Microsoft to hold HoloLens 2 press event next month

Quick Hit Thoughts to Start 2019

Some quick hit thoughts on this first business day of 2019.

Last Friday's Listing Deficiency Notice was expected and brought 2018 to a close. During the year, the company overhauled its entire technology platform, including a 1440p scanner, a Time-of-Flight ASIC for LiDAR and Interactive Display, and a new Video ASIC. Perry's commentary on this during the Q3 conference call was instructive:

"Based on this successful volume of work, we believe we are positioned to potentially support the launch of three product families during the second half of 2019 which could position us to achieve profitability in late 2019. To support these product launches we are now working with our module manufacturing partner to be ready for our 2019 sales opportunities and to minimize the associated working capital requirements."

This was the message back at the end of October. So, the company has had two months since then to continue to work with their "module manufacturing partner" to be ready for the 2019 product launches. Of note, if I understand this correctly, the partner referenced only has a license to sell "Display Only" Microvision modules at the current time. So if the three product families include Display Only, Interactive and AR/MR products, one could assume there would need to be additional license(s) acquired by this partner to sell modules for the two new verticals.


During the same Q3 conference call at end of October, we were told that the expected $3-4M of NRE from the Display Only partner was obviated:


"We said earlier this year that we expected to perform some NRE or non-recurring engineering activity work for our Licensee to customize the display engines for the Licensee’s customers. The good news is that so far, no customizations have been required. This implies that our references designs are closely aligned to what the OEM customers are looking for."


So, our licensee's OEM customers have had a Display Only reference design that meets their product needs since the end of October. Perhaps this means that our licensee may place component orders for Display Only modules before too long. The licensee is already out $10M (apart from the far greater capital investment costs to create an R/G/B/IR laser diode product family and the needed manufacturing capacity) so logic suggests there would be a sense of urgency on the part of the licensee's decision makers to turn that investment into a profit center. 


And, CES 2019 is less than a week away. We already know MVIS will be presenting their Interactive Display and LiDAR solutions to the press. If the products look good, this could create a wow factor with the assembled media. This would go a long ways towards solving the trouble with awareness that the company has struggled with for some time. And, our first component orders, should they come this quarter, could change the entire narrative about the company and its future prospects. 


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