So this is the right space. So and then from there, it’s significantly more growth because it’s not even scratching the entire fleet that gets launched every year. So we have great upside there. So that only happens, the target pricing they’re doing is if there’s economy of scale available, and they’re going to break millions of units. And they recognize that. So they’re expanding as we talk. The first part of the question was about, a lot about the OEM timelines. And is this right, Anubhav, did I get that right? I mean, I actually really forgot what the first part of the question was. Could you repeat it? Can you break the question down? Because this is a really long question.
Anubhav Verma: Yes. So I think it was about, I think the first part of the question was between ICE and EV, are you seeing the RFQs more focused towards ICE or EV?
Sumit Sharma: I think they have picked a year that they want to launch these products. Okay. And they’ve already announced publicly their EVs are towards the back end. So we are in ICE, and all the models that we’re talking about, I just see a bunch of ICE projects up front. And part of it is they have to deliver software. With our perception, we can probably accelerate their path. But like any OEM, they pick a model year. They pick, and they get all their suppliers lined up. They start with the sensor choices first off. But they have to get all the supply chains lined up. But I would say dominantly ICE engines are, back on the table.
Anubhav Verma: Right. And I think the design cycle, and I think maybe you talked about the design cycles already. Maybe if I can add one more thing, right? Because I think Sumit, you mentioned, yes, the demand there. I think I would like to point out, once you get these millions of sensors out there in the field, I think what automatically pops up is the after-service market as well, right? Because obviously, imagine these sensors out there on the field. And since we have made those sensors, we would be the go-to default to get any repairs, etcetera. So that’s also the adjacent market, which again, I keep saying it’s a traditional model of hardware and software combined, which just adds to the revenue opportunity here. All right, the next question is, management conveyed that the company is not pursuing AR anymore because it has no control over the end product or the end markets.
Here we are, though, trying to get placement in an OEM end product, finding ourselves in a similar situation. How would you characterize it?
Sumit Sharma: I’ll take that. I would say that that actually is not the right assessment. In the case of automotive LiDAR, there’s multiple global OEMs engaged in it, and they’re talking about it, and they’re talking about their features. Multiple companies that are saying the same thing because they’re dealing with the same OEMs. AR, I think there’s one contract that we had, and that did not go to the high volume that we expected. And since then, very few consumer electronic OEMs have actually stepped into it. I think one big one in Cupertino steps into it, but not with AR, with a mixed reality sensor, right? At $3,500 a pop. So I think it’s not the right or fair assessment saying that we don’t control it. In this case, we control our sensor, but somebody that controls even more complicated platform, and that’s their core business, are engaged, and they’re talking publicly about how important this is to them.
And they’re awarding billion dollar contracts according to people, as you know. So we’re in the right place, I would say, with our technology. MAVIN, with our MEMS-based technology, does something very special, and is in the right place at the right time. The Flash-based LiDAR, I think if you really take the time to read through our prepared comments, we give a lot of context of having a wide portfolio, so we’re not like a one-trick pony. In the case of AR, you’re a one-trick pony. In this case, you actually have a wide array of products that you can address the market with. And you have high contribution margin with software, which you had no opportunity anywhere else. So I would argue very strongly, and I think, and I really believe that most of the investors would agree with me after reflection, this is the best place to be.
This is the best opportunity this company’s ever had in its history.
Anubhav Verma: Well, thanks, Sumit. Without going too deep, please elaborate a bit on what type of industry settings our hardware and software offerings are suited for in the near term? Actually, I think, let me take that question because this is about the direct sales opportunity for the non-automotive customers. Look, I think investors need predictable revenue, right? We’re beginning to see medium to long-term partnerships with significant multi-year revenue opportunities in the industrial sector. Now, keep in mind, they are not as long as going into the next decade like the OEMs, but these are three to four-year deals that we are beginning to see from some of the forklifts, warehouse automation applications, agricultural applications, etcetera.
And I think this gives us the biggest bang for our buck because again, our business model is to be efficient and not go after 700, 800 customers selling three, four, five sensors each to them. In fact, we believe the best way to capitalize on this opportunity is to go after these two, three, four-year, multi-year deal with these industrial automation companies where they can use our MOVIA sensor into their robots and forklifts and the automation applications, etcetera. Again, I keep driving the point of having a gross margins because again, one of the reasons why we have been successful and command such a position in the market is because of being financially prudent and having a strategy to make sure the gross margins are protected, capital raising is done right.
All these things truly add to creation of long-term value for our shareholders, unlike others who chase revenue at low to negative gross margins because that model ain’t going to work anymore given where we are in the current economic cycle. All right, next question is, what happens to drive-by wire and sensor fusion? You didn’t mention anything on the call today. What’s the plan on that?
Sumit Sharma: I’ll take that one. I think, we have a team in Germany that worked on it, and of course our team here also contributed to that a little bit. But, there is no real big plan for sensor fusion. So we’ve actually taken the sensor fusion part of it and we’ve wound it down. The people have been allocated to other programs to be able to secure some of these RFQs, but we really don’t have a plan with sensor fusion long-term, given the environment that you clearly see that anybody that’s been working on L4 is scaling back. So customers were more than a decade out. And to be fair, to really make a dent into it, you have to make a significantly higher investment that we’re willing to make on pure R&D, on something that, other people that have a thousand engineers working on it are scaling back.
So our main focus remains our perception software. But one benefit I see is a team that knows how sensor fusion would work. They know what a customer’s requirement will be. As they continue perfecting the perception software part of it, they kind of know the problems that have to be solved. So I think we’re going to have a good team working on and focusing on our perception software. I think the question did not get asked about Mosaic, but let me just say Mosaic as a product stays valid. We’re still selling it. We’re promoting it to people that are interested, but we’re not making any more other investments in it to mature it any further. And again, it’s part of, financial discipline, because if we’re not seeing, we had a year ago when we talked about it, we had very high hopes for all the revenues that we thought that we had pipelines to, and the economy does its own thing, so we can’t control that.
But we’re readjusting the focus of the company based on the situation that we see ahead. And sensor fusion is something that our team did, but as a R&D project, it was never a product that was going to go without any big partnership. And given the fact the market for that has really reduced, I think it’s the right move for us.
Anubhav Verma: Thanks, Sumit. What are MicroVision’s plans to achieve IATF 16949 certification, similar to one of the competitors who announced the certification? What steps are in place for this certification?
Sumit Sharma: That’s a good one. That’s a really good question, actually. That’s an important question. So we are ISO 9000 now. I think you can go to our website, and it’s there. But as we talk about eventually to become a live RTR1, even though we’re working with contract manufacturers, our internal development processes and supply chain controls and everything have to conform to IATF. We intend to do that. But given the timelines that you need this for, it’s a qualification that will start over the next several years. We’ll get it done in time before any of these contracts. But the first thing is before we make that investment is to make sure you secure a big enough project. And if you think about anybody else out there that got IATF, it would be interesting to know for what volume that they did that.
It’s millions of dollars you have to spend to get that qualification. But if you had done it early, great, congratulations. But you’re shipping as an option to a car, low volume. I think the way we’re spending money is, yes, it’s going to cost several million to actually get that qualification, but you want to do it for the right time. And as we think about the RFQs, the closure of these RFQs that we’re focused on, that would be the right time to initiate it. And actually, OEMs know our plan. We’ve actually given that to them in writing. And they acknowledge that, yes, if you get it by that timeframe before C-sample, after B-sample, that’s adequate and sufficient. And of course, working with consultants outside, you have an estimate of what it’s going to cost, what time it’s going to take.
And given the fact that we have such a mature process that we inherited from IVAIL [ph], the only team that actually qualified an automotive LiDAR, we see our path that that’s not something that’s going to impede us long-term.
Anubhav Verma: Thanks, Sumit. So this is related to the Microsoft agreement. What is the status of the agreement? If renewed, was it on the same terms? Did December 2023 mark the conclusion? And let me take this one. So, yes, the Microsoft contract expired as at the end of December 2023. At this point in time, we have no visibility into any future revenue from Microsoft. Can you provide more detail on cash runway and to what date? And does the company envision it will have to issue shares in 2024? Let me take this one because it’s an important one. Liquidity. Look, let’s actually detail out the calculation. So our liquidity is 93 million, which I described is made up of $74 million of cash and cash equivalents and about $19 million in ATM availability.
And if our cash burn, which I provided to be $65 million to $70 million on an annual basis, it roughly translates into Q1 of 2025 or approximately 1.4 years. While I cannot share out exact plans, what I will say is we have shown a very disciplined history of capital raising, the ability to strategically and opportunistically raise money via ATMs position us very favorably as compared to our peers. I think you have seen in the past some of the peers had to resort to structured finance, overnight deals at significant discounts, damaging the stock price even until now. We will continue to strategically evaluate all the capital market instruments to preserve and create long-term shareholder value available, including equity and debt to strengthen the balance sheet and again, establish our credibility as a tier one player.
Because I think you have heard us talk about that quite a bit in this call. And I think this is sort of why we believe that we will be one of the winners in this LiDAR industry because of these attributes. I guess we are running out of time, but maybe I’ll take another question. Last question, Sumit, level four highway pilot, are there any updates you can provide about the level four highway pilot trucking OEM previously mentioned on the slide deck?
Sumit Sharma: I think like we said, it’s when you think about autonomy, right, I think, because again, we’re trying to keep everything consistent of exactly where the market is, give everybody the data that they need to make their decisions. Level four was all everybody talked about. It’s still there, but it’s much more diffused. I would say there’s only a handful of people so focused on it with timelines they have. We’re happy to support if we can for the right deal. But again, it’s a problem that is a pretty big problem that those guys are working on. And they have to find a viable business model. In the case of trucking, right, there’s how do I describe it? I think one of the other companies that is already public describes it as hub to hub transit that they’re doing.
They’re starting to explore business models for that. Effectively, they need LiDAR, but their software is the dominant central piece of that product line, but it is enabled by our LiDAR and other long range LiDAR that reach out to like, half a kilometer or something like that. So trucking is a space that you want to focus on. But again, it’s like anything else. I sell a sensor, we do some software, and the rest is really up to them. In the case of a passenger vehicle, it’s the same story, but since such high volume is needed that the sensor, the LiDAR sensor actually turns to be a very key supplier partner that they have to work with. In the case of the autonomy, the level four autonomy in trucking, you’re still a key supplier. But their timelines to figure out their business model, right, could determine how much money really comes into the company from the sale of products.
So, we support them. They are OEMs. It’s a small world. You want to support them as much as possible, but you got to be really mindful about where your resources are. Like as you said, we show financial discipline, meaning that if I have, 350 plus people in the company, we don’t want to increase OpEx based on the level four. We certainly want to increase OpEx based on large projects that may be coming with a level three, level two plus. But if you can support them with existing products, we’re happy to do so.
