and we're just hopeful in.
Wished that customer a lot of success.
Building up.
The volume sales of their product.
Fifth fifth question.
Yeah.
We talked about scalability today.
<unk> is being able to scale and your product so important.
Take that.
So I think I mentioned this also in the Q.
Q3 earnings call scalability is important to demonstrate that the.
The gravity of business and the product that they have they would have a future capability of generating revenue and profit so.
I think it's important to think about now that for the first time in the 20 year history, even the 20 year history of this company. Finally, we are in the market and market segment, where there other public examples of Standalone companies, taking advantage of our free cash that you can see like you finally have a range. So we're not the only ones there's no competition.
Nowhere there okay. So keep that in mind now everybody, who will talk about scaling but it is pretty clear Oems have a very specific idea of how the long term market would be if they cannot win for a sensor that can go multiple years of deployment.
Redesign of sensor every year, that's not what automotive it is slow and steady and reliable. So therefore, it is very important to understand the long term commercialization and scaling of the choices that remains true.
Anybody can have the best possible sensor solution, while I believe that solid state Mems scanning is powerful is because my our scanner.
Dark from a 200 millimeter wafer.
Turning to module controls electronics optics and is able to do that wide scanning now put that versus a mechanical scanner.
You can't negotiate here were down when you have a lot more components than you had mechanical parts. So right off the bat when you're talking about scalability. It's not just the fact that you can go from a.
A small volume and ramp up to higher one that is very important of course, that's one of the biggest thing why you would leverage.
Mems based scanner and a 95 nanometer laser system integrate it together.
But there's a lot of the features that we have it's the fact that that is much more competitive regardless of where the entire conversation in the market with the the folks that we're competing against that's one of our very big conversation that kind of gets lost and model people are so focused on if you have 251 meters single return right.
<unk> check, but the bigger question is how are we going to win. This if you know that the customer always looks at commercialization even harder than consumer.
Repeat that whatever people have an understanding of the consumer market automotive a significantly more conservative because they need to understand any sensor sales that they would make that Oems, making a car is supportive of 15 to 20 years behind.
But this premise sports my premise of course that consolidation is something we have to keep in mind. It is.
The level of investment that's involved it is probably the.
The path forward for <unk>.
For the company, obviously, but also that scaling part of it right. If it's demonstrated you have a high probability of potentially being successful otherwise you can build the story and tell a story but.
For me personally it will not Jive, because if you can't really improve with scale. So it's very important to think about scalability and we just talk about what is the ASP.
What the margin would be that day.
Good conversation, but the conversation for any any interested party in the world goes beyond that because as you understand multiple years, you said millions of lives and billions of dollars over decades. So you can understand that's why scale is very important right. So if you combine all that together right you have to really give long term confidence.
To hit target price points in margin that they would experience and that's important that's a set so actually I think Stephen I have good conversation about this if you want to add a couple more things with us.
I think.
One of the things when.
It's on scalability, we are putting together a pilot line, but I just want you to be where that.
We are not going hog wild with some big factory, we are building a pilot line to prove our capabilities and the fact that this product does can be made to scale and in Congo, and the line could ramp up if it was needed but that's.
The secondary right now we're focused on the appropriate level to be able to prove and show scalability and the product.
Okay.
I think this is the last question we have is.
Okay.
This question is regarding where we are in the process of seeking strategic alternatives.
You want to add on that soon in addition, the comments already made.
Yes, I think the point I would start with is I want people to understand is it's not.
Not a philosophical one right. It's just common sense and so you have to be pragmatic about it.
With so many companies buying for the rollout volumes that are going to be there in OEM and there is still the biggest game in town.
Consolidation is going to be part of the conversation always in any reasonable business person would say that has to be on the table at all times. So that's why we stay committed to it so theres no theres no ambiguity are reading between the lines. There is nothing to read between the lines. This is Australia is I can say it. So I think it is actually important strategic alternative seeking that alright, that's number one.
I think I realized the right value for the company advancing our hardware demonstrating scalability again I've heard one that quite a few quite a bit.
A few minutes here.
<unk>.
Is key given the current competitive landscape. So as you get more people in there.
The conversation going different places, but I tend to want to just stay down like this is it is one thing that everybody can tell the story of the company that product thinking hey, I'm going to win we're going to win we're going to win but there is another thing that you can see a company and senior group of people and a senior product. When you can see the move yourself from the outside Investor and say I think theyre going to win because this is.
How it would piece altogether anybody any reasonable person would see this as hobby theres nothing exotic about it and that's very important so.
I think I'll, just come out and be pragmatic about it which is this is where we are and all the variation of the chess game.
Yeah, that's reasonable so therefore strategic alternative sales days in the corporate or are thinking alright, so is very important and a growth again.
The currency landscape associated with the market capitalization from potential parties, you can see where everything is all it is very important to focus on the right thing.
Yeah.
We continue to advance development of our automotive Lidar and again as you noticed is two eight sample again be pragmatic about how what are you happy to enable so you can think true.
Youre not youre, not promising the moon and under delivering.
Just be reasonable about where everything is headed and spend accordingly.
Pretty good.
And for me personally like that the process continues the process also continuing but we will not be commenting more on it I think.
The question that Steve has created here at <unk>.
Softer version of some of the questions and I appreciate everybody's enthusiasm for the company and trying to understand but as we've said before I assure you the process continues but.
But we will not be commenting on any specifics.
Okay.
With that.
The last question.
Sumit you want to make any kind of channel.
Right.
Yes.
Then I want to once again, thank our employees business partners and our shareholders.
For their continued support I look forward to reporting on our progress in the future. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.