MICROVISION, INC.

Previous wording

We have incurred substantial losses since inception and expect to incur a significant loss during the fiscal year ending December 31, 2025. We have funded operations to date primarily through the sale of common stock, convertible preferred stock, warrants, the issuance of convertible debt and, to a lesser extent, from development contract revenues, product sales and licensing activities. In October 2024, we entered into a securities purchase agreement with an institutional investor for the purchase of senior secured convertible notes of up to $75.0 million. SeePart II, Item 8, Note 7. Notes Payable and Derivative Liability. In February 2025, we entered into another securities purchase agreement with the same institutional investor for the issuance and sale of $8.0 million in shares of common stock, plus warrants to purchase additional shares of common stock for approximately $9.0 million. SeePart II, Item 8, Note 16. Subsequent Events. There can be no assurance that additional capital will be available or that, if available, it will be available on terms acceptable to us on a timely basis. We cannot be certain that we will succeed in commercializing our technology or products.

Current wording

We have incurred substantial losses since inception and expect to incur a significant loss during the fiscal year ending December 31, 2025. We have funded operations to date primarily through the sale of common stock, convertible preferred stock, warrants, the issuance of convertible debt and, to a lesser extent, from development contract revenues, product sales and licensing activities. In October 2024, we entered into a securities purchase agreement with an institutional investor for the purchase of senior secured convertible notes of up to $75.0 million. SeePart II, Item 8, Note 7. Notes Payable and Derivative Liability. In February 2025, we entered into another securities purchase agreement with the same institutional investor for the issuance and sale of $8.0 million in shares of common stock, plus warrants to purchase additional shares of common stock for approximately $9.0 million. SeePart II, Item 8, Note 8. Warrant Liability. In February 2026, we entered into a securities purchase and exchange agreement with the same investor, pursuant to which we issued two senior secured convertible notes due March 2028 – one for approximately $20.6 million in exchange for the previously existing senior secured convertible note due March 2026 and the other for approximately $22.4 million. SeePart II, Item 8, Note 17. Subsequent Events for additional discussion.

Previous wording

Our business combination is accounted for under the acquisition method. We allocate the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the fair value of the underlying net assets acquired and liabilities assumed over the purchase consideration is included in bargain purchase gain in the Consolidated Statement of Operations. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Current wording

Our business combination is accounted for under the acquisition method. We allocate the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the fair value of the underlying net assets acquired and liabilities assumed over the purchase consideration is included in bargain purchase gain in the consolidated statements of operations. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Previous wording

Our intangible assets consist of acquired technology from the January 2023 Ibeo asset purchase and purchased patents. The estimated fair value of acquired technology was calculated through the income approach using the multi-period excess earnings and relief from royalty methodologies. The intangible assets are amortized using the straight-line method over their estimated period of benefit, ranging from one to seventeen years. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Recoverability of these assets is measured by comparison of their carrying values to the projected undiscounted net cash flows associated with the related intangible assets or group of assets over their remaining lives. Measurement of an impairment loss for our intangible assets is based on the difference between the fair value of the asset and its carrying value. During 2024, we recorded a non-cash impairment charge of $4.2 million related to our Reference software. SeePart II, Item 8, Note 8. Financial Statement Components – Intangible Assets.

Current wording

Our intangible assets consist of acquired technology from the January 2023 Ibeo asset purchase and purchased patents. The estimated fair value of acquired technology was calculated through the income approach using the multi-period excess earnings and relief from royalty methodologies. The intangible assets are amortized using the straight-line method over their estimated period of benefit, ranging from one to seventeen years. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Recoverability of these assets is measured by comparison of their carrying values to the projected undiscounted net cash flows associated with the related intangible assets or group of assets over their remaining lives. Measurement of an impairment loss for our intangible assets is based on the difference between the fair value of the asset and its carrying value. During 2025 and 2024, we recorded non-cash impairment charges of $10.1 million and $4.2 million primarily related to our perception software and reference software, respectively. SeePart II, Item 8, Note 9. Financial Statement Components – Intangible Assets.

Previous wording

The decrease in revenue for the year ended December 31, 2024 compared to the same period in 2023 was primarily due to revenue associated with the Microsoft contract partially offset by the sale of sensors to an existing industrial customer for agricultural equipment and service parts, an increase in shipments of MOVIA L sensors to Daimler Truck North America and affiliates as part of their RFQ evaluation process, and increased sales to a second industrial customer.

Current wording

The decrease in revenue for the year ended December 31, 2025 compared to the same period in 2024 was primarily due a lower sales to a leading manufacturer of agriculture equipment, as well as lower sales of MOVIA L sensors as part of RFQ evaluation processes to an industrial customer and to Daimler Truck North America and affiliates.

Previous wording

Cost of revenue can fluctuate significantly from period to period, depending on the product mix and volume, the level of overhead expense and the volume of direct material purchased. The increase in cost of revenue for the year ended December 31, 2024 compared to the same period in 2023 was primarily due to inventory write-downs primarily associated with older configurations of the MOVIA L sensors.

Current wording

Cost of revenue can fluctuate significantly from period to period, depending on the product mix and volume, the level of overhead expense and the volume of direct material purchased. The increase in cost of revenue for the year ended December 31, 2025 compared to the same period in 2024 was primarily due to $9.9 million of obsolete inventory associated with older configurations of short-range MOVIA L sensors and $3.2 million of adverse purchase commitments related to the production of select MOVIA L sensor inventory. SeePart II, Item 8, Note 9. Financial Statement Componentsfor additional discussion.

Previous wording

Research and development expense consists of compensation related costs of employees and contractors engaged in internal research and product development activities, direct material to support development programs, laboratory operations, outsourced development and processing work, and other operating expenses. We assign our research and development resources based on the business opportunity of the available projects, the skill mix of the resources available and the contractual commitments we have made to our customers. We believe that a substantial level of continuing research and development expenses will be required to further develop our scanning technology.

Current wording

Research and development expense consists of compensation related costs of employees and contractors engaged in internal research and product development activities, direct materials to support development programs, laboratory operations, outsourced development and processing work, and other operating expenses. We assign our research and development resources based on the business opportunity of the available projects, the skill mix of the resources available and the contractual commitments we have made to our customers. We believe that a substantial level of continuing research and development expenses will be required to further develop our scanning technology.

Previous wording

The decrease in research and development expense during the year ended December 31, 2024 compared to the same period in 2023 was primarily due to lower salary and benefits expense and non-cash compensation of $11.2 million as a result of 2024 restructuring events (seePart II, Item 8, Note 14. Restructuring Charges), lower depreciation expense of $0.8 million, lower freight costs of $0.2 million, lower direct materials and equipment costs of $0.2 million, and lower travel expenses of $0.2 million. These decreases were partially offset by restructuring charges of $5.4 million, and higher IT and software costs of $0.5 million.

Current wording

The decrease in research and development expense during the year ended December 31, 2025 compared to the same period in 2024 was primarily due to a reduced workforce resulting in lower salary and benefits expense of $7.9 million, lower restructuring charges of $5.4 million, lower purchased services of $2.1 million, and lower IT and software costs of $1.1 million. These decreases were partially offset by higher building expenses of $0.9 million.

Previous wording

The decrease in sales, marketing, general and administrative expense during the year ended December 31, 2024 as compared to the same period in 2023 was primarily due to lower salary and benefits expense and non-cash compensation of $4.6 million as a result of 2024 restructuring events (seePart II, Item 8, Note 14. Restructuring Charges), lower professional fees of $1.8 million primarily related to legal and audit fees associated with the acquisition of Ibeo in 2023, lower subcontractor fees of $0.7 million, lower business insurance fees of $0.6 million due to favorable rates obtained, and lower advertising costs of $0.3 million. These decreases were partially offset by restructuring charges of $0.6 million, higher IT and software costs of $0.4 million, higher trade show expense of $0.2 million, and higher building expenses of $0.2 million.

Current wording

The decrease in sales, marketing, general and administrative expense during the year ended December 31, 2025 as compared to the same period in 2024 was primarily due to lower non-cash share based compensation expense of $7.6 million from the reversal of previously recognized expense related to the forfeiture of awards in connection with the executive separations that occurred during the year ended December 31, 2025, lower salary and benefits expense and non-cash compensation of $1.5 million, lower restructuring charges of $0.6 million, and lower trade show expense of $0.4 million. These decreases were partially offset by higher recruiting expenses of $0.6 million, higher building expenses of $0.4 million, higher purchased services fees of $0.3 million, and higher advertising costs of $0.3 million.

Previous wording

Impairment loss on intangible assets includes impairment charges on intangible assets. During the year ended December 31, 2024, management identified impairment indicators related to MOSAIK software. We performed an assessment of projected future cash flows and determined the software was fully impaired, which resulted in a $4.2 million impairment charge. SeePart II, Item 8, Note 8. Financial Statement Componentsfor additional discussion.

Current wording

During the year ended December 31, 2025, management identified impairment indicators related to perception software, which resulted in a $10.1 million non-cash impairment charge. During the year ended December 31, 2024, management identified impairment indicators related to MOSAIK software. We performed an assessment of projected future cash flows and determined the software was fully impaired, which resulted in a $4.2 million non-cash impairment charge. SeePart II, Item 8, Note 9. Financial Statement Components for additional discussion.

Previous wording

The increase in interest expense during the year ended December 31, 2024 compared to the same period in 2023 relates to $4.4 million of non-cash interest expense on notes payable that originated in October 2024. SeePart II, Item 8, Note 7. Notes Payable and Derivative Liabilityfor additional discussion.

Current wording

The increase in interest expense during the year ended December 31, 2025 compared to the same period in 2024 relates to $7.3 million of non-cash interest expense representing the discount on the 2025 Purchase Agreement for warrants and shares of common stock (seePart II, Item 8, Note 8. Warrant Liability), $9.1 million of non-cash interest expense related to amortization of the debt discount and issuance costs on notes payable, and $2.1 million of non-cash interest expense related to the modification of notes payable (seePart II, Item 8, Note 7. Notes Payable and Derivative Liability).

Previous wording

Unrealized loss on derivative liability

Current wording

Unrealized gain (loss) on derivative liability

Previous wording

Unrealized loss on derivative liability reflects the revaluation of our derivative liability associated with notes payable as of December 31, 2024. Due to the increase in the fair value of the derivative liability as of December 31, 2024 relative to its initial measurement on October 23, 2024, we recognized an unrealized loss during 2024. SeePart II, Item 8, Note 7. Notes Payable and Derivative Liabilityfor additional discussion.

Current wording

Unrealized gain (loss) on derivative liability reflects the revaluation of our derivative liability associated with notes payable as of December 31, 2025 and 2024. Due to the decrease in the fair value of the derivative liability as of December 31, 2025 relative to December 31, 2024, we recognized an unrealized gain during 2025. Due to the increase in the fair value of the derivative liability as of December 31, 2024 relative to its initial measurement on October 23, 2024, we recognized an unrealized loss during 2024. SeePart II, Item 8, Note 7. Notes Payable and Derivative Liabilityfor additional discussion.

Previous wording

During the years ended December 31, 2024 and 2023, we recognized tax expense of $0.5 million and $1.1 million, respectively, mainly related to income in foreign jurisdictions offset, partially offset by a deferred income tax benefit generated by the reduction to a deferred tax liability created as a result of the acquisition of Ibeo in Q2 2023. The change in income tax expense during the year ended December 31, 2024 was largely the result of lower profitability in foreign jurisdictions. As of December 31, 2024, we had net operating loss carryforwards of approximately $498.0 million for federal income tax reporting purposes. In addition, we have research and development tax credits of $11.1 million. During 2024, $28.2 million federal net operating losses and $0.2 million general business credits expired unused. A majority of the net operating loss carryforwards and research and development credits available to offset future taxable income, if any, will expire in varying amounts from 2025 to 2044, if not previously used.

Current wording

During the years ended December 31, 2025 and 2024, we recognized a tax benefit of $0.1 million and tax expense $0.5 million, respectively, mainly related to income in foreign jurisdictions, partially offset by a deferred income tax benefit generated by a 2025 loss provision on our Hamburg, Germany office lease. As of December 31, 2025, we had net operating loss carryforwards of approximately $549.4 million for federal income tax reporting purposes. In addition, we have research and development tax credits of $11.2 million. During 2025, $16.0 million federal net operating losses and $0.3 million general business credits expired unused. A majority of the net operating loss carryforwards and research and development credits available to offset future taxable income, if any, will expire in varying amounts from 2026 to 2044, if not previously used.

Previous wording

We have incurred significant losses since inception. We have funded operations to date primarily through the sale of common stock, convertible preferred stock, warrants, the issuance of convertible debt and, to a lesser extent, from development contract revenues, product sales, and licensing activities. As of December 31, 2024, the Company had $54.5 million in cash and cash equivalents and $20.2 million in short-term investment securities, or $74.7 million total. In February 2025, we raised net proceeds of $7.8 million through sale of common stock to an existing investor. In addition to cash and cash equivalents, the Company also has potential availability of $143.6 million comprised of the following:

Current wording

We have incurred significant losses since inception. We have funded operations to date primarily through the sale of common stock, convertible preferred stock, warrants, the issuance of convertible debt and, to a lesser extent, from development contract revenues, product sales, and licensing activities. As of December 31, 2025, the Company had $32.3 million in cash and cash equivalents and $42.5 million in short-term investment securities, or $74.8 million total. In February 2026, we raised net proceeds of $20.9 million from the exchange and issuance of senior secured convertible notes to an existing investor. In addition to cash and cash equivalents, the Company also has potential availability of $42.0 million left on our existing $150.0 million ATM facility that was put in place in the first quarter of 2024, subject to certain limitations.

Previous wording

In consideration of the above, the Company has total liquidity of $226.1 million. Pursuant to terms of the Note, we will maintain minimum cash liquidity of $30.0 million for the duration of the Note term, subject to decreases beginning on May 1, 2025. Based on our current operating plan, we anticipate that we have sufficient cash and cash equivalents to fund our operations for at least the next 12 months.

Current wording

In consideration of the above, after factoring in the $33.2 million purchase price of the Luminar asset acquisition in February 2026 (seePart II, Item 8, Note 17. Subsequent Events), the Company has total liquidity of $104.5 million. Pursuant to terms of the securities purchase and exchange agreement entered into in February 2026, we will maintain minimum cash liquidity of the lesser of $21.5 million or 110% of the then outstanding balance of the Note for the remaining duration of the Note term. Based on our current operating plan, we anticipate that we have sufficient cash and cash equivalents to fund our operations for at least the next 12 months.

Previous wording

Cash used in operating activities totaled $68.5 million during 2024, compared to $67.1 million in 2023. During the years ended December 31, 2024 and 2023, we made payments of $1.9 million and $3.1 million, respectively, to our contract manufacturing partner in connection with the buildup of MOVIA sensor inventory for direct sales to both automotive and non-automotive customers. Moreover, we expect to make additional minimum payments to this partner totaling approximately $6.3 million during 2025 and 2026 in line with agreed-upon deliveries.

Current wording

Cash used in operating activities totaled $58.7 million during 2025, compared to $68.5 million in 2024. During the years ended December 31, 2025 and 2024, we made payments of $7.7 million and $1.9 million, respectively, to our contract manufacturing partner in connection with the buildup of MOVIA sensor inventory for direct sales to both automotive and non-automotive customers. As of December 31, 2025, we had open purchase commitments of $3.2 million related to the production of MOVIA L sensor inventory. We have determined that certain of the sensors are obsolete and an adverse purchase commitment for the entire balance of open purchase commitments has been recorded as of December 31, 2025.

Previous wording

During the year ended December 31, 2024, cash provided by investing activities was $2.7 million compared to $21.8 million during the same period in 2023. During the year ended December 31, 2024, we purchased short-term investment securities totaling $26.1 million and sold short-term investment securities totaling $35.4 million, compared to purchases of $41.7 million and sales of $76.7 million in the same period of 2023. During the year ended December 31, 2024, we purchased property and equipment totaling $0.4 million compared to $2.0 million in the same period in 2023. During the year ended December 31, 2024, we made payments totaling $6.3 million related to the acquisition of Ibeo assets compared to $11.2 million in the same period in 2023.

Current wording

During the year ended December 31, 2025, cash used in investing activities was $24.6 million compared to cash provided by investment activities of $2.7 million during the same period in 2024. During the year ended December 31, 2025, we purchased short-term investment securities totaling $51.9 million and sold short-term investment securities totaling $30.1 million, compared to purchases of $26.1 million and sales of $35.4 million in the same period of 2024. During the year ended December 31, 2024, we made advances of $2.2 million related to the acquisition of Scantinel assets (seePart II, Item 8. Note 17, Subsequent Events). During the same period in 2024, we made payments totaling $6.3 million related to the acquisition of Ibeo assets.

Previous wording

Net cash provided by financing activities totaled $72.9 million during the year ended December 31, 2024, compared to $72.4 million during the same period of 2023. Proceeds received from stock option exercises totaled $0.1 million during the year ended December 31, 2024, compared to $0.3 million during the same period in 2023. Net proceeds from issuance of common stock were $34.7 million during the year ended December 31, 2024, compared to $72.3 million during the same period in 2023. In 2024, we received approximately $38.1 million in net proceeds, inclusive of debt issuance costs, from the issuance of $45.0 million senior secured convertible notes. SeePart II, Item 8. Note 7, Notes Payable and Derivative Liabilities.

Current wording

Net cash provided by financing activities totaled $60.9 million during the year ended December 31, 2025, compared to $72.9 million during the same period of 2024. Net proceeds from issuance of common stock and warrants were $77.4 million during the year ended December 31, 2025, compared to $34.7 million during the same period in 2024. In 2025, we made scheduled principal repayments of $16.5 million associated with our senior secured convertible notes. In 2024, we received approximately $38.1 million in net proceeds, inclusive of debt issuance costs, from the issuance of $45.0 million senior secured convertible notes. SeePart II, Item 8. Note 7, Notes Payable and Derivative Liabilities.