MICROVISION, INC.

1. DESCRIPTION OF BUSINESS

MicroVision, Inc. is defining the next generation of lidar-based perception solutions for automotive, industrial, and security & defense markets. The Company delivers integrated hardware and software solutions designed for real-world performance, automotive-grade reliability, and economic scalability. The Company’s diverse portfolio of lidar sensors, with both short- and long-range lidar solutions, feature solid-state sensors with varying wavelengths, advanced sensor architectures, design-to-cost engineering, and open software solutions.

The Company’s solutions enable advanced driver assistance systems, or ADAS, and autonomy features for customers in a wide range of markets, including automotive, industrial, and security & defense. Target industrial sectors include robotics, automated warehouse, agriculture, and mining. The Company’s integrated hardware and software solutions enable intelligent autonomous, active safety, and automation systems which depend on secure, cost-effective, and energy-efficient solutions. Software has been developed in close collaboration with automotive customers and also has broad application in industrial, defense, and commercial vehicle sectors.

With engineering teams in the U.S. and Germany, the Company develops and supplies integrated solutions, incorporating application software and processing data from differentiated sensor systems. The Company’s extensive experience in developing and productizing core lidar hardware and software components, along with expertise in edge computing, positions the Company as a valuable commercial partner capable of delivering high-value, low-power products.

Liquidity

The Company has incurred significant losses since inception. Operations to date have been funded 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 total liquidity of $74.8 million including $32.3 million in cash and cash equivalents and $42.5 million in short-term investment securities. In addition, the Company has approximately $42.0 million availability under its current at-the-market (“ATM”) facility as of December 31, 2025, subject to certain conditions. On October 23, 2024, the Company issued $45.0 million in senior secured convertible notes for gross proceeds of $41.4 million. Additionally, in February 2026, the Company entered into a securities purchase and exchange agreement with an institutional investor, pursuant to which the Company 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. SeeNote 17. Subsequent Events for additional discussion.

Based on the current operating plan, the Company anticipates having sufficient cash and cash equivalents to fund operations for at least the next 12 months from the issuance of these consolidated financial statements.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements and accompanying notes include the accounts of the Company and its wholly owned subsidiaries, after elimination of all intercompany balances and transactions. Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. These reclassifications had no impact on net loss, shareholders’ equity or cash flows, as previously reported.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires the Company to make estimates and assumptions that affect the reported amounts therein. The most significant estimates and assumptions relate to business combinations, valuation of intangibles, valuation of derivative liabilities, revenue recognition, inventory valuation, valuation of share-based payments, income taxes, depreciable lives assessment and related disclosure of contingent assets and liabilities. Due to the inherent uncertainty involved, actual results reported in future periods could differ from those estimates.

Foreign Currency Translation

Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in currencies other than the functional currency. Realized gains and losses on those foreign currency transactions are included in determining net loss for the period of exchange and are recorded in other income in the consolidated statements of operations.

Segment Information

The Company determines operating segments based on how the chief operating decision maker (“CODM”) manages the business, makes operating decisions around the allocation of resources, and evaluates operating performance. The CODM is the Chief Executive Officer. The Company has determined that it operates inone operating segment andone reportable segment, relating to the sale and servicing of lidar hardware and software, as the CODM regularly reviews financial information presented on a consolidated basis. Financial information regularly reviewed by the CODM includes revenue, income or loss from operations, and net income or loss.

Business Combination

Business combinations are accounted for under the acquisition method. As such, the fair value of the Ibeo purchase consideration was allocated 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 was included in bargain purchase gain, net of tax in the consolidated statements of operations. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Cash and Cash Equivalents and Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the authoritative guidance establishes a three level fair value inputs hierarchy and requires an entity to maximize the use of observable valuation inputs and minimize the use of unobservable inputs. The Company uses market data, assumptions and risks that market participants would use in measuring the fair value of the asset or liability, including the risks inherent in the inputs and the valuation techniques.

Financial instruments include cash and cash equivalents, investment securities, accounts receivable, accounts payable and accrued liabilities. The carrying value of financial instruments approximate fair value due to their short maturities. Cash equivalents are comprised of short-term highly rated (A rated securities and above) money market savings accounts.

Short-term investment securities primarily consist of debt securities. The Company has classified its entire investment portfolio as available-for-sale. Available-for-sale securities are stated at fair value with unrealized gains and losses included in other comprehensive income (loss). Dividend and interest income are recognized when earned. Realized gains and losses, if any, are presented separately on the income statement.

Restricted Cash

Restricted cash is held in money market savings accounts and serves as collateral for irrevocable letters of credit related to our facility lease agreements. The restricted cash balance as of December 31, 2025 includes $0.3 million and $0.2 million of collateral under two letters of credit issued in connection with lease agreements for the Company’s headquarters and general office and lab space, respectively, in Redmond, Washington. The restricted cash balance also includes approximately $1.1 million for a security deposit associated with a lease agreement for office space in Hamburg, Germany.

Inventory

Inventory consists of raw materials, work in process and finished goods assemblies. Inventory is computed using the first-in, first-out (FIFO) method and is stated at the lower of cost and net realizable value. Management periodically assesses the need to account for obsolescence of inventory and adjusts the carrying value of inventory to its net realizable value when required.

Intangible assets consist of acquired technology from the January 2023 Ibeo asset purchase and purchased patents. As part of the Ibeo asset acquisition, two intangible assets were primarily acquired in the form of Perception software and Reference software, with initial useful lives of 15 years and 8 years, respectively. 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 (seeNote 9. Financial Statement Components – Intangible Assets for discussions of impairment). 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 intangible assets is based on the difference between the fair value of the asset and its carrying value.

Property and Equipment

Property and equipment are stated at cost and depreciated over the estimated useful lives of the assets (two tofive years) using the straight-line method. Property and equipment may include assets related to future product lines. As production needs change, management will periodically assess the remaining estimated useful life of production equipment. If necessary, depreciation on production equipment will be adjusted to reflect the remaining estimated useful life. Leasehold improvements are depreciated over the lesser of the estimated useful life or the lease term. Costs for repairs and maintenance are charged to expense as incurred and expenditures for major improvements are capitalized at cost. Gains or losses on the disposition of assets are reflected in the consolidated statements of operations at the time of disposal.

Leases

Management assesses all contracts executed to determine whether the agreements contain a lease component. Significant judgment may be required to determine whether a contract contains a lease, the length of the lease term, the allocation of the consideration between lease and non-lease components, and the appropriate discount rate to be applied. Management reviews the underlying objective of each contract, the terms of the contract, and considers current and future business conditions when making these judgments.

The Company’s lease obligations consist of various office and equipment operating leases. Operating lease assets are recorded under the operating lease right-of-use asset (“ROU”) line item, while liabilities are recorded under the current portion of operating lease liability and operating lease liability, net of current portion line items on the consolidated balance sheets.

Operating lease ROU assets and liabilities are recognized upon lease commencement based on the present value of payments over the lease term. For leases which do not provide an implicit rate, the Company’s incremental borrowing rate as of the commencement date serves as the discount rate to determine the present value of lease payments. Lease expense from operating leases is recognized on a straight-line basis over the lease term.

Notes Payable

The Company evaluates all conversion, redemption, and put features contained in its debt instruments to determine if there are any embedded features that require bifurcation as a derivative. The Company accounts for debt as a long-term liability, with the current portion classified as a short-term liability, equal to the amount repayable at maturity, net of any debt discount and issuance costs, within notes payable on the consolidated balance sheets. The debt discount and issuance costs are amortized over the term of the Note, using the effective interest method, as interest expense in the accompanying consolidated statements of operations. Conversions of principal are accounted for in accordance with ASC 470-20, “Debt with Conversion and Other Options,” with immediate expense of the unamortized discount associated with the converted principal.

Derivative Liability

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the issuance date and is then re-valued at each reporting date, with changes in the fair value reported as an unrealized gain or loss in earnings on the consolidated statements of operations. The Company has elected to classify the entirety of its derivatives in current liabilities.

Warrant Liability

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance included in ASC 480, “Distinguishing Liabilities from Equity”, and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether the warrants meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period end date while the warrants are outstanding.

Warrants that meet all of the criteria for equity classification are required to be recorded as a component of additional paid-in capital at the time of issuance, or when the conditions for equity classification are met, and are not remeasured. Warrants that do not meet the required criteria for equity classification are classified as liabilities. The Company adjusts such warrants to fair value at each reporting period until the warrants are exercised or expire. Changes in fair value are recognized in the Company’s consolidated statements of operations.

Revenue Recognition

The following is a description of principal activities from which the Company generates revenue. Revenues are recognized when control of the promised goods or services are transferred to customers, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

The Company evaluates contracts based on the 5-step model as stated in Topic 606 as follows: (i) identify the contract, (ii) identify the performance obligations, (iii) determine the transaction price, (iv) allocate the transaction price, and (v) recognize revenue when (or as) performance obligations are satisfied.

A contract contains a promise (or promises) to transfer goods or services to a customer. A performance obligation is a promise (or a group of promises) that is distinct, as defined in the revenue standard.

The transaction price is the amount of consideration an entity expects to be entitled to from a customer in exchange for providing the goods or services. A number of factors should be considered to determine the transaction price, including whether there is variable consideration, a significant financing component, noncash consideration, or amounts payable to the customer. The determination of variable consideration will require a significant amount of judgment. In estimating the transaction price, the Company will use either the expected value method or the most likely amount method.

The transaction price is allocated to the separate performance obligations in the contract based on relative standalone selling prices. Determining the relative standalone selling price can be challenging when goods or services are not sold on a standalone basis. The revenue standard sets out several methods that can be used to estimate a standalone selling price when one is not directly observable. Allocating discounts and variable consideration must also be considered. Allocating the transaction price can require significant judgement on the Company’s part.

Revenue is recognized when (or as) the customer obtains control of the good or service/performance obligations are satisfied. Topic 606 provides guidance to help determine if a performance obligation is satisfied at a point in time or over time. Where a performance obligation is satisfied over time, the related revenue is also recognized over time.

Product Revenue

Product revenue is primarily derived from sales of lidar hardware and systems. While each contract is individually assessed to identify separate performance obligations, a performance obligation generally consists of an individual sensor or sensor system, inclusive of all materials and integrated software. Transaction prices are normally fixed, as the Company does not include variable consideration or the exchange of any other goods as part of the contract. Revenue is recognized upon shipment of the product to the customer, as control and title of the product passes to the customer at the point of shipment. Product sales generally include acceptance provisions, however, as it can be objectively determined that agreed-upon customer specifications have been met prior to shipment, control of the item passes at the time of shipment.

License and Royalty Revenue

License and royalty revenue consists of revenue from the licensing of various software and intellectual property owned by MicroVision, and any royalties generated from their use in products sold by customers.

Software licenses sold are either a license to install and use, whether perpetual or fixed-term, or a license to access the software, which is normally a volume-based license. Revenue from licenses to install is recognized at the point when the customer is granted the ability to install the software, as these licenses represent functional intellectual property with significant standalone functionality. Revenue from licenses to access is recognized over the period of time in which the Company has ongoing obligations under the agreement, as these licenses represent symbolic intellectual property, which exclude significant standalone functionality. Revenue recognized each period is based on the appropriate measure of progress, typically being the number of usage hours consumed.

Revenue from sales-based royalties is recognized based on reports provided by customers which identify the number of royalty-bearing products sold or otherwise distributed. For any customers that fail to provide timely reports, management estimates the number of royalty-bearing products sold based on historical sales volume and available forecast data.

Contract Revenue

Contract revenue in a particular period is dependent upon when the contract is entered into, the value of the contract, and the availability of technical resources to perform work on the contract. Each performance obligation associated with development contracts is identified at contract inception. The contracts generally include product development and customization specified by the customer. For contracts with multiple product development or customization components, each component is evaluated to determine whether it is distinct within the context of the contract and represents a standalone performance obligation. Components which are deemed not distinct at contract inception are combined into a single performance obligation.

Development contracts are primarily fixed-fee contracts. Contract revenue is recognized either at a point in time, or over time, depending upon the characteristics of the individual contract. If control of the deliverable(s) passes to the customer over time, the revenue is recognized in proportion to the transfer of control. If control passes to the customer only upon completion and transfer of the asset, revenue is recognized upon completion of the contract. For contracts which include significant customer acceptance provisions, revenue is recognized only upon acceptance of the deliverable(s).

If control of deliverables passes to the customer over time, revenue is recognized based on the proportion of total cost expended to the total cost expected to complete the contract performance obligation (defined as the ‘input method’ under Topic 606). For contracts which require the input method of revenue recognition, the determination of the total cost expected to complete the performance obligation(s) involves significant judgment. Management initially estimates the resources required to complete each relevant performance obligation, and incorporates revisions to hour and cost estimates throughout the course of the contract as necessary.

Cost of Product Revenue

Cost of product revenue includes the direct and allocated indirect costs of products sold to customers. Direct costs include labor, materials, reserves for estimated warranty expenses, and other costs incurred directly, or charged by contract manufacturers in the manufacture of these products. Indirect costs include labor, manufacturing overhead, and other costs associated with manufacturing activities. Manufacturing overhead includes the costs of procuring, inspecting and storing material, facility and other costs, and is allocated to cost of product revenue based on the proportion of indirect labor which supported production activities. The cost of product revenue can fluctuate significantly from period to period, depending on product mix and volume, the level of manufacturing overhead expense and the volume of direct material purchased.

Cost of Contract Revenue

Cost of contract revenue includes both direct and allocated indirect costs of performing work on contracts and producing prototype units and evaluation kits. Direct costs include labor, materials and other costs incurred directly in producing prototype units and evaluation kits or performing work on a contract. Indirect costs include labor and other costs associated with research and development and building technical capabilities and capacity. Cost of contract revenue is determined by the level of direct and indirect costs incurred, which can fluctuate substantially from period to period.

Manufacturing overhead, which includes the costs of procuring, inspecting and storing material, and facility and depreciation costs, is allocated to inventory, cost of product revenue, cost of contract revenue, and research and development expense based on the level of effort supporting production or research and development activity.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk are primarily cash, cash equivalents, and investment securities. As of December 31, 2025, cash and cash equivalents are comprised of operating checking accounts and short-term highly rated money market savings accounts. Short-term investments are comprised of highly rated corporate bonds and U.S. Treasury securities.

For the year ended December 31, 2025, four customers accounted for 42%,19%,15%, and 12% of total revenue, or $0.5 million, $0.2 million, $0.2 million, and $0.1 million of total revenue, respectively. For the same period in 2024, three customers accounted for 60%,13%, and 10% of total revenue, or $2.8 million, $0.6 million, and $0.5 million of total revenue, respectively.

Typically, a significant concentration of components and the products sold are manufactured and obtained from single or limited-source suppliers. The loss of any single or limited-source supplier, the failure of any of these suppliers to perform as expected, or the disruption in the supply chain of components from these suppliers could subject the Company to risks and uncertainties including, but not limited to, increased cost of sales, possible loss of revenues, or significant delays in product development or product deliveries, any of which could adversely affect the Company’s financial condition and operating results.

Income Taxes

Deferred tax assets and liabilities are recorded for differences between the financial statement and tax bases of the assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable for the period increased or decreased by the change in deferred tax assets and liabilities during the period.

Research and Development

Research and development expense consists of labor and subcontractor costs for internal research and product development activities, direct material to support development programs, laboratory operations, outsourced development and processing work, and other operating expenses. Research and development resources are assigned based on the business opportunity of the available projects, the skill mix of the resources available and the contractual commitments have been made to customers. Research and development costs are expensed as incurred. It is highly likely that a substantial level of continuing research and development expense will be required for the Company to further develop its technology.

Share-Based Compensation

The Company issues share-based compensation to employees in the form of restricted stock units (RSUs), performance stock units (PSUs), and stock options. Share-based awards are accounted for by recognizing the fair value of share-based compensation expense on a straight-line basis over the service period of the award, net of estimated forfeitures. The fair value of RSUs and PSUs is determined by the closing price of common stock on the date of grant. The fair value of stock options is estimated on the grant date using the Black-Scholes option pricing model. Changes in estimated inputs or using other option valuation methods may result in materially different option values and share-based compensation expense.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update expand annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. All disclosure requirements under this standard will also be required for public entities with a single reportable segment. The Company adopted ASU 2023-07 during the year ended December 31, 2024.

In March 2024, the FASB issued ASU No. 2024-01, Compensation: Stock Compensation (Topic 718). The amendments in this ASU clarify existing guidance related to profits interest and similar awards. ASU 2024-01 was adopted by the Company beginning January 1, 2025. The adoption of the new standard did not have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update require disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The Company retrospectively adopted ASU 2023-09 during the year ended December 31, 2025. The adoption of the new standard did not have a material impact on the Company’s consolidated financial statements. SeeNote 14. Income Taxes for enhanced disclosures pursuant to the standard.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this ASU require additional disclosure of specified information about certain costs and expenses in the notes to the financial statements. ASU 2024-03 is effective for annual periods for the Company beginning January 1, 2027, with early adoption permitted. The Company is currently evaluating the impact this ASU may have on its financial statement disclosures.

In November 2024, the FASB issued ASU No. 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20). The amendments in this ASU clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The amendments in this Update are effective for all entities for annual reporting periods beginning January 1, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. The ASU is not expected to have a material impact on the Company’s financial statements or disclosures.

3. NET LOSS PER SHARE

Basic net loss per share is calculated using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is calculated using the weighted-average number of common shares outstanding and the dilutive effect of all potentially dilutive securities, including common stock equivalents and convertible securities. As the effect of dilutive securities outstanding during the period is anti-dilutive, diluted net loss per share is equal to basic net loss per share.

The components of basic and diluted net loss per share are as follows (in thousands, except loss per share data):

For the years ended December 31, 2025, 2024 and 2023, the following securities from net loss per share have been excluded as the effect of including them would have been anti-dilutive:

4. BUSINESS COMBINATION

On January 31, 2023, the Company completed the acquisition of certain net assets of Ibeo, a lidar hardware and software provider based in Hamburg, Germany. The purpose of the acquisition was to acquire certain Ibeo assets, primarily intellectual property and personnel, which enabled the Company to expand their technology and product portfolio and diversify revenue streams.

Total consideration related to this transaction was approximately EUR 20.0 million or $21.6 million, consisting of approximately (i) EUR 7.0 million or $7.6 million in cash paid at closing, (ii) EUR 6.6 million or $7.1 million in cash advanced to Ibeo prior to closing, (iii) EUR 3.0 million or $3.3 million released from escrow during the quarter ended March 31, 2024, (iv) EUR 0.6 million or $0.7 million in costs paid on behalf of the seller, and (v) EUR 2.7 million or approximately $3.0 million after calculating the deduction in purchase price agreed between both the parties. The remaining balance of approximately EUR 2.7 million was paid during the three months ended June 30, 2024 and was previously recorded as an accrued liability for Ibeo business combination on the consolidated balance sheet. In addition, the Company incurred $0.6 million of acquisition-related costs associated with the acquisition during the three months ended March 31, 2023, which were included in Sales, marketing, general and administrative expense.

The transaction was accounted for as a business combination. The results of operations for the acquisition are included in the consolidated financial statements from the date of acquisition onwards.

The following table summarizes the final purchase price allocation to assets acquired and liabilities assumed (in thousands):

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 estimated fair value of the order backlog was calculated through the income approach using the multi-period excess earnings methodology.

Revenue and net income from the acquisition included in the consolidated statement of operations from the acquisition date through December 31, 2023 is $2.3 million and $3.9 million, respectively.

**5. REVENUE RECOGNITION **

Disaggregation of Revenue

The following table provides information about disaggregated revenue by timing of revenue recognition (in thousands):

The following table provides information about revenue and long-lived assets, which is comprised of property and equipment, net, and operating lease right-of-use assets, by geographic area (in thousands):

Contract Balances

Under Topic 606, the Company’s rights to consideration are presented separately depending on whether those rights are conditional or unconditional. Unconditional rights to consideration are included within accounts receivable, net of allowances in the consolidated balance sheets.

Significant changes in the contract assets and the contract liabilities balances during the period are as follows (in thousands, except percentages):

Contract Acquisition Costs

The Company is required to capitalize certain contract acquisition costs consisting primarily of commissions paid when contracts are signed. As the Company currently does not pay any commissions upon the signing of a contract, no commission cost has been incurred as of December 31, 2025.

6. INVESTMENT SECURITIES, AVAILABLE-FOR-SALE AND FAIR VALUE MEASUREMENTS

Investment securities, available-for-sale is comprised of corporate and government debt securities. The principal markets for the debt securities are dealer markets which have a high level of price transparency. The market participants for debt securities are typically large money center banks and regional banks, brokers, dealers, pension funds, and other entities with debt investment portfolios.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the authoritative guidance establishes a three level fair value inputs hierarchy and requires an entity to maximize the use of observable valuation inputs and minimize the use of unobservable inputs. The Company uses market data, assumptions, and risks that market participants would use in measuring the fair value of the asset or liability, including the risks inherent in the inputs and the valuation techniques. The hierarchy is summarized below.

Level 1 - Quoted prices in active markets for identical assets and liabilities at the measurement date that the reporting entity has the ability to access.

Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Unobservable inputs for which there is little or no market data, which requires us to develop our own assumptions, which are significant to the measurement of the fair values.

The valuation inputs hierarchy classification for assets measured at fair value on a recurring basis are summarized below as of December 31, 2025 and 2024 (in thousands). These tables do not include cash held in money market savings accounts.

Short-term investments are summarized below as of December 31, 2025 and 2024 (in thousands).

The maturities of the investment securities, available-for-sale as of December 31, 2025 and 2024 are shown below (in thousands):

The following table summarizes investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for more than 12 months as of December 31, 2025 and 2024 (in thousands):

7. NOTES PAYABLE AND DERIVATIVE LIABILITY

Background

On October 14, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) for the purchase of senior secured convertible notes (the “Note”) with an institutional investor (the “Holder”). The principal amount for the initial note is $45.0 million (the “Initial Principal Amount”), with an option for the Company to issue additional principal in the amount of $30.0 million (the “Additional Principal Amount” and, together with the Initial Principal Amount, the “Principal Amount”) of convertible notes to the Holder, subject to certain limitation.

The Note will rank senior to any outstanding and future indebtedness of the Company. Beginning on January 1, 2025, the Holder may elect to require the Company to partially repay the Notes up to $1.8 million monthly prior to April 1, 2025, and up to $3.5 million monthly on and after April 1, 2025, plus a 10% premium. In lieu of electing a partial repayment in each of the stated months, the Holder has the right to convert the Note to shares of the Company’s common stock at a conversion price of $0.7462 prior to June 1, 2025 and $1.5960 on or after June 1, 2025, subject to certain conditions.

Additionally, the Company has the option to require the Holder to convert the entire Note to shares of common stock if the share price exceeds $2.3940 on each of 20 consecutive VWAP Trading Days, subject to certain other equity conditions. If not fully repaid or converted, the end of term maturity balance is the outstanding principal balance of the Note multiplied by 110% and matures on October 1, 2026. The Note bears zero coupon. Pursuant to terms of the Note, the Company will maintain minimum cash liquidity of 110% of the then outstanding balance of the Note for the remaining duration of the Note term, or $19.5 million as of December 31, 2025.

On October 23, 2024, the Purchase Agreement closed and the Note was issued for net proceeds of approximately $38.1 million, inclusive of all discounts, fees, and expenses related to the transaction.

On December 30, 2024, pursuant to the terms of the Note, the Holder elected to convert $1.8 million of outstanding principal into 2,345,068 shares of the Company’s common stock.

On February 3, 2025, the Company entered into a Letter Agreement with the Holder related to the Note. As a result of the Letter Agreement, the Holder elected to early convert $8.8 million of outstanding principal into 11,725,337 shares of the Company’s common stock. Additionally, as a result of the Letter Agreement, the Holder agreed to defer $11.6 million of principal repayments toseven monthly payments of $1.7 million beginning on September 1, 2025 and concluding on March 1, 2026. The Letter Agreement represented a modification requiring extinguishment accounting in accordance with ASC 470. As a result of the modification, a realized loss on debt modification of $4.7 million and interest expense of $2.1 million for the year ended December 31, 2025 were recorded on the consolidated statement of operations.

On September 2, 2025, October 1, 2025, and November 3, 2025 the Company repaid $5.5 million principal on each date in accordance with the Holder’s redemption election pursuant to the terms of the Note.

As of December 31, 2025, $19.5 million principal was outstanding, inclusive of the 10% repayment premium. Subsequent to the dates of these financial statements, on February 23, 2026, the Company entered into a securities purchase and exchange agreement for the exchange of the Note and issuance of new senior secured convertible notes. SeeNote 17. Subsequent Events for additional information.

Components

The Note is a convertible debt instrument with multiple redemption, conversion, and put features. Certain features qualify as embedded derivatives requiring bifurcation. Therefore, the bifurcated features are accounted for separately as a compound embedded derivative in accordance ASC 815, “Derivatives and Hedging” and are included in the derivative liability on the consolidated balance sheets. The host contract, which represents the Note excluding the derivative liability, is accounted for as non-convertible debt under ASC 470, “Debt” and is included in notes payable, current and notes payable, net of current portion on the consolidated balance sheets.

Notes Payable

Subsequent to the modification, the host contract is recorded at the total amount repayable at maturity of $36.0 million, less any unamortized debt discount. The debt discount is equal to the amount repayable at maturity, net of the initial fair value of the bifurcated derivative liability. There were no material qualifying debt issuance costs resulting from the modification.

Supplemental balance sheet information is as follows:

Interest expense related to the amortization of the debt discount and issuance costs for the years ended December 31, 2025, 2024, and 2023 was $9.1 million, $4.4 million, and $0.0 million, respectively. Total interest expense for the years ended December 31, 2025, 2024, and 2023 is comprised of the following components:

The monthly effective interest rate implicit in the Note as of December 31, 2025 under the interest method was 2.2%.

Derivative Liability

The derivative liability was initially recorded at its fair value of $7.5 million as of the issuance date of October 23, 2024. The derivative liability is subsequently remeasured and reported at fair value each reporting period, with the changes in fair value recorded as an unrealized gain or loss and recognized in earnings.

The fair value of derivatives not designated as hedging instruments are as follows:

Unrealized gains and losses associated with derivatives not designated as hedging instruments are as follows:

Fair Value Measurements

The fair value of the derivative liability is determined utilizing a “with and without” method, in which the fair value is calculated as the difference in the fair value of the entire hybrid instrument and the fair value of the instrument excluding the bifurcated derivative features.

The fair value of the hybrid instrument is estimated using a binomial lattice model, which projects future movements of the underlying instrument over the remaining term. The model then calculates the fair value of the instrument by discounting projected cash flows based on the optimal action at each point in time. Optimal actions for both the Company and the Holder are determined by the projected stock price at a point in time, in addition to the probabilities of the occurrence of certain events. At initial measurement on October 23, 2024, a Monte Carlo simulation was further incorporated in order to simulate the Company’s share price as of the registration date, which occurred on November 21, 2024.

The fair value of the host contract excluding embedded derivative features is estimated using a debt discounted cash flow model, which assumes that the contract is a debt instrument with only the option to redeem partial principal payments prior to maturity. Projected cash flows are based on the assumption that the Holder will fully exercise early redemption options, based on the estimated internal rate of return for the Holder resulting from early redemption as compared to redemption at maturity. The debt discount rate is estimated based on the rate of similar non-convertible debt instruments reflecting the Company’s credit risk.

The valuation inputs hierarchy classification for liabilities measured at fair value on a recurring basis are summarized below as of December 31, 2025 and 2024 (in thousands). SeeNote 6. Investment Securities, Available-For-Sale and Fair Value Measurements for discussion of the fair value level hierarchy.

The table below lists the inputs and assumptions for the Company’s initial valuation as of December 31, 2024 and re-valuation of the derivative liability as of December 31, 2025:

8. WARRANT LIABILITY

On February 3, 2025, the Company entered into a new Securities Purchase Agreement (the “2025 Purchase Agreement”) with an institutional investor. In exchange for $8.0 million, the Holder agreed to purchase 5,750,225 shares of common stock (the “closing shares”) and warrants to purchase up to 5,750,225 shares of common stock at an exercise price of $1.57 per share (the “warrants”). On February 4, 2025, the 2025 Purchase Agreement closed for net proceeds of approximately $7.8 million, inclusive of all fees and expenses related to the transaction. The warrants are exercisable beginning August 4, 2025 and expire on August 4, 2030. There have been no exercises of warrants as of December 31, 2025.

The warrants are accounted for as a liability under ASC 480, Distinguishing Liabilities from Equity. Both the closing shares and the warrants are initially recorded on February 4, 2025 at their fair values of $9.0 million and $6.3 million, respectively. The warrant liability is subsequently remeasured and reported at fair value each reporting period, with the changes in fair value recorded as an unrealized gain or loss and recognized in earnings.

The fair value of warrants as of December 31, 2025 and 2024 are as follows:

Unrealized gains and losses associated with warrants are as follows:

Interest expense of $7.3 million representing the discount on the transaction was recorded on the consolidated financial statements for the year ended December 31, 2025.

The valuation inputs hierarchy classification for liabilities measured at fair value on a recurring basis are summarized below as of December 31, 2025 and 2024 (in thousands). SeeNote 6. Investment Securities, Available-For-Sale and Fair Value Measurements for discussion of the fair value level hierarchy.

The fair value of the warrants is measured using the Black-Scholes option pricing model as of the measurement dates. The table below lists the inputs and assumptions for the Company’s valuations as of December 31, 2025 and upon initial measurement as of February 4, 2025:

9. FINANCIAL STATEMENT COMPONENTS

Inventory

Inventory consists of the following (in thousands):

Inventory is computed using the first-in, first-out (FIFO) method and is stated at the lower of cost and net realizable value. Management periodically assesses the need to account for obsolescence of inventory and adjusts the carrying value of inventory to its net realizable value when required.

During the year ended December 31, 2025, the Company recorded a $9.9 million reduction to inventory due to obsolescence, primarily related to short-range MOVIA L sensors. During the year ended December 31, 2024, the Company recorded a $2.0 million reduction to inventory due to obsolescence.

Property and Equipment

Property and equipment consists of the following (in thousands):

During the year ended December 31, 2025, the Company abandoned $2.2 million of production equipment related to prior designs of the Company’s long-range MAVIN sensors.

Depreciation expense was $1.4 million, $2.1 million, and $3.1 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The components of intangible assets are as follows:

Amortization expense was $0.9 million, $2.1 million, and $2.1 million for the years ended December 31, 2025, 2024 and 2023, respectively.

During the year ended December 31, 2025, management identified various factors that collectively indicated that it is more-likely-than-not that the fair value of the Company’s perception software intangible asset was less than its carrying amount as of December 31, 2025. As a result, the Company performed an impairment assessment for intangibles in accordance with ASC 360, Property, Plant and Equipment. The December 31, 2025 impairment test indicated that the carrying amount of the perception software intangible asset is not recoverable, resulting in a non-cash impairment charge of $10.1 million, thereby fully writing off the asset.

During the year ended December 31, 2024, management identified various factors related to the 2024 restructuring events (seeNote 15. Restructuring Charges) that collectively indicated that it is more-likely-than-not that the fair value of the Company’s reference software intangible asset was less than it’s carrying amount as of December 31, 2024. Prior to impairment, the fair value was $4.2 million. As a result, the Company performed an impairment assessment for intangibles in accordance with ASC 360. The 2024 impairment tests indicated a decline in the carrying amount of the reference software intangible asset, resulting in a non-cash impairment charge of $4.2 million, thereby fully writing off the asset.

The following table outlines estimated future amortization expense related to intangible assets held as of December 31, 2025 (in thousands):

Accrued Liabilities

Accrued liabilities consists of the following (in thousands):

As of December 31, 2025, the Company had open purchase commitments of $3.2 million related to the production of select MOVIA L sensor inventory. The Company has determined that 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.

10. SHARE-BASED COMPENSATION

The Company issues share-based compensation to employees in the form of restricted stock units (RSUs), performance stock units (PSUs), and stock options. The following table summarizes the amount of share-based compensation expense by line item on the consolidated statements of operations:

During the year ended December 31, 2025, $4.4 million and $3.2 million of expense previously recognized within sales, marketing, general and administrative expense was reversed related to the forfeiture of awards in connection with the CEO and CFO separations, respectively, that occurred during the same period.

Options Activity and Positions

The following table summarizes shares, weighted-average exercise price, weighted-average remaining contractual term, and aggregate intrinsic value of options outstanding and options exercisable as of December 31, 2025 (in thousands, except per share data):

As of December 31, 2025, there isno unrecognized share-based employee compensation related to stock options.

Restricted Stock Activity and Positions

The following table summarizes activity and positions with respect to RSUs and PSUs for the years ended December 31, 2025, 2024 and 2023 (in thousands, except per share data):

During the year ended December 31, 2025, the Company granted 3,064,000 shares to non-executive employees for annual, short-term incentive, and new hire awards. These shares are valued based on the closing price of common stock on the dates of grant and vest immediately or over three or four years.

During the year ended December 31, 2025, the Company granted 78,000 shares to non-employees. These shares are valued based on the closing price of common stock on the dates of grant and vest immediately.

During the year ended December 31, 2025, the Company granted 9,589,000 shares to executive employees and directors for annual, short-term incentive, and long-term incentive awards. These shares are valued based on the closing price of common stock on the dates of grant and vest immediately, over one year, or over three years

As of December 31, 2025, unrecognized share-based compensation related to RSUs was $6.2 million, which will be expensed over the next 1.9 years. Unrecognized share-based compensation related to executive PSUs was $1.2 million, which will be expensed over the next 0.4 years.

11. LEASES

The Company leases office space and certain equipment under operating and finance leases. All leases have remaining lease terms of less than eight years. Office lease agreements include both lease and non-lease components, which are accounted for separately. Finance leases contain options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless the Company is reasonably certain to exercise the purchase option.

In September 2021, the Company entered into a lease agreement for product testing and lab space in Redmond, Washington which commenced in November 2021. In addition to base rent, the Company pays additional rent comprised of a proportionate share of any operating expenses, real estate taxes, and management fees. The lease, which expires in July 2032, includes anoption to extend the term for one ten-year renewal period.

In September 2021, the Company entered into a lease agreement for office space in Redmond, Washington which commenced in December 2022. In addition to base rent, the Company will pay additional rent comprised of a proportionate share of any operating expenses, real estate taxes, and management fees. During the quarter ended June 30, 2023, a payment of $3.0 million was received as an incentive to terminate the Company’s previous lease. The gain is recorded as other income in the consolidated statements of operations. The lease, which expires in December 2032, contains anoption to extend the term for one ten-year renewal period. On April 21, 2025, the Company signed an agreement with a third party to sublease a portion of this office space. The sublease commenced on July 15, 2025 and provides monthly rent of $0.1 million. The sublease expires on April 1, 2030 and containsone 32-month extension option.

In April 2022, the Company entered into a lease agreement for product testing for engineering and development activities in Nuremberg, Germany which commenced in May 2022. In June 2024, the Company abandoned the space prior to itsexpiration of November 2027. During the year ended December 31, 2024, impairment expense of $0.2 million was incurred and is recorded within sales, marketing, general and administrative expense on the consolidated statements of operations.

In September 2022, the Company entered into a lease agreement for office space in Nuremberg, Germany which commenced in November 2022. In June 2024, the Company entered into an early termination agreement to decrease theexpiration from April 2027 to April 2025, resulting in an insignificant early termination fee. During the year ended December 31, 2024, impairment expense of $0.1 million was incurred and is recorded within sales, marketing, general and administrative expense on the consolidated statements of operations.

Additionally, in connection with the January 2023 acquisition of assets from Ibeo, the Company assumed three leases in Hamburg, Germany. Each lease was abandoned orexpired in 2024, resulting in impairment expense of $0.1 million during the year ended December 31, 2024.

In December 2023, the Company entered into a lease agreement for office space in Hamburg, Germany which commenced in November 2024. The lease, which expires in October 2029, includes anoption to extend the term for two three-year renewal periods. During the year ended December 31, 2025, the Company determined that the associated operating lease right-of-use asset was impaired. Impairment expense of $1.2 million is recorded within operating expenses on the consolidated statement of operations.

In September 2025, the Company entered into a lease agreement for an airplane runway strip in Warrenton, Virgia which commenced in October 2025. In addition to base rent, the Company pays additional rent comprised of a proportionate share of any operating expenses and real estate taxes. The lease, which expires in September 2026, includes anoption to extend the term for two one-year renewal periods.

The components of lease expense are as follows:

Supplemental cash flow information related to leases is as follows:

Supplemental balance sheet information related to leases is as follows:

As of December 31, 2025, maturities of lease liabilities are as follows:

12. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

During the quarter ended September 30, 2023, the Company entered into a $9.3 million purchase commitment with a contract manufacturing partner for the production of MOVIA sensor inventory to support direct sales to both automotive and non-automotive customers. During the quarter ended December 31, 2024, the Company entered into an additional purchase commitment with the existing contract manufacturing partner of $1.8 million. As of December 31, 2025, the Company had open purchase commitments to the partner of $2.3 million that were included within the adverse purchase commitment record within accrued liabilities on the consolidated balance sheets and within cost of revenue within the consolidated statements of operations. SeeNote 9. Financial Statement Components for additional discussion.

Litigation

The Company is subject to various claims and pending or threatened lawsuits in the normal course of business. The Company is not currently party to any legal proceedings that management believes are reasonably possible to have a material adverse effect on financial position, results of operations, or cash flows.

13. COMMON STOCK

In March 2024, the Company entered into a $150.0 million ATM equity offering agreement with Deutsche Bank Securities, Inc., Mizuho Securities USA LLC, and Craig-Hallum Capital Group LLC (collectively, the “Agents”). Under the agreement, the Company is able, with discretion, to offer and sell shares of common stock having an aggregate value of up to $150.0 million through or directly to the Agents. As of December 31, 2025, the sale of 80.6 million shares for net proceeds of $104.0 million had been completed. As of December 31, 2025, approximately $42.0 million is available under this sales agreement, subject to certain limitations.

14. INCOME TAXES

Components of net loss before income taxes are as follows (in thousands):

Components of income taxes paid, net of refunds received are as follows (in thousands):

Components of income tax expense (benefit) are as follows (in thousands):

The difference between the effective tax rate of the provision (benefit) for income taxes and the Federal statutory rate is as follows (in thousands):

Components of deferred tax assets are as follows (in thousands):

As of December 31, 2025, a valuation allowance of $165.5 million was maintained for deferred tax assets which have been deemed not more likely than not to be realized.

As of December 31, 2025, the Company has net operating loss carryforwards of approximately $549.5 million for federal income tax reporting purposes. In addition, the Company has 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.

Certain net operating losses arise from the deductibility for tax purposes of compensation under nonqualified stock options equal to the difference between the fair value of the stock on the date of exercise and the exercise price of the options. For financial reporting purposes, the tax effect of this deduction, when recognized, is accounted for as an income tax benefit.

In certain circumstances, as specified in the Internal Revenue Code, a 50% or more ownership change by certain combinations of shareholders during any three-year period would result in limitations on the ability to use a portion of net operating loss carryforwards.

The One Big Beautiful Bill Act (“OBBBA”), which was enacted on July 4, 2025, introduced notable changes to the U.S. Internal Revenue Code, including the option to elect immediate expensing of domestic Section 174 costs. Section 174 costs are expenditures which represent research and development costs that are incident to the development or improvement of a product, process, formula, invention, computer software, or technique. As previously required under the Tax Cuts and Jobs Act, the Company capitalized research and development expenditures during the years ended December 31, 2022 through December 31, 2024. With the enactment of the OBBBA, the Company has continued to capitalize domestic Section 174 costs during the year ended December 31, 2025.

The Company hadno unrecognized tax benefits as of December 31, 2025 or 2024.

Interest accrued and penalties related to unrecognized tax benefits are recognized in tax expense. During the years ended December 31, 2025, 2024 and 2023, no interest or penalties were recognized.

Income tax returns are filed in the U.S. federal jurisdiction, certain U.S. states, and in Germany. Due to the Company’s operating loss and credit carryforwards, the U.S. federal statute of limitations remains open for 2006 and onward. Tax years 2022 and forward remain open in Germany.

15. RESTRUCTURING CHARGES

In 2024, to better align the Company’s resources to support business needs, the Company reduced the global workforce by approximately 41%. The Company recognized approximately $6.0 million in restructuring and related reorganization charges during the year ended December 31, 2024, of which $5.4 million is recorded within research and development expense and $0.6 million within sales, marketing, general and administrative expense on the consolidated statements of operations. The charges were predominately related to employee severance and benefit costs. Consistent with the impairment analyses performed during 2024, the workforce reduction and restructuring included, among other things, impacts from the de-emphasis on the Company’s MOSAIK software business. There wereno restructuring charges during the year ended December 31, 2025.

16. RETIREMENT SAVINGS PLAN

The Company maintains a retirement savings plan which qualifies under Internal Revenue Code Section 401(k). The plan covers all qualified employees. Contributions to the plan are made at the discretion of the Board of Directors. During the years ended December 31, 2025, 2024 and 2023, contributions of $0.3 million, $0.5 million, and $0.5 million were made to the plan, respectively.

17. SUBSEQUENT EVENTS

Subsequent to the date of these financial statements, on January 1, 2026, the Company acquired from Scantinel Photonics GmbH (“Scantinel”) certain assets related to Scantinel’s 1550nm FMCW ultra-long-range LiDAR sensor business. The purchase price of $0.4 million was paid on December 31, 2025 and is reflected in other current assets on the consolidated balance sheets. During the fourth quarter of 2025, prior to the closing of the acquisition on January 1, 2026, the Company advanced operating funds of $1.8 million to Scantinel.

On January 26, 2026, the Company entered into an agreement with Luminar Technologies, Inc. (“Luminar”), pursuant to which MicroVision agreed to acquire from Luminar certain assets related to Luminar’s worldwide lidar sensor business, including intellectual property and inventory related to its IRIS and HALO sensors. The acquisition was approved by the U.S. Bankruptcy Court on January 27, 2026. On February 3, 2026, the acquisition closed and MicroVision paid to Luminar the purchase price of $33.0 million (less the previously paid 10% deposit) plus cure costs of $0.2 million, funded through cash on hand.

On February 23, 2026, the Company entered into a Securities Purchase and Exchange Agreement (the “2026 Purchase Agreement”) with an institutional investor, pursuant to which the Company issued two senior secured convertible notes – 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 (combined, the “2026 Convertible Notes”). Net cash proceeds from the issuance are approximately $20.9 million, inclusive of initial discounts, fees, and expenses related to the transaction.

The 2026 Convertible Notes will rank senior to all outstanding and future indebtedness of the Company. Immediately upon closing and monthly beginning on April 1, 2026, the Holder may elect to require the Company to partially redeem the Notes. The Company has the right to optionally convert any partial redemption of the Notes to shares of the Company’s common stock, subject to certain conditions. If conversion is elected by the Company, the partial repayment amount is the greater of $3.0 million monthly, plus a 10% premium, or 110% of 7% of the aggregate daily volume of common stock for all VWAP trading days over a specified period. If cash settlement is elected by the Company, the partial repayment amount is $3.0 million monthly, plus a 10% premium. The end of term maturity balance is the outstanding principal balance of the Notes multiplied by 110% and matures on March 1, 2028. The Notes bear zero coupon.

Subsequent to closing the 2026 Purchase Agreement, on February 23, 2026, the Holder elected a partial redemption. The Company elected to settle through shares of common stock, which are expected to be issued on or before March 31, 2026.

On February 27, 2026, the Company committed to a plan to consolidate its Redmond, Washington-based engineering, manufacturing, supply chain, and quality activities into the Company’s new Orlando, Florida facility (the “Consolidation Plan”). The decision is part of the Company’s ongoing efforts to reduce operating expenses and cash usage, improve organizational efficiency, and align resources to support strategic priorities. SeePart II, Item 9B, Other Information for additional discussion.