With me, I have here, Mrs. Anca Guina, our CFO. Welcome to our second quarter webinar. For today's agenda, while I walk through the key messages, Anca will discuss the financials, and then we'll look at the operating environment, give some progress on the highlights to our existing activities as well as the project pipeline and talk about strategy. At the end, we'll take questions as much as you have. The uncertainty continued in our operating environment, and second quarter was clearly a big disappointment. This is quite obvious that our go-to-market strategy needs to be reviewed to reflect the changed operating environment. We have continued the execution of our growth strategy and investments in the production capacity as well as into the technology. There is nothing in our knowledge that would suggest that we would need to change the product strategy. The market for the products is as previously estimated or perhaps even better. There was some good progress also with some projects, and the total number of projects remained at 26. We got one new order and several smaller ones during the quarter. Financial performance, as said, clearly a disappointment, and we'll discuss those more later. Clearly the prolonged COVID restrictions, shortages in component availability, in particular this quarter, as well as the increased exposure of risks in general in the capital markets impacted some of our customers and their capital expenditure. Thus, it only makes sense to review the strategy, and we will announce the updated strategy later this year. Do not see at the moment any change to the product and the market demand as gonna be discussed in a moment remains unchanged. Clearly our go-to-market activities have not been the right one and needs to be reflected to the changed operating environment. Anca, if you please, walk through the figures. Yes. Thanks, Seppo. Good morning. The revenue for the second quarter was EUR 498,000 versus EUR 2.35 million last year, so a decline of 78.9%. The decline was mainly due to continued COVID-19 related organization-specific restrictions, which prevented us from visiting necessary facilities, hence causing delays in certain projects. Additionally, our deliveries were impacted by challenges related to component availability. Also, Russia's war on Ukraine continued to cause general geopolitical and macroeconomic uncertainty and that impacted Modulight's business environment as well as our customers. As Seppo already mentioned, capital expenditure and the availability for financing. Because there was some confusion previously, we want to emphasize that Modulight has no direct business operations in Russia, nor outsourced components from there. The revenue for January-June was EUR 2.1 million versus EUR 4.56 million in the previous year, so 54% decline from the reference period. EBITDA in the second quarter was -EUR 2.70 million compared to EUR 1.78 million last year. Operating result was -EUR 2.61 million compared to EUR 1.48 million. Earnings per share was -0.07 versus 0.04. The lower level of profitability was a result of a lower level of revenues and increased operational costs. As it was already mentioned by Seppo, our costs are now significantly higher because we continue to execute our growth strategy. EBITDA for period January-June was -EUR 2.59 million compared to EUR 3.50 million in 2021. Operating result for the first half was -EUR 3.48 compared to EUR 2.60 million last year. During January to June, Modulight continued to make investments in intangible and tangible assets, which amounted to EUR 5.60 million versus EUR 1.81 million in 2021. Free cash flow from operating activities was -EUR 7.75 million compared to EUR 1.34 million. Cash and cash equivalents were EUR 53.8 million at the end of June 2022. Net debt at the end of June was -EUR 44.97 million versus EUR 6.81 in June 2021. Gearing ratio was -62.6%, and equity ratio 86.1%. The return on equity in the first half of 2022 was -5.9%. Seppo will continue now with more details on the operations as he already mentioned. Yeah. As obvious from Anca's key figures table, we've continued investment into strategy and increase of the headcount. These are the primary reasons for the reduction of the profitability besides the drop in sales. As said at the beginning, the long-term growth drivers in the market remain unchanged. The worldwide oncology market keeps on growing as well as the ophthalmology. We see this also in our pipeline as well as with the discussions with the customers. There is no need to update anything on that. Just as a reminder that these remain the value drivers or the market drivers behind our company. Short-term operational environment, as discussed earlier, the COVID-related restrictions have bothered us both in terms of inability to visit hospitals as well as ability to meet customers. Obviously with our long sales cycles, especially the Omicron variant, which kind of stopped the visits more or less again, has caused quite a lot of problems to us. Luckily, there are some customers with whom you can operate without meetings, and we're obviously increasingly focused on those. I guess now about two and a half years of limited traveling is hitting us more than we expected earlier. Global problems with component availability is something that we are experiencing now a little bit. We are particularly unhappy about some, I would say unexpected, postponements of the deliveries during the second quarter. These were things that we did not foresee. We have since especially last summer, meaning summer 2021, taken many activities to mitigate this, but obviously not enough. This has impacted our kind of product deliveries somewhat. There is a little bit more impact on our supplier side, who many of them have expressed concerns about their delivery ability for new equipments that we have ordered from them. This is particularly related to suppliers in Japan. This is not any kind of geographical analysis, but just based on our sample of our random suppliers' home base. Macroeconomic and geopolitical uncertainty is something that customers across the world, particularly United States, has highlighted as we outlined earlier. Clearly there is less capital expenditure, especially with the smaller companies. As you can see in a moment, our kind of portfolio is slowly converging towards even more, let's say larger companies, blue chip companies, and this obviously helps with this kind of concerns to some degree. It does not remove the near-term risks and our location, but at least probably slightly improves the customer's ability for spending and investing. Just as a reminder, our revenue model, we work on early stage projects which are either proofs of concept and clinical trials, or pilot production. This still remains the primary source of the revenue, although in some projects there is now progress even during the summer. A significant percentage of revenue still comes from these early stage projects. We are kind of experiencing this, as earlier explained, strong fluctuations. The primary objective for us is obviously to increase the number of projects and especially take the existing projects forward. Some progress highlights. As announced earlier, we received $3.9 million order and several smaller ones. What I'm particularly happy about is the progress with some blue chip customers who we also announced during the springtime. The relevance of the blue chip customers, for example, a top five pharmaceutical company that we signed up as our customer, it has obviously large commercial potential, but even perhaps more so effect as a reference value. We're actually quite happy to say that with that customer also another track has already started. We have continued R&D activity, as explained earlier, and this has resulted into three new patent applications during the second quarter. Our analytics team is working on several other new applications. Our expansion in the manufacturing capacity and capabilities continues. There are some delays, but they are in the order of three months or so mostly. Not a major delay, but clearly a measurable delay. Project portfolio, we view it remain as solid. It has stayed flat from quarter to quarter. We had one early stage company whose project we stopped, and then we got one new customer who is an established company from Central Europe. This is a little bit more view on the same data as shown on the previous slide. You can see that established companies have gone a little bit up and kind of early stage companies down by one, but practically same situation as in the first quarter. In a nutshell, there is roughly same situation. New projects that have been started, as said, and announced, perhaps the most important announcement in our view during the first half, we started a project with one of the five largest pharmaceutical companies in lung cancer. Here, the important thing besides obviously the commercial opportunity and the reference value is that this is a therapy that we've been working with their competitor already earlier for a couple of years. Thus, I believe that a big company coming in to use the same technology as their smaller competitor is already using is quite an acknowledgment to the work our team is doing. We started a project in dermatology using our laser technology. The specific thing about this is that the approval times are expected to be shorter than in some of the interstitial cancer therapies. This makes it quite exciting as well, besides being a large U.S. public company. Thirdly, as said earlier, we signed up an established company from Central Europe in the area of ophthalmology, and that project is looking forward to be in ramp-up mode in 2024. Relatively quick, considering the industry, but there are certain fundamentals why we dare to say that this customer expectation might also realize with a reasonable probability. In a nutshell, we continue to leverage and expand the usage of our unique laser technology the number of different platforms, applications, and indications. Having said that, I think it would be irresponsible not to acknowledge the fact that our financials have gone in the completely incorrect direction, and they are very disappointing to me. As said, we find that our technology remains unique and establishes the basis for long-term success and growth. We see significant opportunities in expanding cooperation with existing blue-chip customers and established company customers. As said, this has also happened during the summer. We also see continued demand from new customers to offering our technology to new customers, applications and indications. Megatrends support the strategy, aging population, and trend for better and more cancer care and ophthalmic disease prevention, care, and diagnosis remain strong. Confidence in the long-term financials targets achieving revenue growth and high degree of profitability, which we drove 10 years straight prior to our recent unsatisfactory progress is something that we expect to be able to resume. It's good to mention again what we said already during the winter that our strong balance sheet has obviously enabled us to be in better position than ever to execute our growth strategy, which we have been executing since 2014. We have kept the plan, kept on investing, doing R&D, investing into the equipment. Yes, there have been some delays, but we expect them to be short-term. Changes in the operating environment, caused by COVID-19, component shortages and geopolitical uncertainty, are obviously impacting our performance, as discussed also earlier. We need to recognize the fact that we need to have more feet on the ground. We need to be closer to the customer no matter what the preventions and obstacles are existing. These are some of the things that we will address when we will review the strategy. On the other hand, there are also some positives that may play into our favor, and we are hearing from some of the customers already that the fact that we are vertically integrated, meaning that we manufacture our semiconductor lasers ourselves, we have a solid manufacturing base and a technology base, are actually perceived as a plus by customers looking for differentiation and supply chain security. We hope to capitalize on this even more in this changed environment. In a nutshell, strategy will be updated with focus on go-to-market strategy, and we will announce the updates later this year. Strategic key factors remain the same. We keep on investing into our production capacity and technology, a program we started in 2019. We keep our focus on the geographical expansion, and clearly this is something that will be at the core of the review, as said earlier. The changed operating environment needs to be reflected here. Expanding the product range, both the new indications, i.e., the different cancers, as well as the new applications, including diagnostics, remains a hot topic for us as before. Opportunities for expansion in the field of analytics. As said, our team has now been able to figure out new ways to apply analytics and is applying also patents to some of those, and the IP portfolio overall has taken a big step forward. Continuous investment in software and laser technology remains also very strong in our strategy, and we see no reason or no evidence that would suggest neither from the market or from the competition technology point of view to revise these strategy goals. Yeah, Modulight is not issuing any guidance, but this is made for kind of a reminder. Thank you for listening and we'll be open to take some questions if we have. Okay, can we start? Okay. We seem to have several questions. Have you seen better component availability after Q2? When taking about components, do you mean components used in building your new production lines or manufacturing your own products? Yeah. Good question. As said, in the Q2, somewhat unexpectedly, we were hit also in our own deliveries by the component shortage. This was somewhat unexpected as we have been trying to prepare for that for quite a long time. We have now increased our inventories and of course in this kind of very fluid operating environment one should be quite cautious to say, but at least currently we feel maybe a little bit better than in June. The component availability is obviously hitting more people who make long-term CapEx equipment such as our suppliers. With them we expect to see that impact still longer. Which specific change in operating environment requires Modulight to review its strategy? I believe I highlighted that in the presentation quite well, and this is actually a question that came before the presentation. Hopefully it was clear from the presentation that prolonged COVID, the overall geopolitical risks and their impacts to the supply chain as well as to the capital market. Yeah. Sorry, I was maybe a little bit too quick. We have actually also online our analysts, Lars Hevreng and Daniel Lepistö. If you guys would like to also ask questions, just you may do so now. Yeah, sorry, Lars, Daniel. I guess we traditionally had the that you guys ask first. Okay. It's Lars here. Do you hear me? Yes. Yeah. Thanks. Can I just start with I mean, the revenue recognition? How you have like EUR half a million revenues in the quarter? I mean, the client base, how big should that be to I mean, to avoid these significant variations in the revenue recognitions during these periods? 26 clients is obviously not enough. How big should it be? Excellent question. I do believe that we have said earlier that we expect only fraction of this to reach a commercial rollout status. As you very well know, in pharma and biotechnology, the failure rates of the projects is typically very high. We have had clearly lower failure rates with the projects, but so far, obviously the size has been limited. We do believe that if we reflect our financial targets of reaching three commercial roll-outs by 2023. Obviously there is some question about that now. If we say that those are all projects having a potential to go to this eventually EUR 10 million per year run rate. You don't need many projects to cover the company's current cost basis. The order you announced, this $3.9 million order you announced earlier in the first half. When that project starts to be recognized as revenues, is that a matter of recognition over a few quarters or is it more a matter of revenue recognitions over several years? It is, I think we said in the press release, if I recall right, that the deliveries would start this autumn and extend well into next year. It is good to emphasize that that is still early stage development, so that is not reflecting customers' expected production volumes. That's, I mean, that kind of order is more early stage, and if things start well, so to say, that will be followed by more orders. Yes. Can you touch upon the cost level? You had so when you report other operating expenses, that was significantly higher. I think it was a EUR 1.4 million year-over-year increase. What's behind that? It's mainly related to the growth of the company, as was already mentioned. Of course, we increased the headcount, but I mean, increasing the headcount involves increase of other costs as well, not only the wages and salaries. They all, the costs related to our growth are included here. For example, marketing, telecommunication, IT related, and so on and so forth. The cost level we see in the second quarter, around EUR 2 million-EUR 2.5 million, how should we see that? Is that an ongoing expense level or how should we see that? I would say it actually may increase even more if you think of the increased prices, you know, with all our suppliers. These costs don't even take into account the increase in electricity prices which will come in the autumn time or wintertime. Obviously all our suppliers will keep increasing prices. I would expect increase of total cost for us as well. All right. These unexpected delivery delays, you mentioned Japan. What can be said more about that? They are experiencing very stringent COVID restrictions. One of our engineers was recently there and not related to sourcing, but more like on the customer side activity. I think it's quite descriptive that after a few days at the customer, he ended up being 10 days in hospital in Tokyo before he was able to return home. Overall, let's say restrictions are quite tight. If you, for example, look at different suppliers of equipment, even if they come from same city, some say that we are able to send engineers to Europe. Some in the exact same city are saying that we don't know if we can ever send anybody. This is the range of these difficulties. I don't think they should be overestimated, but clearly it has an impact, especially the delivery of the capital equipment. All right. Thank you. Just, I know you can't or you don't, you won't provide guidances that come out in terms of revenue recognition. I mean, since it's been so volatile from one quarter to another, you know, what kind of possibilities do you see for the revenue recognition to just, you know, rebound from one quarter to another? Or is this more, you know, as it will be for some time going forward? As I believe we stay in our statement that the difficulties are not gonna be over in one week, but we have remained with tight revenue recognition criteria, as announced early this year. We cannot give obviously a guidance, but let's I mean say that we obviously keep on investing in accordance to our growth strategy, and so no need to revise those plans due to the technology or the market point of view. This, the ongoing EUR 23 million CapEx expansion program, where are you in that program at the moment? How far are you? We have done quite a bit of those investments, and we were expecting many of those machines to arrive in late Q2 and early Q3. Several have arrived and are now under installation, and our engineers are very busy with those. As indicated in our documents, there have been some setbacks, particularly from the Far Eastern CapEx suppliers. Some of those have more delay, but I would say that there are several with about three months of delay. In a nutshell, we are currently expanding our capabilities at an unprecedented rate, but we were looking forward to a faster deployment of new tools. Okay. Is it fair to say that you're around halfway through this expansion program, and you have spent, like, half of that amount that you have talked about? I would say that we are all well over half. All right. Thank you. Welcome. Daniel, do you have additional questions, or shall we look from the line? No further questions from me. Thanks. Thank you. There's a question in Finnish. Loosely translated, "What are you going to do, as CEO, to restore shareholder confidence?" We have outlined today in our presentation what are the kind of actions the company's doing. We remain as a team committed to the growth strategy. We have obviously a very strong balance sheet, and thus, this enables us to keep on doing the systematic work despite these disappointing quarters. I will continue to work as hard as I can and to best of my ability. On Sunday morning, I will go to Boston, and we'll keep on doing what we have shared here with you. I'm happy to elaborate more with more particular questions. There is another question in Finnish, loosely translated, about how realistically we have described the risks in the IPO material. There's a reference that the company's business has decreased substantially in a short amount of time. This is something that we have, I believe, answered in this call several times. Obviously we have done that together with our advisors to the best of our ability. I'm really, really kind of sorry that we could not see some of these things in advance. In all fairness, I do believe that several of these operating environment changes were something that were not really, let's say, something that we could even foresee. I'm now referring to the big changes in geopolitics or even the reemergence of Corona. In IPO, you promised strong growth, profitability, and the promises have not realized. Why were the forecasts so much off? I believe that my answer to this one is quite similar and was kind of addressed in the previous comment. What specifically are the COVID-19 restrictions that you are referring to? To my understanding, all travel restrictions are lifted from all Western countries where I expect your market to be. What restrictions and where are you referring to specifically and in detail? Thank you for the question. I tried to outline this earlier also, but obviously not done a very good job. We are still seeing almost weekly basis situations that even within the same clinical trial and the same country, some customers are accepting visitors to the therapies or treatments and surgeries, while some are not. This is most recently has also happened in the second end of second quarter in Germany. For example, that one hospital was accepting external companies to the brain surgeries, whereas another one was, and they referred that this is due to the COVID situation. Obviously we're not in a position to debate this with the hospitals. There are also very varying kind of rules with the global companies, namely U.S. companies, about accepting visitors, visiting offices and meeting vendors. As our sales cycles are very long, this obviously has an impact far beyond when the traveling is resumed. I would like to, for example, share an example that while a certain multinational company basically opened the traveling according to our contacts there in April, May. They more or less fully closed it back and asked people to return to remote offices at end of June. The changes are very real still today, and it is important to understand that once you have kind of removed the restrictions, which luckily has happened in many cases. Yes, there is a clear delay when it reflects to your business. I mean, now we have not been able to properly do, for example, sales work for two and a half years. Yes, luckily there are customers with whom we have met and closed a deal over the internet, but there are also some customers to which it disturbs. I cannot quantify it exactly, but the long sales cycle in this type of business is definitely a factor to be considered. How are the increased interest rates affected you on your financial status and also your customers' financial status ability? Do you see upcoming issues with delayed payments or no payments at all like reported during the spring 2021 results? Maybe this is for the finance. As we already informed actually in Q1, we or in the year-end, we decided to recognize the revenue based on for some selected customers based on the received cash. I would not. Well, I can't give guidance, but I would say that they would not affect our status. Yeah. I think there is the comment also was asking about the interest rates. Right. Sorry, on our financial status. Well, we don't see or I personally don't see now an impact of the interest rates, direct impact on our operations. Yeah. It obviously has some impact on the numbers via this, as we hold very large cash reserves, I believe EUR 50 million or so. Thus that's when deposited in normal banking cash systems at the interest rate change, there is this what do you call it? Fl-in- The change- Okay The change in the fund value. Just to make sure, some of our cash or mostly most part of the cash is deposited in funds, and it was actually done from the beginning just for the reason of not paying huge interest to the banks. Basically the fair value of the funds is recorded every month, and hence the financial items look so big. It's unrealized interest. They are not exactly related to the banking costs. What I believe this question is after is that, if the interest rate increases are affecting our customers, I would say that the impact is limited. Yeah Mostly impacting those customers who are venture funded. There obviously it's not the interest rates, but overall more stringent capital markets. For the bigger companies which are now increasing share of the portfolio, we have no evidence that it would impact their ability. In IPO you mentioned, also development phase, you invoice full plus the supplies plus 30% investment as annual fee. Now with higher number of projects, sales are declining. Can you please explain the sales contracts look nowadays? We are continue to push the kind of similar models. There are obviously, I said, delays in different customer cases. The proportion of this recurring revenue has been affected. There are also customers where we see that growing. As we are not issuing any revenue breakdowns, it's not easy to comment too much. As said earlier, these early stages, the fluctuations are still very big. Yeah The month-to-month and quarter-to-quarter variations are to be expected. Question to CEO: Please walk us through in concrete steps how you as CEO are going to turn around Modulight and return to profitable growth. I have explained that we'll concentrate on the basics. We concentrate on our growth strategy, and we will revise, especially, the go-to-market strategy. This is too early to comment what it will involve, but definitely, it will address the kind of inability to meet the customers and engage the clinics. This is something where we could clearly improve. If we had the strategy already ready, we would have announced it today. I will address these points more as we give update to our strategy. There is a question about how many FDA approvals you have so far. There is at least one FDA approval that can be found from the FDA database. It can be. If you look at kind of also the early-stage approvals, then you might find more. Those are partially public and can be found with a certain amount of Googling. The overall FDA situation for us remains kind of hot on the agenda. We have since the Q1 report had an FDA on-site audit, which went well. We have provided our kind of written answers to FDA and are now waiting for their analysis and feedback. Can you please walk through the upcoming expected FDA approvals indicative time schedule? I believe I just answered that. In general, do you see a declining trend in global POC and R&D activities? i.e., is the market generally slowing down? I said clearly the venture-funded companies do need to be more scarce with their spending. But then there are others who are keep on investing. I don't have a statistically relevant sample, but I do see variation across the customers. Namely, it is so that smaller companies are perhaps a little bit more cautious today than the large ones. Among your blue-chip customers, is there reluctance to introduce new treatment procedures, i.e., to replace existing treatments? Does this affect the take-up of your products? Of course, I cannot say what they are thinking, but the fact that, for example, existing blue-chip customers are proactively suggesting new completely parallel projects, to me, implies their willingness to do more research. Generally, you do more research in anticipation of introducing new treatment procedures. What are your ongoing changes in the go-to-market strategy on a high level? Clearly, the objective is and has been since the beginning of the year to increase the kind of face-to-face contact with the customers. Previously, you said you put more focus on client payment terms. What has been the impact from this point of view to ability to sell the product? We have not seen a significant impact on our ability to sell the product. How have the component prices developed, plus 50% or what? There is of course variance here, but for most of our products, the gross margin is typically very high in the range of 80% or more. Thus, even the component price fluctuations, which are large, are not so important to us, but it's more like the availability of the components. Last year, we paid for one microcontroller that used to cost EUR 10, we paid EUR 100, but then if the laser costs EUR 100,000, the change is quite irrelevant. What kind of visibility you have on the near-term, near- to midterm revenues? Is it reasonable to increase the headcount given the recent operational performance? The company and the board has assessed that, due to aforementioned reasons, the market fundamentals and the uniqueness of the technology, that it only makes sense to keep on executing the growth strategy. With the current changes, how likely you see the target of having three commercial customers by the end of 2023? If this happens, what you expect as the yearly revenue at this scenario? I said we will be updating the strategy, and I guess I cannot comment on the forecast beyond what we have said in our release. Please remind us who are your major competitors? Given your low market valuation, do you see a possibility or risk for hostile takeover? I would say that the major competition remains the same. This is the other cancer therapies, whereas at least myself personally very much believe that what many of the doctors are saying that cancer treatment nowadays is very much a game of combination therapy, meaning that we may sometimes use chemotherapy, sometimes surgery, and sometimes laser, but even more often are combining all these three to an effective outcome and that what is the best set of treatments to each patient will be increasingly looked on a one by one basis. The company is not commenting on its valuation or the kind of hostile takeovers or the probabilities of those. You mentioned your strengths. What are your weaknesses just to complete the picture? Thank you. It's a very fair point. Obviously, in the current operating environment, we have been suffering from the fact that we are on a relatively remote location in the world. Clearly that at least is a weakness to us. Obviously, the fact that company is in a relatively early stage that we don't have a solid range of production customers probably considered as a weakness as well. Then again, it seems that at least 26 projects are counting on us to deliver long-term deliveries to them. This is something which we will work on. We could list probably more of those, but I think this is a very fair point. This is definitely something that we are doing, as a part of our strategy work. Once we know all the weaknesses, or I would say the updated picture, then, if there are new ones, we will reflect those in the strategy and communicate it. Now, we don't have any more questions on the line. Anything from the analysts? Okay. Thank you very much for listening to us and we will continue to work according to our strategy and keep you posted on the company's progress. Thank you very much. Thank you. Bye. Have a good day.