Microvision: Equity or Debt Financing to Stay as Going Concern

During the month of August 2010, Microvision raised $12.5 million dollars from Azimuth Fund in order to prepare the 3rd Qtr 2010 financial on a “going concern basis.

Here's what they said in the 10-Q filing for the 3^rd Qtr earning report...

“In August 2010, we received a report from our independent public accounting firm regarding the consolidated financial statements for the year ended December 31, 2009 that includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. Our financial statements have been prepared on a going concern basis.

In August 2010, we entered into a committed equity financing facility under which we may sell up to the lesser of $60.0 million or 17,771,901 shares of our common stock to Azimuth Opportunity, Ltd over a 24-month term. In September 2010, we raised $12.5 million through the sale of approximately 6.3 million shares of our common stock under this facility. As of September 30, 2010 we have the lesser of approximately $47.5 million or 11.4 million shares of common stock remaining available under the facility, though we may not be able to sell shares under the facility in the amounts desired or at all. Based on our current operating plan, we anticipate that we have sufficient cash and cash equivalents to fund our operations through April 2011.”

Now three months later, in November 2010, I would expect Microvision to address the “going concern basis” issue again... because they probably burned another $12 million dollars during the three months from August to November leaving them essentially at the same financial spot they were in August of 2010.

Today is December 12^th and so far we have not heard a thing about any additional funding from Azimuth or any other form of equity or debt financing. We did, however, hear about the Memorandum of Understanding [MOU] with Pioneer Corporation of Japan...

MicroVision and Pioneer to Jointly Commercialize Innovative Laser Display Products

Here's the link to the news...
http://www.businesswire.com/news/home/20101208005686/en/MicroVision-Pioneer-Jointly-Commercialize-Innovative-Laser-Display

According to the news on MOU with Pioneer...

REDMOND, Wash.--(BUSINESS WIRE)--MicroVision, Inc. (NASDAQ: MVIS), a leader in innovative ultra-miniature laser display technology, announced today that it has entered into a memorandum of understanding (MOU) with Pioneer Corporation, one of the top original equipment manufacturers (OEMs) of high-performance audio, video and computer equipment for the home, car and business markets, to develop, manufacture and distribute display engines and display engine subsystems for consumer and in-vehicle head-up displays (HUDs) using the MicroVision PicoP^® laser display technology.

“We believe that by combining our respective market and product development capabilities, and leveraging best practices in manufacturing, MicroVision and Pioneer can accelerate introducing next-generation laser display products while reducing the total cost for both companies in getting there.”

Earlier this year, the two companies executed a joint development agreement to develop two critical components of the PicoP display engine: a laser light source module using direct red, blue, and green lasers and a separate display engine subsystem based on MicroVision’s patented PicoP laser scanning technology. Both are key pieces of the next-generation PicoP display engine that will offer OEMs significant commercial advantages in price, size, power, and performance for embedded solutions ranging from cell phones and eyewear, to airplanes and automobiles.”

Now this is what I'm wondering, just like thousands of other Microvision investors...

This is almost middle of December, and since there is no news of SEC filings on any funding from Azimuth or any other entity; there's the risk of “going concern” statement from the independent accounting firm in the 10-K Annual Report... unless the funding issue has been addressed, in some shape or form, by the MOU and soon to be announced details of some equity stake in Microvision by Pioneer Corporation.

If Pioneer Corporation were to share cost of future development, manufacture and distribution of whatever CE products and modular components they have agreed to; and also take an equity stake in Microvision; that would explain the silence on the funding front.

However, if Pioneer shares the cost of future engagement with Microvision, but does not take an equity position, then there would be some need for additional funding... possibly from the Azimuth Fund facility.

At the most recent 3rd Qtr earnings conference call, Mr. Jeff Wilson, Microvision CFO addressed the $48 million funding that is still available from Azimuth… but left some of us wondering how that may play-out in view of current MVIS stock price that dropped sharply after the CC.

“The terms of Azimuth funding are quite complicated to say the least. However, one thing seems clear that with MVIS stock trading at $1.25 or lower, there may not be any funding available from Azimuth?

Does that mean Pioneer Corporation is our “knight in shining armor” coming to Microvision rescue?

It surely looks that way from what I hear.

However, even with some equity funding and future cost shared with Pioneer, there is the impact of low MVIS stock price on Azimuth funding to flow. Here’s what the terms of Azimuth funding say in the 8-K filing…

“Threshold Price” is the lowest price at which the Company may sell Shares during the applicable Pricing Period as set forth in a Fixed Request Notice (not taking into account the applicable percentage discount during such Pricing Period determined in accordance with Section 3.2); provided, however, that at no time shall the Threshold Price be lower than $1.25 per share."

Microvision's first draw was allowed to be up to 12.5 million, but the subsequent draws are not. Subsequent draw limits are tied to the price of the stock. Since MVIS is currently in the price group─ $1.75 to $2.00, the maximum fixed amount they can request is $2 million dollars per draw every three weeks.

Two million dollars every four weeks [including 5 days waiting period] is about $6 million a Qtr and that is not so bad when you consider that Microvision is able to share future development cost with Pioneer; and with some equity funding [from Pioneer] they can make the Azimuth funding facility last to the middle of 2011.

That's the good part of the story.

The bad part is...

If the price drops below $1.25, then they can't raise anything, and that's obviously bad.

When you have only $21 million in cash─ as of September 30, 2010, spend $3 to $4 million per month, but you can only raise a maximum of about $2 million per month─ with the stock price in $1.75 to $2.00 range, the math is simple to do. You would run out of cash by middle of 2011… even though there would theoretically still be cash left on the Azimuth funding deal.

Not that I think the BODs would let them get all the way down to zero before adopting creative sources of alternate funding [like Pioneer] or dramatically cutting cost before shutting things down.

I see future cost sharing with Pioneer... with some equity funding as well.  What I don't see is any efforts to dramatically cut costs... and that has me wondering why?

At this point, it seems that any dilutive financing is pretty much priced into the stock.

Now consider this...

What would happen if the company issued debt instead?

Or, even better, what if a “white knight” like Pioneer took an equity stake in the company as Walsin Liwa did in 2009.

“Microvision could very well be the phoenix that rises from the ashes once the last remaining negative event [financing] is behind them.”

[… to quote Paul Marganski at http://www.picopros.com/]

Anant Goel

Microvision: White Knight in Shining Armor (part 2)

Here's the news from this morning...

December 08, 2010

06:00 AM Eastern Time 

MicroVision and Pioneer to Jointly Commercialize Innovative Laser Display Products

REDMOND, Wash.--(BUSINESS WIRE)--MicroVision, Inc. (NASDAQ: MVIS), a leader in innovative ultra-miniature laser display technology, announced today that it has entered into a memorandum of understanding (MOU) with Pioneer Corporation, one of the top original equipment manufacturers (OEMs) of high-performance audio, video and computer equipment for the home, car and business markets, to develop, manufacture and distribute display engines and display engine subsystems for consumer and in-vehicle head-up displays (HUDs) using the MicroVision PicoP^® laser display technology.

“We believe that by combining our respective market and product development capabilities, and leveraging best practices in manufacturing, MicroVision and Pioneer can accelerate introducing next-generation laser display products while reducing the total cost for both companies in getting there.”

Earlier this year, the two companies executed a joint development agreement to develop two critical components of the PicoP display engine: a laser light source module using direct red, blue, and green lasers and a separate display engine subsystem based on MicroVision’s patented PicoP laser scanning technology. Both are key pieces of the next-generation PicoP display engine that will offer OEMs significant commercial advantages in price, size, power, and performance for embedded solutions ranging from cell phones and eyewear, to airplanes and automobiles.

The MOU establishes the framework of a future manufacturing and commercial distribution agreement for PicoP-based display engines to be used in consumer, after-market and embedded automotive products. Pioneer has announced it is targeting commercial introduction of an in-vehicle HUD using PicoP technology into the consumer market in 2012.

“Pioneer has a strong history of bringing cutting edge technologies to mass markets,” stated Alexander Tokman, president and CEO of MicroVision. “We believe that by combining our respective market and product development capabilities, and leveraging best practices in manufacturing, MicroVision and Pioneer can accelerate introducing next-generation laser display products while reducing the total cost for both companies in getting there.”

Both Pioneer and MicroVision were recently recognized as finalists for the CEATEC Innovation Awards for 2010. Pioneer was recognized in the Automotive category for its demonstration of a HUD using laser scanning technology provided by MicroVision, and MicroVision was recognized in the Components category for its SHOWWX^™ laser pico projector, powered by the PicoP display engine.

Continues...

*****

Here's the link...
http://www.businesswire.com/news/home/20101208005686/en/MicroVision-Pioneer-Jointly-Commercialize-Innovative-Laser-Display

In my last post─ on the subject of “Microvision: White Knight in Shining Armor”─ I wrote…

“Something is cooking at Microvision; and considering the available options at this stage, and knowing how Microvision management operates, it could be the “knight in shining armor” knocking at the door shortly.”

Well, there you have it.

Today's news is about Memorandum of Understanding; which in my opinion is the precursor to Pioneer Corporation coming on-board as the joint venture strategic partner... in other words, our “knight in shining armor”.

The reason I say Pioneer is coming on-board as the joint venture partner; is very obvious from the wording of the press release...

“We believe that by combining our respective market and product development capabilities, and leveraging best practices in manufacturing, MicroVision and Pioneer can accelerate introducing next-generation laser display products while reducing the total cost for both companies in getting there.”

And then consider this...

“Earlier this year, the two companies executed a joint development agreement to develop two critical components of the PicoP display engine: a laser light source module using direct red, blue, and green lasers and a separate display engine subsystem based on MicroVision’s patented PicoP laser scanning technology. Both are key pieces of the next-generation PicoP display engine that will offer OEMs significant commercial advantages in price, size, power, and performance for embedded solutions ranging from cell phones and eyewear, to airplanes and automobiles.”

We're all too familiar with the Azimuth funding situation, so I believe at this point the management had to be looking at some serious alternatives. Here's some quotes from the 3^rd Qtr earnings conference call...

"...As a result of these events, most recent events, we have immediately accelerated our internal efforts to develop and commercialize the best performance, tiniest, low-cost engine for the high-volume consumer applications based on direct green lasers. We're in the process currently of selecting strong partners, who will help us to accelerate this effort, such that, our time-lines match the commercialization of the direct green laser time-lines."

This is what Alex Tokman, Microvision CEO said, when answering a question about cost containment...

"...We're gonna rely for, uh, for this second-generation engine, we're gonna very closely ally ourselves with, uh, one or two strategic partners, who will take on a lot more of a development and manufacturing than what we've done in the past."

I don't know what this means to you?

But to me, it means strategic partnership with sharing of joint venture costs and surely there's a possibility of equity funding from a strategic partner.

Once the market realizes the full impact of this strategic partnership with Pioneer Corporation, the MVIS stock price may start on the path to recovery, which in turn should allow Microvision to tap into the remaining money under the Azimuth facility starting now and more at a later date.

For a company like Microvision, with huge future potential but running out of cash while waiting for cheap diode lasers, Pioneer is the “knight in shining armor” and is the friendly enterprise that comes-on-board upon invitation of the management… and possibly offers cash, but surely shares development costs, for the next crucial 36 months, in exchange for an opportunity to joint venture in mega billion dollar market potential.

The good thing in this relationship is that; there are no stock dilutions from progressively increasing number of shares and warrants.

Having said that… 

Microvision’s current financial situation leaves them vulnerable to possible “hostile takeover” and the corporate management may be exploring every possible cost saving and additional funding strategy for the company in an effort to continue as an independent enterprise.

The only problem is; it may be too late to conserve available capital, including additional funds raised thru Azimuth─ if any, and make it last another 36 months as an independent “going concern”.

This joint venture strategic partnership, or whatever else you may call it, is the best of all possible avenues to financial survival and future growth without giving away the keys to the store.

I’m sure the recent purchase of a patent portfolio from Motorola was at the heart of this deal with Pioneer... because, it not only strengthens Microvision’s patent portfolio but also makes their [Microvision] laser based pico projection technology IP portfolio so much more broader that companies like Pioneer may find it cheaper to “join them” rather than “fight them”.

That is all good.

However, it’s not more patents and diversity of products that Microvision needs at this stage. What they need is fiscal responsibility to conserve capital for the next 24 to 36 months while they patiently wait for cheap diode/SHG green lasers… because without cheap green lasers, Microvision will not survive as a financially viable independent entity,­ with or without Pioneer.

You are right, this joint venture with Pioneer [ whether you see it for what it is or not] is the most significant and positive news for Microvision employees and its investors.

It may not be obvious to the naked eye...

• Pioneer is the "knight in shining armor" and they don't even know it. Equity funding from Pioneer is always possible... but it is not necessary while Azimuth funding is still in place.
• This “knight in shining armor” comes with NO stock dilution to the existing stockholders... and that's a very good thing under the circumstances.
• Microvision just transferred [some] of their SG&A and R&D cost to the joint venture with Pioneer... without laying-off any key personnel.
• Microvision just about [indirectly] solved its funding issue... because, sooner or later the market would recognize the financial significance of this joint venture and with PPS increasing gradually, the funding from Azimuth would keep flowing.
• Microvision just expanded their product offering to include Integrated RGB Laser Light Modules, Integrated Photonic Modules, and PicoP Display Engines.

The biggest news is...

This joint venture would now allow Microvision to introduce [spec] consumer products in partnership with Pioneer as a strategically aligned OEM with deep pockets... rather than waiting for OEM customers to come to the table with firm commitment to dollars, time-lines and product configurations.

Anant Goel

Microvision: What’s New in Laser Land?

The Red-Green-Blue (RGB) laser light sourcing has, for a long time, been one of the blocking factors for MEMS-based pico-projector development.

Technical challenges have been overcome by some laser manufacturers [like Osram for one example] that are now providing the three basic colors. It is expected that these lasers will be mass-produced in a single bar─ that is a platform integrating the three laser sources in one instead of three individual lasers, by early 2011.

Single bar RGB laser light source for MEMS pico projectors is expected to be much more cost effective and scalable to mass production. Not only that, there are other benefits of reduced physical size, lower energy consumption and faster modulation rates.

Laser pico projector pricing is then strongly related not only to the cost of RGB laser light source and production volumes but also to initial technology choices, the business model and product strategy.

Anant Goel

Microvision: What Does 15 Lumens Mean to SHOWwx+ Projected Image Brightness?

Here's the news...

MicroVision Unveils Second-Generation Laser Pico Projector, SHOWWX+

Press Release
Source: MicroVision, Inc.
Monday November 22, 2010, 1:00 pm EST

REDMOND, Wash.--(BUSINESS WIRE)-- MicroVision, Inc. (NASDAQ:MVIS - News), the leader in innovative ultra-miniature laser display technology, today unveiled SHOWWX+®, the second-generation of its award-winning laser pico projector. With a 50 percent brighter display within the same slim size, SHOWWX+ enables mobile device users to break free from the small screen and project large, clear 16:9 widescreen content wherever they are, on any surface.

“We’re on a mission to eliminate the squinting and huddling that occurs when mobile device users share content,” said Alexander Tokman, president and CEO of MicroVision. “SHOWWX+ is designed to simply and quickly connect to today’s hottest new portable devices so users can display and share large vibrant images and video with ease.”

Taking the Mobile Experience Beyond the Small Screen
SHOWWX+ is the first laser pico projector to offer a big-screen, movie-length experience that easily slips into a shirt pocket. Boasting two hours of battery life, 15 laser lumens, a contrast ratio up to five times higher than competing products, and the shortest throw ratio of any pico projector on the market, the SHOWWX+ is the perfect accessory for expanding viewing experiences beyond a palm or pad-sized screen. Its category-leading 5,000:1 native contrast ratio ensures the SHOWWX+ produces the deepest blacks and most brilliant whites.

Continues…

*****

Here’s the link to the news…
http://finance.yahoo.com/news/MicroVision-Unveils-bw-4077703968.html?x=0&.v=2

In all fairness, this is excellent news as it shows progress in the right direction to achieving a brighter and improved quality image from the tiny laser based PicoP Display Engine at the core of MicroVision’s second generation product SHOWwx+.

We have seen the first generation pico projector SHOWwx… and are really impressed by the 10-lumen brightness and the quality of projected image.

However, with the second generation SHOWwx+ there are lots of speculations and misinformation about what does it really mean to have 15-lumen brightness from the new PDEs?

Consider this in its utmost simplicity…

Lumen:
A lamp [LED or a laser diode] produces a certain amount of light that is measured in lumens. The lumen is the globally standardized SI unit of "luminous flux"--meaning that it measures just how much visible light is produced by an object such as, for example, a light bulb.

Typical indoor lamps have light outputs ranging from 50 to 10,000 lumens. You use lumens to order most types of lamps, to compare lamp outputs, and to calculate lamp energy efficiencies.

The luminous flux is a weighted sum of the power at all wavelengths in the visible band. Light outside the visible band does not contribute. Luminous flux is the total perceived power emitted in all directions. However, luminous intensity is the perceived power per unit solid angle… like as directed and projected on a screen and seen by the eye.

[Note that lumen output is not related to the light distribution pattern of the lamp. A large fraction of a lamp’s lumen output may be useless if it goes in the wrong directions… like as in diffused light from a lamp or LED source]

Luminous intensity:
It is a measure of the wavelength-weighted power emitted by a light source in a particular direction per unit solid angle, based on the luminosity function, a standardized model of the sensitivity of the human eye. The SI unit of luminous intensity is the candela (cd).

We are interested in the measurement of visible light as perceived by human eye; the human eye can only see light in the visible spectrum and has different sensitivities to light of different wavelengths within the spectrum. When adapted for bright conditions (photopic vision), the eye is most sensitive to greenish-yellow light at 555 nm. Light with the same radiant intensity at other wavelengths has a lower luminous intensity. For instance, the measured responses of the eye to violet light varied by a factor of ten.

Luminous intensity should not be confused with another photometric unit, luminous flux, which is the total perceived power emitted in all directions. Luminous intensity is the perceived power per unit solid angle.

Lux:
Lux is the unit that indicates the density of light that falls on a surface. This is what light meters measure. For example, average indoor lighting ranges from 100 to 1,000 lux, and average outdoor sunlight is about 50,000 lux.

One Lux, for example, is measured as one lumen per square meter. The general term for lux is “luminance”.

Lux versus lumen:
The difference between the lux and the lumen is that the lux takes into account the area over which the luminous flux is spread. A flux of 100 lumens, concentrated into an area of one square meter, lights up that square meter with a luminance of 100 lux. However, the same 100 lumens, spread out over ten square meters, produce a dimmer luminance of only 1 lux.

Now consider this…
A person looking at the screen sees different areas of his visual field in terms of levels of brightness, or luminance, measured in candelas [the measure of luminous intensity] per square meter.

With that clarity on the difference between lumen and lux; conversion between the two is simple.

Lux is a measure of how many lumens are present in a given area. It's essentially a measure of "photon density" or "light concentration." A "denser" cloud of photons [like a 10 lumen laser light pixel] means there are more lumens present in a pixel space… producing more brightness and higher lux as perceived by the eye.

A "lighter" cloud of photons [like a 10 lumen LED lighting the one square meter of the screen] means fewer lumens are present in a pixel space… leading to dimmer conditions and lower lux as perceived by the eye.

To achieve a desired lux level in a given space it may be necessary to use brighter bulbs with higher lumen rating or use many light bulbs, each producing a given number of lumens.

Do the Conversion…
Measure the dimensions of the space that you wish to illuminate, and write down how many square meters of surface area it has. In case of SHOWwx with 10 lumens, it is 10 lumens over the size of a pixel. In case of 10 lumen LED based pico projectors, it is 10 lumens over the one square meter of the screen.

The fundamental ratio of conversion from desired lux level to required lumens is:

1 lux = 1 lumen per square meter.

Since perceived brightness corresponds to a logarithmic function, depending on the shape of the function's graph, close to the x axis (where pico projector brightness is now), you would tend to see more difference from smaller amounts of change. That's because close to the axis, the curve is relatively steep. The technical projector literature, the ANSI definitions and viewers personal experience says…

“… In case of pico projectors, as you double the ANSI lumens you double the brightness."

However, as the lumen numbers get bigger─ like 2,000 to 4,000 lumens for lamp based projectors, the curve flattens out, so you need relatively more change in lumens to get the same perceived change in brightness.

"For pico projectors, depending on where you are on that curve, it might even be possible to get a “more” than double brightness increase from a smaller than double lumen increase."

In summary…
Lumen for lumen, the laser pico projectors have higher perceived brightness as compared to those using other light sources… and as you increase the ANSI lumens by 50% [going from 10 lumens to 15 lumens] you more or less increase the brightness by 50%.

Anant Goel

Microvision: White Knight in Shining Armor

In my last post─ on the subject of “Microvision: $48 million in Additional Funding”─ I wrote…

“The terms of Azimuth funding are quite complicated to say the least. However, one thing seems clear that with MVIS stock trading at $1.25 or lower, there may not be any funding available from Azimuth?

Does that mean some other “knight in shining armor” coming to Microvision rescue?

It surely looks that way from what I hear.”

First, here’s what the terms of Azimuth funding say in the 8-K filing…

"“Threshold Price” is the lowest price at which the Company may sell Shares during the applicable Pricing Period as set forth in a Fixed Request Notice (not taking into account the applicable percentage discount during such Pricing Period determined in accordance with Section 3.2); provided, however, that at no time shall the Threshold Price be lower than $1.25 per share."

Yeah, that seems like it could be a problem…

Microvision's first draw was allowed to be up to 12.5 million, but the subsequent draws are not. Subsequent draw limits are tied to the price of the stock. Since MVIS is currently in the last price group─ $1.25 to $1.50, the maximum fixed amount they can request is $1 million dollars per draw every three weeks.

That's a problem, because they can only do one request every three weeks, and making them that often (followed by the short selling Azimuth would be doing) risks dropping the MVIS price below $1.25.

If the price drops below $1.25, then they can't raise anything, and that's obviously bad.

But even if the price stabilizes, they'll still likely run out of money and be out of business by fall of 2011.

When you have only $21 million in cash─ as of September 30, 2010, spend $3 to $4 million per month, but you can only raise a maximum of about $1 million per month─ with the stock price in $1.25 to $1.50 range, the math is simple to do. You would run out of cash by fall of 2011… even though there would theoretically still be cash left on the Azimuth funding deal.

Not that I think the BODs would let them get all the way down to zero before shutting things down.

I know that is disheartening and financially devastating to lots of us. But unless BODs can find a buyer for the company, or get a source of funding other than Azimuth, or get a $1+ run in the stock price over the next 30-60 days, there is not much hope for changing the course of events that usually follow when a company runs out of cash.

For a company like Microvision, with huge future potential but running out of cash while waiting for cheap diode lasers, the “knight in shining armor” could be the friendly enterprise that comes-on-board upon invitation of the management… and offers cash for the next 36 months in exchange for progressively increasing number of shares and warrants─ as the PPS would in all probability be flat or drop every Qtr on news of more and more dilution of unknown proportions.

If you were to assume that cheap diode lasers would be available in the next 24 months and then it takes another 12 months to generate enough profits to self- sustain as a going concern… there is ample time of 36 months for our “knight in shining armor” to accumulate enough shares and warrants to not only cause massive dilution but also become the majority owner.

Having said that…

Microvision’s current financial situation leaves them vulnerable to possible “hostile takeover” and the corporate management may be exploring every possible cost saving and additional funding strategy for the company in an effort to continue as an independent enterprise.

The only problem is; it may be too late to conserve available capital, including additional funds raised thru Azimuth─ if any, and make it last another 36 months as an independent “going concern”.

I’m sure the recent purchase of a patent portfolio from Motorola is a good deal; as it further strengthens Microvision’s patent portfolio. However, it’s not more patents and diversity of products that Microvision needs at this stage. What they need is fiscal responsibility to conserve capital for the next 24 to 36 months while they patiently wait for cheap diode green lasers… because without cheap diode green lasers, Microvision will not survive as a financially viable independent entity.

I’m sure Microvision’s technology and IP portfolio would be of interest to some seasoned business entity with few hundred million dollars to burn.

The only other source of funding, other than a secondary IPO offered thru major investment banks, would be the “rights offering”…

“Cash-strapped companies can turn to rights issue to raise money when they really need it. In these rights offerings, companies grant shareholders a chance to buy new shares at a discount to the current trading price.

Let's look at how rights issue work, and what they mean for all shareholders.

Defining a Rights Issue and Why It's Used
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. More specifically, this type of issue gives existing shareholders securities called "rights", which, well, give the shareholders the right to purchase new shares at a discount to the market price on a stated future date. The company is giving shareholders a chance to increase their exposure to the stock at a discount price.

But until the date at which the new shares can be purchased, shareholders may trade the rights on the market the same way they would trade ordinary shares. The rights issued to a shareholder have a value, thus compensating current shareholders for the future dilution of their existing shares' value.

Troubled companies typically use rights issues to pay down debt, especially when they are unable to borrow more money. But not all companies that pursue rights offerings are shaky. Some with clean balance sheets use them to fund acquisitions and growth strategies. For reassurance that it will raise the finances, a company will usually, but not always, have its rights issue underwritten by an investment bank.

Be Warned
It is awfully easy for investors to get tempted by the prospect of buying discounted shares with a rights issue. But it is not always a certainty that you are getting a bargain. But besides knowing the ex-rights share price, you need to know the purpose of the additional funding before accepting or rejecting a rights issue. Be sure to look for a compelling explanation of why the rights issue and share dilution are needed as part of the recovery plan. Sure, a rights issue can offer a quick fix for a troubled balance sheet, but that doesn't necessarily mean management will address the underlying problems that weakened the balance sheet in the first place. Shareholders should be cautious.”

[Excerpt from… http://www.investopedia.com/articles/stocks/05/062905.asp?partner=answers]

Something is cooking at Microvision; and considering the available options at this stage, and knowing how Microvision management operates, it could be the “knight in shining armor” knocking at the door shortly.

Anant Goel

[I must attribute part credit for this post to Paul Anderson from the Yahoo Message Board]

Microvision: $48 Million in Additional Funding

At the most recent 3rd Qtr earnings conference call, Mr. Jeff Wilson, Microvision CFO addressed the $48 million funding that is still available from Azimuth… but left some of us wondering how that may play-out in view of MVIS stock price that dropped sharply after the CC.

I know a few VCs and hedge fund managers who have participated in secondary financings… the kind Microvision has engaged most recently with Azimuth.

Let me explain, using a hypothetical example, how this additional $48 million funding may be in play already and running its course…

• Microvision wants to raise $48 million and the stock was trading at $2.00 on November 1, 2010.

• If the deal was done, without the average price over 20 day period, there would be 26.7 million shares offered at $1.80 [$2.00 at 10% discount]. However, that is not the case… the investor [fund] is going with the average over 20 days clause… for a reason of course.

• After the agreement, the hedge fund would short sell the stock starting at $2.00 and go as far down as the most recent support level at $1.45… to raise $20 million and be 10 million shares [more or less] short… thereby limiting the net invested capital outlay to only $28 million. The $28 million net being the comfortable level of investment the hedge fund may want to make in the current financial market.

• Let’s assume the average price over a 20 day period, as a direct result of this short selling, is now $1.50. However, the conversion price will be $1.35 considering the 10% discount. That gives the hedge fund 35.6 million shares in exchange for $28 million net invested [$48 million - $20 million] vs. the 26.7 million shares they would have gotten for $48 million invested without the manipulation.

• In time, the hedge fund would cover the 10 million short shares from the 35.6 million shares received from Microvision treasury.

• The net result, the hedge fund got 25.6 million shares [35.6 million – 10 million] for a net investment of only $28 million [$48 million – $20 million].

So, the hedge fund just improved their average cost to $1.10 per share… and invested a total of only $28 million in these cash constrained financial environment.

Is it illegal? No.

Is it immoral? No.

Is it the American way? Oh YES.

On a more important note; the dilution from raising the additional $48 million to stay as a going concern─ while Microvision waits for cheap diode green lasers─ is only about 35.6 million additional shares… possibly increasing the total to 130.6 million shares from the current 95 million before this funding.

That’s not all that bad considering the dilution is only about 37% from $2.05 trading range... and seems to be already baked-in the $1.45 price as of this day.

Unfortunately, life is not that simple. The terms of Azimuth funding are lot more complicated than that and there are limits to the progressively lower amounts that can be funded as the stock price goes down.

The terms of Azimuth funding are quite complicated to say the least. However, one thing seems clear that with MVIS stock trading at $1.25 or lower, there may not be any funding available from Azimuth?

Does that mean some other “knight in shining armor” coming to Microvision rescue?

It surely looks that way from what I hear.

Anant Goel

Microvision: Take Over Candidate

Microvision will do fine in the year 2012/2013… but it may not be with its current management still in place or with AT as the CEO of the company. In all probability, Microvision will be taken over in the next 12 to 15 months… to put an end of this sad story in the hands of an ineffective management team.

If the BODs continue with the same old... same old for another 6 to 9 months, the game is over for Microvision as an independent entity. Fortunately, the current PIPE funding thru Azimuth may provide enough money to last another 6 to 9 months as a going concern… without having to worry about breaching the “loan or equity covenants” with their spend thrift lavish operating life style at Microvision.

You may not like what I say, but the current management has no vision, gumption, business strategy or ability to execute at Microvision. Microvision CEO looks like fish out of water and he operates the company like a rough riding cowboy shooting from the hip pocket. Under his leadership over the last four years, everything that’s done at Microvision seems like “reactive” and not something that was part of the plan or “pro-active”. Over the last sixteen quarterly earnings CC, this management team has exposed themselves to their short comings in managing most all aspects of financial and business affairs of the company.

It is quite visible now, after four long years, that the current management lacks business growth strategy; lacks vision; lacks gumption; lacks risk management savvy; lacks contingency planning; lacks fiscal responsibility; and certainly lacks ability to execute as a business-for-profit company.

I will back-up every statement that I make here in more detail in later posts on the blog… but for now, mark my words that the current management of Microvision, contrary to what I may have said before, is the worst ensemble of novices under the “learn as you go” directionless leadership of AT.

At the risk of repeating myself, mark my words…

The current PIPE funding thru Azimuth may provide enough money to last another 6 to 9 months as a going concern… without having to worry about breaching the ‘loan or equity covenants’ with their spend thrift lavish operating life style at Microvision. However, the last stop funding is in motion... after that; game is over for Microvision as an independent company.

This PIPE funding costs Azimuth not a cent... because; it is nothing more than a conduit for MVIS shares from the treasury to be sold to investors-at-large─ with Azimuth acting as the facilitator.

However, once this money is flushed down at an elevated rate approaching $12 million per Qtr… what’s next?

I’m sure the recent purchase of a patent portfolio from Motorola is a good deal; as it further strengthens Microvision’s patent portfolio. However, it’s not more patents and diversity of products that Microvision needs at this stage. What they need is fiscal responsibility to conserve capital for the next 12 to 18 months while they patiently wait for cheap diode green lasers… because without cheap diode green lasers, Microvision will not survive as a financially viable independent entity.

I’m sure Microvision’s technology and IP portfolio would be of interest to some seasoned business entity with few hundred million dollars to burn.

Today’s stock price at $1.53, after having traded at $5.57 last year─ right after SHOWwx product launch, does not speak much for the current management of Microvision.

Anant Goel

Microvision: Hyper Growth in 2011

Rapid Development in Native [Diode] Green Laser Technology Sets PicoP™ Projector into Hyper Growth for Year 2011

In the emerging market for pico-projectors, as well as, other display techniques such as head-mounted display (HMD) or head-up display (HUD), the ideal light source would be a laser due to its capability to deliver highly saturated colors in the widest possible gamut.

Additional desirable features include focus-free operation, improvement in wall-plug efficiency─ reducing power consumption for battery operation, lower cost and high production scalability. The great advantage of laser projectors is a consistently sharp, always-in-focus, true-color, high-contrast image irrespective of the projection distance and projection surface

As we all know too well, the availability and cost of green lasers, both diode and SHG, has held back the progress in ramping-up production of laser based PicoP projectors.

However, there are three pieces of news, two from this morning and one from a year ago, that put the commercialization of laser based PicoP projectors from Microvision on steroids… for hyper growth in the year 2011.

First the old news from August 2009…

“Success in the laboratory: direct emitting green InGaN laser with 50 mW

OSRAM has set a new milestone for mobile laser projection

OSRAM Opto Semiconductors has achieved a major breakthrough in the laboratory with its direct emitting green indium-gallium-nitride laser. It already achieves an optical output of 50 mW and emits light in true green with a wavelength of 515 nm. Compared with semiconductor lasers based on current technology that operate with frequency doubling, direct emitting green lasers are more compact, offer greater temperature stability, are easier to control and have higher modulation capability.”

*****

Here’s the link to the Osram web site…

http://www.osram.com/osram_com/News/Trade_Press/LED_OptoSemiconductor/2009/090813_PM_R%26D_gruenerLaser_en.html

Over the last one year there have been several articles and white papers published indicating rapid improvement in the development of diode green lasers getting out of the lab approaching commercialization.

Today’s news from Corning confirms that…

Press Release
Source: Corning Incorporated
Monday November 1, 2010, 7:00 am EDT

CORNING, N.Y.--(BUSINESS WIRE)-- Corning Incorporated (NYSE:GLW - News) today announced its results for the third quarter of 2010.

In the press release Corning stated…

“In other matters, Corning has decided to discontinue its development and commercialization of synthetic green lasers. Given the rapid development of native green technology, the company concluded that the market for synthetic green lasers is limited.”

*****

Here’s the link to the press release…
http://finance.yahoo.com/news/Corning-Announced-bw-2268286162.html?x=0&.v=1

This piece of news further confirms that rapid progress has been made with diode green lasers. And Osram, for example, has overcome the previous limits of the InGaN material system. At the pre-development stage─ in August 2009, the company succeeded in manufacturing the first direct emitting green laser diode from the InGaN (indium-gallium-nitride) material system with a high optical output. The diode emits a “true green”, which is defined by the spectral range of 515 to 535 nm. In this range, efficient high-quality semiconductor lasers have been commercially available only as frequency-doubled versions. In the medium term, however, direct emitting green lasers could replace frequency-doubled lasers for numerous applications. They are easier to control, and also offer greater temperature stability, a smaller form factor and higher modulation capability at several 100 MHz.

Now we come to the last piece of the news that confirms the rapid development of diode green lasers… and that puts the commercialization of laser based PicoP projectors from Microvision on steroids for hyper growth in the year 2011.

Here we go…

Press Release
Source: Microvision, Inc.
Monday November 1, 2010, 7:00 am EDT

REDMOND, Wash.--(BUSINESS WIRE)-- Microvision, Inc. (NASDAQ:MVIS - News), a leader in innovative ultra-miniature projection display technology, today announced it has successfully integrated the first “direct green” laser samples from two leading manufacturers into pico projector benchtop prototypes. This achievement represents an important first step toward the commercialization of PicoP® display engines using direct green lasers. The PicoP display engine utilizing a direct green laser is expected to offer significant commercial advantages in price, size, power, and performance.

“We are very pleased with the performance of these early direct green laser prototypes,” commented Sid Madhavan, Microvision vice president, R&D and Applications. “These encouraging results give us confidence that direct green laser diodes will be capable of meeting the performance requirements for integration into our PicoP display platform.”

Simplicity leads to lower costs
Microvision’s current pico projection engine uses red and blue laser diodes and a frequency-doubled “synthetic” green laser to create a full color image. Synthetic green lasers are infrared lasers that are manipulated to reduce their wavelength to produce a green light. This conversion process creates a complex system of multiple components held to tight tolerances making manufacturing more challenging.

Direct green lasers are capable of producing green light natively, greatly simplifying laser design and manufacturing processes. Direct green lasers are expected to be manufactured in a manner similar to red and blue lasers available today, facilitating lower cost and rapid scalability to commercial quantities. The combination of smaller size, lower power, and lower cost make direct green lasers an attractive alternative to synthetic green lasers for Microvision’s mobile display solutions.

Historically, availability of synthetic green lasers has been constrained due to their complexity and the existence of only two manufacturers. Today, there are at least five companies worldwide that have announced they are developing direct green lasers for late 2011 to mid 2012 commercial introduction. Industry researcher Yole Development forecasts that the direct green laser market size will reach about $500 million by 2016 and should represent more than 45 million devices.

*****

Here’s the link to the press release…
http://finance.yahoo.com/news/Microvision-Integrates-First-bw-2659567055.html?x=0&.v=1

Some would say that this press release from Microvision is damage control in view of Corning’s decision to discontinue its development and commercialization of synthetic green lasers.

But, I disagree… because of two simple reasons:

First: Corning has decided to discontinue development and commercialization of synthetic green lasers… but that doesn’t mean they will stop production of what’s on order and contracted with Microvision.

Second: Currently, SHG green laser diodes are available on the market from Corning, Osram and QD Laser… and each have their own proprietary solutions. Now if you take Corning out of the equation… you still have two other suppliers of SHG green lasers in the interim period from now to mid 2011.

The bottom line is…

“Next year, the commercialization of laser based PicoP projectors from Microvision gets into fast lane for hyper growth in the year 2011.”

We just have to wait and see how things unfold from here?

Anant Goel

Microvision: Announcement of OEM for High End Media Player with Embedded PicoP™ Projector

The question of an announcement, by Microvision, of the OEM for the HEMP is on everyone’s mind. Some of us feel this announcement is imminent; while others feel it could be delayed for CES 2011 in January.

Either way, it is important to understand the various generations of Microvision PicoP Display Engines that we have [or will have] floating around very shortly… and based on which one the OEM decides to embed in the HEMP could very well dictate the announcement date.

Here we go…

1st Generation PDEs: This is one that went inside the SHOWwx [Standard and the Limited Edition] units shipped in March 2010. Features include a native resolution of WVGA (848 X 480), ultra-simple plug-and-play use, fiddle-free infinite focus, very high-contrast ratio, and bright vivid colors generated from ultra-miniature laser light sources. Users simply connect the SHOWWX to any mobile device with TV or VGA out (iPod, laptop, etc.) and project DVD-quality images from a mobile device, up to 200" across, depending on the ambient light.

Here’s the link to the press release…
http://phx.corporate-ir.net/phoenix.zhtml?c=114723&p=irol-newsArticle&ID=1399816&highlight=

2nd Generation PDEs: Interestingly, on March 29th; Microvision announced the completion and shipment of initial samples of its new display engine that incorporates a proprietary ASIC chipset half the original size and weight and that consumes one third less power than its predecessor while delivering uniformly bright, vivid color WVGA (848 X 480) images up to 200 inches. It also provides a 5000:1 contrast ratio – 5 times greater than other pico projector engines in the market today and is always in focus without the need for focusing dials or optics – an especially desirable benefit for mobile consumers.

On April 5th; Microvision announced that it had received an $8.5 million purchase order for its new ultra-miniature PicoP laser projection display engine from a consumer electronics customer. The OEM plans to [in my opinion] embed this 2nd generation PicoP Display Engine inside the high-end mobile media player for release in late 2010 and plans to announce its launch at that time.

Here’s the link to the press release…

http://phx.corporate-ir.net/phoenix.zhtml?c=114723&p=irol-newsArticle&ID=1407100&highlight=

http://phx.corporate-ir.net/phoenix.zhtml?c=114723&p=irol-newsArticle&ID=1409371&highlight=

3rd Generation PDEs: On May 24th; Microvision unveiled the increased brightness 15-lumen 720p HD-ready laser pico projector demonstrator at The Society for Information Display Conference.

According to Microvision press release, the 720p HD-ready prototype pico projector outputs 15 lumens of brightness while still maintaining its compact, low profile form factor, very similar to Microvision's current WVGA product. The company plans a commercial product version of a 720p HD PicoP display engine in the second half of 2011. The new 720p, higher brightness prototype highlights the capability of PicoP technology to support new performance levels while still maintaining the compelling attributes of the existing PicoP platform, including:

• Infinite focus;
• Wide throw angle that offers an immersive visual experience;
• Superior brightness uniformity;
• High optical efficiency resulting in low power requirements;
• 5000:1 contrast ratio; and
• Vivid colors of up to 200% greater than standard broadcast television.

Here’s the link to the press release…
http://phx.corporate-ir.net/phoenix.zhtml?c=114723&p=irol-newsArticle&ID=1430235&highlight=

4th Generation PDEs: These 4th generation PDEs will have to wait till first generation diode green lasers become available in 2012. Initially, the first generation diode green lasers are expected to be expensive compared to possibly the 3rd generation SHG green lasers that may be around… but still may find their way into the 4th generation PDEs as premium modules with higher brightness and resolution with lower power needs.

5th Generation PDEs: These 5th generation PDEs are expected to find their way into millions of PicoP projector in 2013; when 2nd generation diode green lasers would have dropped dramatically in price and reached optimum performance and efficiency levels.

All that is great news but for now let’s get back to the question of the OEM for the HEMP?

In my opinion, there is always the possibility that the OEM may go with the 2nd generation PDEs, as originally announced, and launch the product tomorrow on November 1, 2010.

However, if the 3rd generation PDEs are available now, or will be available shortly, I would change my bet and go with the CES 2011 in January as the possible announcement date.

If we were to pay attention to Microvision press release of April 5th; we may have the surprise announcement at the 3rd Qtr earnings conference call at 4:30pm on November 1, 2010…

“The unidentified customer plans to embed the PicoP engine inside a high-end mobile media player for release in late 2010 and plans to announce its launch at that time."

We just have to wait and see!

Anant Goel

Microvision: What Business Growth Strategy?

Every business has to plan for growth and executives should make sure their growth plans are consistent with their dynamic business plan. A dynamic business plan is an updated version that is kept current to reflect the ever-changing business-operating environment. Especially in the technology and DOT.com businesses, where the product cycles are so short and consumer preferences are mostly dependent on the next hot product or service.

When it comes to growth plans, the two ends of the spectrum are, for example, should a company grow quickly and unprofitably, like Amazon and Hotmail─ before it got acquired by Microsoft for $480 million, or slowly with a careful eye on the bottom line, like Ben & Jerry's ice cream parlors? It all depends on how much venture capital you have access to and what the competition is doing!

The worst thing you can do is fail to decide whether you're going to be a Ben & Jerry's company, or a Hotmail company, or an Amazon company.

There are three possible scenarios when focusing on the challenges of growing a business and picking the right growth model that is consistent with your business plan and positions you for whatever your ultimate goal is…

Number one: you want to be the gorilla of your industry in a hurry like Amazon.
Number two: you want to ramp-up your business fast and position for an acquisition like Hotmail.
Number three: you want to be a brick and mortar company producing steady profits like Ben & Jerry’s.

Regardless of what your business model is, the CEO and the CFO of the company need to formalize their business growth strategy and evangelize to the man in-charge of running the day-to-day operation of the business. Building a company is no small task? You've got one very important decision to make, because it affects everything else you do. No matter what else you do, you absolutely must figure out which camp you're in, and gear everything you do accordingly, or you're going to have a disaster on your hands.

THE DECISION MAKING PROCESS:

Whether to grow slowly, organically, and profitably, or whether to have a big bang with very fast growth with lots of capital spent in a hurry, that is the question?

The first model, popularly called "Get Big Fast" (a.k.a. "Land Grab"), requires you to raise a lot of capital, and work as quickly as possible to get big fast without concern for profitability. I'm going to call this the “Amazon”, because Jeff Bezos, the founder of Amazon, has practically become the celebrity spokes-model for Get Big Fast.

The second model is called "Hotmail for Sale or Fail". As for the name of our model “Hotmail for Sale or Fail”, I just made it up to make the point. This model requires you to raise only a small amount of capital, position for acquisition, and work as quickly as possible to build momentum to show there is promise of getting big fast… without concern for profitability. I'm going to call this “Hotmail” model, because Hotmail fits this model very well.

The third model, organic growth model, is to start small, with limited goals, and slowly build a business over a long period of time. I'm going to call this “Ben & Jerry’s” model, because Ben & Jerry’s fit this model pretty well.

Now the question is: “where on earth does the Microvision business model fit-in?"

The short answer is...

 "Nowhere"

Microvision’s current business growth strategy is either non-existent or is severely flawed after the green laser debacle of late… that still continues to haunt Microvision even after 4 years.

Here’s one clue to the non-existent, or flawed, business growth strategy…

In early 2007, Alex Tokman, CEO of Microvision, was quite aware of the following facts…

*  Embedded pico projector was to be the holly grail for Microvision.
*  Without diode RGB lasers; the power, size, and cost of the laser light source based on SHG green lasers would be prohibitive for embedded applications.
*  In 2007, diode green lasers were 4 to 5 years away… as like in 2011/2012 time frame.

If you were to assume correctly, and AT was aware of these facts as early as in 2007, then why in hell his management team carried-on with an army of personnel in SG&A [and R&D] to continually spend over $12 million dollars every Qtr for the last four years. If AT had used this readily available information and some gumption to control costs to say $6 million per Qtr… today there would be lot less pressure to raise money to continue with operations─ while still waiting for diode/SHG green lasers, because Microvision would have saved over $96 million dollars in costs without sacrificing much.

Microvision management should have either changed their business growth strategy to “hunker down” and coast on a low cost/low profile basis until the green laser technology was mature enough with more plausible cost and performance metrics… or let someone else run the company, instead of pushing the company hard on the downward spiral of financial gloom and doom while waiting for diode/SHG green lasers.

Microvision’s current business growth strategy assures that they will continue to lose money-- as they are now… and continue to do so all of the next year and five years from now. The cost and availability of green lasers today, or a year or two from now, plays a role but its financial impact on the bottom-line profitability is very small when you consider the vicious [large volume/lower cost/lower absolute dollar margin] cycle associated with commodity products such as PDEs and IPMs that are sold to consumer product OEMs.

As long as Microvision corporate management is fixated on just selling their laser light based PDEs and IPMs in an OEM market that has all the makings of a commodity market… they will be at the mercy of the OEMs; for consumer product introduction time-lines, consumer product pricing, product marketing, and commodity component pricing with no pricing power.

Just look around and tell me if you see any embedded mobile phone camera makers or the touch screen makers [for things like iPad or iPhone] making any money worth crowing about. On the other hand, consumer product OEMs like Apple, with vision and gumption, come to market with one consumer product at a time─ on their terms, and rake-in billions in revenue and profits.

The current Microvision business model calls for hundreds of millions in sales of PDEs and IPMs to make a few millions dollars in net profit in a commodity type pricing environment … and that too, if and when the OEM customers let that happen.

Microvision still has time to re-configure its business growth model and seriously consider launching its own branded consumer products ─ possibly in partnership with large OEMs; and be the shaker, baker, and maker of its own destiny.

Just take the current situation of Microvision patiently waiting on its hands and feet─ and spending $12 million dollars per Qtr; while the OEM for the High End Media Player (HEMP) procrastinates on product configuration, product introduction time-lines, and product marketing and pricing issues.

In the best case scenario, the current Microvision business model can, in a year or two, only produce modest earnings growth of perhaps 12% per years for many years to come… and may never come even close to the hyper growth in revenue and earnings that we once believed was possible.

Anant Goel

Microvision: Chickens Come Home to Roost

For a company that launched laser based SHOWwx in September 2009, and announced the availability of the hottest consumer electronic product of this decade, your management team is awfully quiet on all fronts of news with no visible signs of product promotions, marketing or sales. Granted, the backorders and future product introductions do count; but then again who knows for sure what the future would bring, and if the deliveries would be made at profitable terms.

Market does not like the lack of any significant news for extended periods and reacts by selling [and short selling] the Microvision stock. Just over the last few months, the stock price has dropped like a rock [down from $5.44 on October 26th 2009 to $1.96 this morning]. This kind of price drop, it seems, has become a norm for Microvision stock after every Qtr earnings CC or the Annual Shareholders Meeting.

Lack of news; or lack of any visible signs of product promotion, marketing, or sales does not build confidence in Microvision business model… and as a result, more and more investors [and supporters] abandon the MVIS stock every time there is carnage in its market price.

I don’t know if you realize how important the Microvision investors are to the well being, survival, and future prosperity of your [our] company?

Four years is a long time, and $160 million dollars is a lot of money, to accomplish what little progress Microvision has made under the current management.

Over the last four years, I have gone from being ultra bullish initially to being relatively bearish now. And that’s because too little has been accomplished over the last four years at an exorbitant cost of over $160 million dollars. Competition has caught-up with Microvision in all those product categories where the company may want to compete someday. And that someday still remains elusive and lies somewhere in the distant future.

Issues were well known four years ago; and they still are the same─ green laser technology, green laser quantities, green laser pricing, speckle, bow tie image effect, lack of image brightness, too warm to touch, too high a cash burn rate, constant need for additional funding, yada, yada, yada.

Over the last four years, Microvision spends almost $5 million per Qtr in SG&A; with an army of personnel in administration, management, sales, sales engineering, marketing, product development, business development, global business development, strategic planning & development, communications, Investor Relations, out-sourced Public Relations, etc. Any fancy management title that you can think of, you will find at least one, if not more, at Microvision. However, this army has basically produced very little in terms of product awareness, viral marketing, or sales… with years of insignificant revenues and zilch in profits.

If I were to vacillate between bullish to bearish [the so called flip flop] over a short period of time, your comments would have some merits. However, four years is a long time to learn the strengths and weaknesses of the management team that has been in place all these years.

Current management lacks vision and gumption… and that is worrisome because both cash and time is running out for Microvision. More of the same old… same old… will be detrimental to the well being of Microvision and its investors.

[Gumption: Courage, guts, nerve, bravery, common sense, good sense, horse sense, practicality, initiative, resourcefulness, get-up-and-go]

The current PIPE funding through Azimuth Opportunity Fund is indicative of the desperate financial situation that has finally arrived at the door steps of current Microvision management.

Sooner or later, we as the investors of Microvision will learn from our mistakes just like the current management of Microvision would realize soon enough that investor money is not an ever flowing river of milk and honey and the chickens do come home to roost.

Like many others, I too was surprised that Microvision, which has some great products and patents, needs to resort to financing through Azimuth Opportunity Fund. The fund is known as the equivalent of a pawn-shop in the investment community, as their strategy is not to invest for any period of time in the financed companies, but to dump the shares immediately in the market to get their invested capital out… and make as much profit they can get.

For me, and hundreds of others that have followed my recommendations, the mere fact that Microvision had to use such a fire-sale financing method is very negative… and is the final straw that broke the [proverbial] camel’s back.

Either the current management is very inexperienced and unaware how this will reflect on their company; or Microvision is really perceived as a bad risk by creditors.

Either way, the high cash burn rate and creditors' reluctance to lend more money to Microvision is not a good sign.

Someone recently made a comment at the Yahoo Message Board for Microvision…

"Microvision seems utterly unable to deliver on the promise of the technology and they have burned through all the money they are going to be able to raise trying to do so.”

“…. I'm sure the tech will become widely accepted but Microvision will have ceased to exist long before that happens. That's the real danger here. The company has been and is being run into the ground by …"

After 14 years and $385 million dollars later... such comments don't seem too far fetched. When you consider the last 4 years and over $160 million dollars in expenditure, while idling at the stop sign waiting for the green light, you would think that the management really believes in fairy tales and expects even more investor money to fund their orgy.

However, the good news is, if you could call it that, the chickens are coming home to roost─ we are down to the wire and are in the last two innings of this ball game.

Given another 9 months and the last $48 million dollars in pawn-shop slush fund, in my opinion, this fat and bloated management style will come to an end… or at the very least, there will be some re-balancing of the risk/reward matrices at the corporate management level.

Only time will tell the rest of the tale… in the meantime, smart money Wall Street has spoken by showing Microvision the door to the pawn-shops of the financial world.

Once Microvision burns another $48 million over the next three Qtrs, and at the end of this period is unable to self-sustain further cash requirements, nothing would matter... because the Wall Street investor community isn't buying this hide behind the stack of back orders and NDAs story any longer.

If Microvision management got something of substance, then come out with it and tell the Wall Street investors what the heck they have been doing all these years to make any money.

Business is about making money; to pay the bills and then some to show profit. It’s about time they get-on with the business... other wise they would be back to the "pawn shops" to raise more money and last a few more Qtrs to sing the "squint disease" bird song.

[Anonymous]

Disclaimer: These comments are author’s personal observations and opinions and are based on his own research conducted recently.

Microvision: United States Patent 7,822,086

Laser Projection Temperature Compensation

United States Patent 7,822,086
Brown, et al.
October 26, 2010

Inventors: Brown: Margaret K. (Seattle, WA), Sprague; Randall B. (Carnation, WA), Schaaf; Michael L. (Bainbridge Island, WA), Xue; Bin (Mukilteo, WA)
Assignee: Microvision, Inc. (Redmond, WA)
Appl. No: 11/829,459
Filed: July 27, 2007

Abstract
The temperature of a laser diode changes in response to video content across a line of a displayed image, and the radiance changes as a function of temperature. An adaptive model estimates the temperature of the laser diode based on prior drive current values. For each displayed pixel, diode drive current is determined from the estimated diode temperature and a desired radiance value. A feedback circuit periodically measures the actual temperature and updates the adaptive model.

*****

Here’s the link to full text and images database at USPTO web site…
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&u=%2Fnetahtml%2FPTO%2Fsearchadv.htm&r=1&p=1&f=G&l=50&d=PTXT&S1=7,822,086.PN.&OS=pn/7,822,086&RS=PN/7,822,086

Observation:
This morning, the Microvision stock MVIS is up by a few cents and it makes you wonder why? So, we grabed our sleuth hat and went hunting for any news that may be driving this small move.

Here's what I found…
This patent on “Laser Projection Temperature Compensation” is the most significant patent to-date that Microvision now has in its IP portfolio… because, it provides much broader patent protection coverage for RGB laser light source diodes that could be used by anyone for laser light based image projection.

Some folks consider this worth a few cents added to MVIS stock price…
http://www.google.com/finance?client=ig&q=MVIS

However, if the stock volume traded today exceeds 1,000,000 shares... then the true impact of this patent could be recognized much more widely as being larger than a few cents rise in MVIS stock price today.

When you consider a few pennies in royalties every time RGB laser light diodes are used as light source in video image projection… the royalty earnings impact could surely be worth lot more than just a few cents in stock price rise.

However, the use of RGB laser diodes as light source for multi-media video image projection lies in the future... so do the potential royalty based earnings for Microvision.

We just have to wait and see how this new twist in Microvision’s future plays out in terms of dollars and cents?

Anant Goel

Microvision: CEATEC 2010 Japan

Microvision is at CEATEC 2010 Japan... booth #2A38.

That’s in the Home & Personal Zone at the Digital Network Stage.

Some of the other major global CE firms are its neighbors…
• OKI
• Toshiba
• Sony
• Sharp
• Panasonic
• Hitachi
• Fujitsu
• Cisco Systems
• NTT Docomo
• NEC

Some nice exposure to OEM community is expected due to Microvision booth proximity to these “shakers and bakers” of the Consumer Electronics industry.

Auri Rahimzadeh, President of The Auri Group, is the American journalist covering Microvision. This is what he had to say about Microvision after day 1 at the CEATEC Japan…

720P Laser Pico Projector from Microvision

Claiming to be the “smallest pico projector capable of 720p", Microvision showed off a pretty wicked solution for business professionals and those who need a low-power, super portable OEM-ready product. 15 lumens and 720p, and it’s smaller than 8 postage stamps.

PicoP also showed off a laser-based in-car heads-up display, with a full 120 degree field of view.

*****

Here’s the link to his blog post from Day 1…

http://www.windowslive.com/Connect/Post/d982845e-ef83-4d1d-9fc1-d50ac5e5db76

This year, it’s all about the 3D display technology with Pico projectors getting very little attention.

Anant Goel

Microvision: Goes Sour on Apple?

There may not be any Apple in Microvision future… because Apple has considered but never [yes that’s right] warmed-up to the idea of embedding a pico projector, Microvision’s or anyone else’s, in any of its product line.

That’s a very bold statement and demands due diligence and research to support this argument.

First, watch this Alex Tokman interview video dated September 27, 2010. Watch carefully; from three minutes seven seconds to three minutes thirty five seconds.

http://www.youtube.com/watch?v=7MQtsuj1y-I&feature=youtube_gdata_player

AT sounds sour on Apple don’t you think? For someone who used to answer questions about Apple as: “Apple world loves us”… now talks about Apple as a forgone conclusion in the iPhone vs. Google Android battle of the giants. Google Android is a new entrant to the smartphone arena and anyone worth listening to in this technology space would tell you: “it’s too early to tell who would be the leader… if there is going to be one at all in the first place?”

AT sounds sour on Apple and there may be a good reason for it.

Vast majority of technologists with-in Apple camp are convinced that pico projection technology is not mature enough to risk the integrity of their established technology offering… like computing, MP3 player, or mobile me platform [iPad, iPhone]. Unless there is an Apple product genre that offers pico projection as a primary function… there is very little chance of a pico projector making its way into the existing Apple product line? Unfortunately, that is not the only issue.

Another issue with an embedded pico projector inside any of the Apple product line, according to my sources, are the concern for primary product reliability and common mode failure caused by or because of the embedded pico projector functionality.

The reasoning goes like this...

“Pico projection is relatively new technology; with very little, if any, proven performance and reliability track record. If the pico projector goes on the fritz, the primary functionality of the iPad, iPhone or iWhatever is lost and the entire unit must be repaired or replaced”

That does not sound too good for embedded pico projectors for the Apple product line… at least for now.

However, all is not lost.

Smart companies have figured out the way around Apple’s position on embedded pico projectors. They are coming out with hand held pico projectors as an accessory unit for the Apple products─ like Microvision SHOWwx for one example, or as a docking station for the Apple mobile me products [iPod, iPhone, iPad] with added bells and whistles.

Anant Goel

Disclaimer: These comments are author’s personal observations and opinions and are based on his own research conducted recently.

Microvision: Stock Has Headline Risk

I’m probably the strongest supporter of Microvision and its current management… but if you were to read some of my recent posts, you would never believe that.

I have followed this company for more than 10 years and have been an investor, with millions of dollars at stake, for over 5 years.

Last 4 years have been the most excruciating and financially devastating period for me and hundreds of  Microvision investors that I personally know.

If you watch the ticker symbol MVIS, you will see that someone [or more than one someone] is selling a small number of shares at very low prices to spook the long retail investors into unloading their position… only to come-in to scoop-it-up by the bucket loads. This seems to be going on for several days now? While the net market value of Microvision keeps going to hell in a hand basket; the management stays totally aloof and silent. And that makes you wonder why?

Let’s face it, for the last four years, the traders and manipulators have played with MVIS stock like a Yo Yo… because they are able to exploit the headline risk associated with Microvision to their advantage. While the die hard longs just hang-in risking their hard earning investment dollar, the corporate management of Microvision hides behind the green laser curtain and blows the NDAs hot air up our stack.

For four years it has been the… same old… same old.

This stock has no backbone and has several headline risks going forward …

• first it was the green laser availability

• then it was the price of blue & green lasers

• next it was the brightness and speckle of projected image

• then it will be the debate of safety issue with lasers

• further down the road, it will be the anemically slow revenue and earnings growth

• then it will be the issue of poor margins

• and then towards the end of our journey [if we live to be 90+ years old] it will be the case of missing brass balls.

I have said it before and I’ll repeat it again…

“This company’s entire future lies with the green lasers… and to make the matter even worse, the corporate management hides behind the stack of backorders and NDAs. For the last four years, this company does not have much to show for new business development… other than polishing and patenting what was accomplished four years ago and they seem to be frozen in place─ like a deer caught in the dazzle of green light on the long road to the promise land.”

Unfortunately, the key issue may not be just the green lasers… but also the case of an ill conceived and misguided Business Plan or the lack of management execution. After fifteen years and $380 million dollars later, all we get is $2 million in 2nd Qtr 2010 revenues and $12 million in quarterly loss… all at substantial negative margins and lots of promises for the future.

There are many more headline issues facing Microvision and the slow bleeding in the price of MVIS stock is to be expected… especially when the corporate management keeps mum on important issues; and lacks the conviction, or perhaps the business savvy to manage investor expectation over so many years.

I didn’t think that I would ever say this, but here it goes…

Its tmie to cut dwon yuor psotiion szie and persevre yuor ctpaail.

Get it?

This is called hiding behind a stack of your abc’s and ─ as long as the first and last letter are in the right place─ you can play with the English language alphabet and still get your message across. The point is, if the corporate management has something to say and wants to get a message across… it can do so in so many different ways.

Longer the management of Microvision delays release of any significant news [of any kind], the lower the price of MVIS will go down. Here’s why…

With each passing day without any significant news, the smart money will convince you that at the moment Microvision don’t actually have a product. The product they are selling right now is the inferior and soon to be replaced by the second generation product they have announced recently. What we have, is an under illuminated novelty item that has a very limited appeal in its present configuration. They made the current technology obsolete last April when they announced that they have a 15 lumen 720 HD product solution… but that product wasn’t going to be available until some time in the future. But what that announcement did was to severely limit the market for what they had and would have for at least one more year.

You can imagine: “what a marketing blooper that’s going to be?”

The simple fact is that Microvision doesn’t yet seem to have a product that the market wants at the current prices and the product that the market may want is what they are developing… but that product and competitive prices won’t be available until the second half of 2011.

You don’t have to take my word for it. The market price of MVIS stock says it all. A company with any kind of near term prospects doesn’t trade at $2.11… after having traded at $5.85 in the recent past.

From an investor’s point of view; management’s total silence is shocking… because no one has ever asked for customer specific information yet they hide behind the backorders and the NDAs argument.

All the investors want to know: “do they see light at the end of this very long and very dark tunnel"?

Anonymous

[Disclosure: Based upon input from dozens of Microvision stock investors with net Long positions]

Microvision: College Campus Marketing

Microvision recently announced a “back to college” promotion for its laser based PicoP projector SHOWwx… by reducing the list price down to $449 which also included the VGA dock.

After having made an extensive check with my contacts in the computer resellers community [from my past life] that sells consumer electronics gadgets to college students all over the US… I have to say that Microvision’s marketing effort is limited to a blurb about the price reduction offer on their web site… and that’s about it.

There are no signs of any marketing effort to promote or sell SHOWwx to the college students… other than an advertisement on the Microvision web site at…

http://www.microvision.com/pico_projector_displays/index.html

College students represent, for many companies like Microvision, a valuable demographic. It's easy to understand why… because most young people are still shaping their brand loyalty, they usually have disposable income, and most are interested in trying new things. Unfortunately, marketing to college students can pose a challenge because they are immune to many classic methods of marketing. By injecting a little fun into the message and having the right attitude, campus marketing can bring your product or service a lot of attention.

Before you decide to launch your marketing campaign, be aware of the “Campus Solicitation” policy of each and every individual campus on your target list. Most colleges discourage aggressive solicitation of students, faculty, and staff on campus. These activities often disrupt campus routine, offend segments of the College community, and imply endorsement by the College of particular products, services, or ideas.

Here’s one idea that is most cost effective and incorporates all of the best of breed ideas in one place…

• Hire a company that specializes in collegiate marketing. Many years ago, I worked with this company called “New Age Marketing”. In my humble opinion, they are the best in the business. Check them out…

http://www.collegiatepromotions.com/cpfeatured.html

You don’t have to create the viral networking buzz yourself… these guys will do it for you in the most cost effective manner.

One other thing that you may consider…

• Partnering with the School

Piggyback on the excitement around college sports events. Football game days at many schools─ Ohio State, Alabama and USC, for example─ are massive undertakings, attracting 100,000 fans to the stadium and thousands more to the surrounding neighborhood. Establishing an official promotional partnership can be expensive, but valuable. Your company could purchase ad space in the stadium. To capitalize on the opportunity without an official license… you must arrive on campus few hours before kickoff and engage the thousands of excited students walking around.

Enter into an agreement with the university to provide goods to students at a low cost. If they have your product in hand, they will learn to turn to you in the future. For example, according to Marguerite Reardon at Wired Magazine, Duke University spent $500,000 to purchase discounted Apple iPods in an attempt to assess their usefulness in higher education. Apple gave 1,650 Duke Freshmen the devices, helping the school and helping Apple expand its market share.

The College or recognized student groups occasionally invite vendors to fulfill particular campus objectives. The Director of Student Life must provide written approval to such vendors to grant exceptions to solicitation policies. Student groups must guarantee the availability of the products that their sponsored vendors sell. These sales must be cleared in writing in advance with the Director of Student Life, and when an athletic team is involved, with the Director of Athletics. No outside organization may proselytize, distribute, or sell products without direct sponsorship of a student organization recognized by the College Student Government or an administrative office.

Here’re some thoughts on doing the marketing to college students on your own…

• Colleges provide sellers with a captive audience full of hungry buyers. College campus advertisements are successful in reaching large numbers of people due to the dense population of students and staff that frequent campus buildings. There are a number of ways that you can effectively advertise on a college campus. By engaging in some creative ad placement, you can increase the success of your business and introduce your product to a whole new group of consumers.

• Print Marketing: Tailor your print marketing to the mindset present in most young people. Instead of putting together ads with lots of tiny words, spend a little extra money with the printer to ensure that your ads have striking images. Think about it; "got milk?" is only two words, but is an ad campaign everyone knows. If nothing else, include a link to your website to take advantage of the increasingly digital lifestyle of the student. Indeed, you should place the signs on outdoor billboards around campus. More important, post them on billboards inside, especially near administrative offices. Thousands of bored students stream past the registrar’s office, and your ad could catch their eye.

• Quad Posting Boards: Many colleges and universities feature a central posting board in their campus quad or other open area. This board contains flyers, student postings and campus event reminders. Advertise your product by placing a flyer on this message board amongst the other messages. Many students peruse this board regularly, so placing your flyer here will surely get you some views.

• Hire enthusiastic young people: to prowl the campus with flyers. Better yet, have them distribute free T-shirts with your product message in vivid colors. Young people are more likely to stop if another young person is flagging them down. Have your employees wear brightly colored T-shirts and make sure they are enthusiastic, above all else.

• Hire some students: to go around to dorms and put flyers up on bulletin boards or stuff mailboxes.

• Put an ad: in the school newspaper.

• Place an ad: on the college radio station.

• Send your flyers: to fraternities, sororities, athletic groups, etc… especially at school "party" times.

One thing that you must not do; is hire yet another “Director of Campus Marketing”… only to fire him/her a year or two later for lack of generating any tangible sales revenue.

Anant Goel