Good morning, everybody, and welcome to poLight's second quarter presentation. Today we are also physically present at Continental, and welcome to you coming this early morning to Continental, and also welcome to you following us from webcast. My name is Øyvind Isaksen. I'm the CEO of poLight. Together with me today is also CFO Alf Henning Bekkevik, who will go through the financial review, and Chairman of the Board Grethe Viksaas. Today's agenda is key events, introduction to poLight, operation and market review, financial review by CFO, outlook, and Q&A. Since this webcast is also webcasted, and if there's any questions from the audience, please wait for the microphone, so that also those from the webcast can hear the question. For those following from webcast, if you ask a question, which you can do through the interface, please leave your contact details in case there is no time to answer all questions. Okay. Key events. Quite many this quarter. We had another design win in barcode area, which is step by step becoming an important area. We'll come back to that. This was a design win from a company called Superlead, a Chinese quite aggressive player. We signed a very important agreement on for a medical endoscope device. This is a long-term project. This is a tier one player, which is a leader in his area, and then super important opportunity for poLight to go into this market in a big way. Sizable NRE fee of NOK 1.7 million. I will say that, and I will come back to it, general good progress on the different POCs, proof of concepts. Specifically, I would like to mention augmented reality, they are progressing very well, with potential for more design wins as we go through this year. You saw maybe from yesterday's announcement or the sixteenth of August, was it, that we had a repeat order from an AR customer who will release their product this year. There is an increased activity in the industrial segments, I would say mainly related to barcode. Despite that the smartphone OEMs are having a, I would say, difficult time because people are spending less money and frequent shutdowns in China specifically are meaning that implying that the OEMs in China are suffering from sales and delaying release of new smartphones, especially the high-end versions. In spite of that, there is still a high activity in this year for poLight, and we are following and supporting some key opportunities, so I'll come back to that. Also, we did a share split during the quarter. One share became five. We held a capital market day, very successful one, and you can still review the material and the webcast from that event. That was held the 1st of June. For those who are new to poLight, I know there's a lot of people following us and a lot of people knowing us very, very well, but still maybe some new. Quickly poLight in a nutshell. Global player, even though small, we are very international and very distributed. As you can see from the top right illustration, we are spread out, you can say thin all over the place, and the strategy for the company is to be with high competence where customers and partners are located. We are today 36 employees. A very focused company on tunable optics with many application areas. We have a high focus on IP. Today, we have 17 worldwide patents, nine pending, and three registered trademarks. In essence, you can say the attributes of our technology on the bottom right corner, extreme speed, which nobody can compare to. We can realize very compact solutions. We have a constant field of view and very low power consumption, which is many of the markets we are addressing, a key attribute. Not many years ago, a couple of years ago, we had zero customers, and since 2005 we have been working on developing the technology, and we finally managed to qualify the technology and get into products. As you know, the first one was the smartwatches, Xiaomi and Sonix. Then we had Honeywell EX30, which is kind of one of a kind scan engine. We are working very closely with Honeywell, definitely. We have various follow-on, I would say, barcode readers application. Very much machine vision-oriented, meaning using our technology in a manufacturing application. That, of course, means that the volumes are relatively small for those applications. Whereas if you go to the Honeywell case. That's more like, call it a logistics warehouse-type device, which has more volume, which you have seen that we're getting frequent repeat orders from Honeywell. As we go, we will get into other applications on barcode reading, which will increase the volume. Webcam, MAXHUB, a very good webcam, important design win, and we're using, of course, that, for whatever it can be used for getting other customers in that area. It is a very cost-sensitive area, I have to say. It's a relatively cheap product. I think that we will be even better positioned when we are ramped up and cost optimized our solution. The small icon here about AR, it's deserved to be bigger, but it is still extremely important, and we expect more to come in that area. I will come back to that. Step by step, building a good references, which of course is somehow the most important sales tool we have. Happy customers. Quickly on our focus areas. Smartphone definitely the main, I would say, focus and that market is probably the only market in addition to accessory market, which can give us the volume we would like to have. We are working and focusing a lot on that field. We are progressing, even though there is some depression in that, should I say, in that market, but sooner or later. Barcode industrial, as we mentioned, a key area for us, it will take time to develop. But as we go, we will get into more, I would say, towards point of sales application, which will increase the volume. The whole thing about why should we be in that market is that barcode is moving definitely from scanning barcodes to scanning more like two-dimensional codes, like QR code. That means that the laser system has to go to an imaging system, and an imaging system very often need an AF technology. Augmented reality is super important for us. Maybe that market is a good example of where we are in the beginning of a market. In the smartphone market, we came in as, where an incumbent technology was already used extensively and all the companies have invested heavily in that, what we call a VCM. In the AR side, we are in the beginning, and we are kind of part of, call it, the reference design phase, which gives us a completely different starting point. I would say there are two other markets I would emphasize on, and that's one thing is medical, which you have seen is coming more and more. We have announced a design-in for disposable endoscope that will come out this year. We have also this NRE R&D project, which we have signed recently of NOK 1.7 million with tier one players. We feel that the medical is very different from anything else we do. Same product we ship, but the differences is that it takes quite some time, there are qualification processes. The way we see it is that this will probably become one of the, I would say, the fourth leg of our market focus. We started to see some interest from automobile, which is also today classified as kind of other markets. We are not kind of actively ourselves addressing that market. It's more like incoming calls, which is often a good starting point. The reason for that trend is that what happened in the mobile smartphone market with a camera system is that resolution increased, pixels become smaller, meaning AF is important, auto focus is important. The same trend you see coming in the automobile, and you know how many cameras are in that industry and in your car. That is a potentially very interesting market. Also extremely tough from a qualification perspective. Market a very strict qualification processes, even maybe stricter than anything else we are doing. We have been approached and the reason for that is that they see that the mechanical AF technologies being used in other application is not suitable, ideal for that application. Reliability, vibration. When you drive your car, there's a lot of vibration, of course. That's where we are. We have no mechanical moving parts. Potentially, there is a good fit. I would classify it as a as a long-term opportunity. Okay. Let's go deep dive a little bit into the different verticals. This so-called add-in TLens concept is really continuing to attract a good interest. It was a big achievement when we managed to convince the ecosystem to use TLens in that way. Just for you who are new, add-in TLens means that instead of having a fixed focus camera and you add TLens on the top, building height as a consequence, which is not nice. Instead of doing that, which is all our customers today are mainly doing. Now the ecosystem has started to qualify themselves to include in the lens stack a bare TLens, no packaging, no plastic around it, a bare TLens. That means that you can realize many solutions. You can support bigger sensor format, higher resolution. You can basically adapt to any kind of application or many more application in different products. This is continuing to be key for us, and we see more and more camera module guys who want to qualify themselves for being able to do that. Today, there is one specific player who is extremely mature and have qualified themselves and are able to go into mass production with that kind of concept. But there are other coming. As the second bullet, talking about reference design, we have acquired capability lately in optical design for lens stacks. A Russian specialist on his way from Moscow to our Tampere office these days. That means that we are able to produce a reference design, which it kind of helps the camera module guys and the OEMs to get a good start and do not need to take everything from scratch themselves. We are publishing soon a new webpage where these kind of reference design will be publicly presented. We think that this will help us to address many more cases in different application, also smartphone. Selfie camera. Even though we have a back camera solution, selfie camera is we think the will be the beginning for us. We mentioned that many times. As I said in the beginning, even though there is OEMs which are struggling, and many of them are struggling, we are engaged in POCs, which are progressing quite well. When it comes to consumer, we also address other markets, such as webcams, drone, but I would say the main focus is on the smartphone. On the bottom there, you see, there are, you know, three design wins in consumer market. You know the watch, two watches and one webcam. There are 11 ongoing POCs, and there are five planning POCs. You can see in the consumer market, including smartphone, quite a, quite high activity. Of those 11, five of them are related to augmented reality. Sorry, four. Five smartphone, one iris recognition, and one webcam. AR. As you see from the top right graphics, we are saying professional use cases. I just want to maybe add to that. That doesn't mean that we are only involved in professional use cases, but what we expect to see on the market in the next year or two or even three will mainly be professional use cases. We expect that the consumer project we are involved in will be a product on market in maybe 2025 or something like that. So that is still some years ahead. Being a part of the enterprise and the professional use case is obviously an important stepping stone for being also involved in the consumer side of it. Why TLens is good for AR, we have a very low power consumption, and you can imagine an AR headset, at the end of the day, is gonna be something like this we're gonna wear every day. That has a very limited space for equipment and battery. Power consumption and the power budget in those kind of devices is super critical. This is one of our clear strengths is exactly that. No gravity. Whatever you do, it will not impact that image quality. Interesting one is actually the temperature stabilization. You know, being so compact design, you can imagine all the electronics is dissipating heat. Heat into, say, an imaging system, is really a recipe for disaster because it starts to drift. That means that, say, if you have a fixed focus camera and the heat is increasing, that fixed focus camera is shifting characteristics and suddenly will be out of focus. That is one of the key reason why actually they need autofocus to adjust for that temperature. That is typically called athermalization. You can Google it and see what it is, but that is one of the important actually attributes in our technology. In a way, inherently, TLens compensate that kind of by design, you can say. We have high speed, compactness, which is. I said many times, it's quite interesting to see how how wanted we seem to be in this segment, for these reasons. That's why we are having a lot of focus in this market. Having said that, whatever we do in smartphone has a direct relevance for AR. It's not like we have to spend resources on smartphone, on AR to prepare ourselves. No, it's basically the same thing. Okay, we have already one design win, which is with a very, I would say, well-known recognized player. And that was announced, I think in December last year. We got our first MP order already done, a small one. Now they seem to be on track, they want to release the product to market this year, they then had to produce or order new raw material, and also supply chain all throughout the world is difficult these days. I guess they also wanted to be earlier than later. That's why we got the follow-on order relatively early, maybe earlier than I expected. That's a good sign that we are in, and hopefully, you will see an AR product on the market today, having your favorite TLens installed. There are more projects on the AR side, and there are candidates for additional design wins this year. That will be very late in the year, and of course, they may slip into the next year, but at least the current plan for the customer is this year. Two use cases and in for TLens in AR. Just to repeat, world-facing cameras for sensing or for imaging or whatever, and then also display solution, that TLens becomes a part of a display solution. There are, in a way, many things we are learning every day when we come to AR, and it seems to open many opportunities. We have recently announced a design in to use TLens for a display solution that is a laser-based system, where TLens will be used in a laser projection system, which projects messages onto the glass. Wherever the user is focusing, whether it's close or whether it's at distance, the message from the wife or the husband to get to have the dinner ready will be displayed in a crisp and focused way. That is the role of TLens. This is one display solution which we are actually in a POC, which will most likely be a consumer product, meaning 2025. It's a long project. We have identified other AR display opportunities for poLight. That is what we call Wobulator, meaning that is not a TLens, but it's basically the technology platform where we are scanning horizontally, vertically to display so that you make a low-resolution display a high-resolution display. This is a new potential product, I should say, which can get quite big. We are already in the POC stage, and we're already in partnership with a very important, well-recognized player in this area. Cameras for sensing, for imaging, for video display solutions, not only one solution, but several solutions. You can imagine one AR headset can give several product opportunities for poLight. AR is moving from enterprise to consumer. This is an area where all the big tech companies are making major investments, and we are being seen today as a key player. One design win, five design-ins, one for consumer and five ongoing POCs. Four of the five is actually consumer. Okay. Barcode. Yeah, we achieved another design win, so this is actually the fourth design win in the barcode area. This is the picture on the right, which you have seen many times. You have the Honeywell scan engine, and then you have, so Honeywell is selling the scan engine to different type of OEMs who's making the barcode reader based on that scan engine. One of a kind, high performance, relatively high cost. The opportunity for this market is, I would say, promising, and we have many activities. As you can see on the POCs, five of the nine POCs are related to barcode. What I would like to explain is that we know we have been able to get into those four design wins. As I mentioned initially, they are relatively low- volume cases, like from a manufacturing line application, which means that, you know, that is a low-volume. You don't buy a lot of devices for having on your manufacturing line. That is by design, kind of low- volumes. Also, because I have got some questions about repeat orders. When we get a design win for a machine vision system, which we know is a low-volume, we have a minimum order quantity. We kind of force our customers to buy, say, 9,000 or 12,000 or whatever units. Because we said that's the minimum order quantity. That means that will keep them busy for quite some years. That's why it takes time for them to deploy that units in that kind of cases. If you go to Honeywell, they are closer to the, should I say, point of sale, more this logistics supply chain. They are not at the manufacturing line, they are more at the logistics warehouse-type application. There, of course, the volume increase. When Honeywell or other is taking the next step, which is making even a more compact scan engine, which will fit into a type PDA, type application, which you will find in the point of sales you are visiting, like the shops and what have you, then of course, the volume will be even bigger. I think that we just need to be patient and build our position step by step. You know how new technology, they are afraid of taking you directly into high-volume cases. They want to cost optimize. This is the kind of the path. We go from low-volume performance, high performance, step by step, moving towards the point of sales, and then this market will be bigger and bigger for us. It will take time to build. Also remember, this kind of applications typically have a long lifetime. Like I say, if you take the EX30, it typically can live for, say, five years plus minus. Of course, we do hope that we will be in Honeywell's plan for the future, and we do hope that others like Honeywell, the bigger players will start to use, and definitely, there are POCs indicating that. We are involved in other applications, not only barcode. They are, I would say, relatively immature, so we don't want to emphasize them too much. As you can see, there are nine POCs. Five are barcode, but there are also other things. Healthcare. Yeah, as I mentioned in the beginning, this can be the next important vertical. We have smartphone, industrial, AR, and then the next one we may want to lift up could be healthcare. We signed a very important, as I mentioned, NRE project, a development project worth NOK 1.7 million, which is with a tier one player, the market leader. If we behave and deliver in that area, we have a fantastic starting point in the, in that high-end world of endoscope. We have already a design win. You may remember Kavli, which is using for this our technology for microscope, studying the behavior of the brain behavior in mouses, which will help to understand Alzheimer's, dementia, and this kind of disease. That is impressive how that has really, after the publication from Kavli, how this has raised a lot of interest. This is an extremely high-value sales, but low-volume. I would say that, at least today, I would say it's more like a brand building for poLight in the healthcare and research area, more than important revenue. It is significant. We are talking about millions already in this area. We're expecting more to come. We have already announced a design in endoscope, you remember. That is moving quite well. I said slow last quarter. I feel that it has started to show some good progress, and the customer still have the target to release that endoscope this year. As you can see, it's starting step by step to build up to something. One design win, Kavli. We have one design in surgical device, which will be released to market this year, and we have 10 ongoing POCs. I don't gonna talk through all of this again, but this is the table you have been seeing many times. Maybe just on the bottom line. We have now nine design wins, eight last quarter. We have seven projects, meaning project design in, which can become design win. We have completed now 58 POCs, 54 last quarter. We have ongoing POCs, 31, compared to 28 last quarter, and planning POC, 29, compared to 19. You can see that there's a steady step-by-step growth in many areas, and this is only, as I say in my statement in the beginning in the quarterly report, this is showing that this TLens is not gonna go away. It's gonna enter into many market segments over time. My dear CFO. Thank you, Øyvind. Good morning to you. Deliveries of TLens and ASICs gave NOK 2.5 million in revenue in the quarter, compared with NOK 2.9 million the same quarter last year. We had a EBIT loss of NOK 13.9 million, compared with NOK 13.7 million. The reasons for that is two, I would say. One is that we have increased the sales resources and resources within R&D and operations. That is offset by our reversed expense of social security on the share option plan due to the decline in the share price in the quarter. On the balance sheet, we had NOK 124 million in cash deposits at the end of the quarter, compared with approximately NOK 56. The inventory have been increased by approximately NOK 10 million in the quarter, and at the end of the quarter is about NOK 30 million. This is mainly wafers, which is the component with the longest lead time. On the cash flow, we started the quarter with NOK 150 million in cash deposits, we used NOK 23 million in operational activities. Last year, we used NOK 12.6 million, and the increase is due to the increased inventory. We used NOK 3 million in final test equipment, and we ended up with a cash deposit of NOK 124 million at the end of the quarter. Thank you. Thank you, Alf Henning. Okay, one slide left, and then Q&A. Yeah. Maybe I've pointed out most of it already, but again, we feel that the quarter has confirmed again potential in several market segments. Opportunity pipeline is building up and showing encouraging, and it's encouraging. The main focus going forward, just to have a statement on that, definitely smartphone space. This is a market which is important for us. This, we have a technology which deserves to be used in smartphone, and it will. I've said that many times, and I will repeat it. We will get into that market. Just to say that, I know obviously a lot of people who have been working towards this segment to get into this segment, and everybody experienced the same. It is damn tough. Sorry. It takes a lot of qualifications, and you need to show that you are there over time. You need to show capacity, capability, but this is something we don't give up. We will be in smartphone. Okay, we would like to mature, of course, the AR cases. As I said and many times, I think this is super important for the company. AR will also be a high focus. Remember what I said, it's not like we have technology for AR and technology for smartphone. It's basically the same component. Gradually build a platform on, in the industrial segment, and let me also add, kind of medical segment. This will be kind of, call it a recurring type, fundament for poLight. Not kind of big project, no project, big project, no. It will be kind of step-by-step increasing as a fundament, which will be important for the call it recurring revenue in the company. That is the focus. Of course, we are a small company, and we need to carefully review where we spend our time and resources, and I have to admit that working in poLight is not an eight-to-four exercise. It is day and night, weekends, vacations, and I felt that we have built a team which are willing to put that in. Because how many companies like this do you have in Norway and in the world? Not many. Okay, other opportunities are there. I mentioned automobile, and they will be addressed if business case and resource situation allow. Those markets I mentioned are definitely the markets which we are proactively taking care of. From a portfolio perspective, there are so many things we could have done. I've been managing tech companies for 25 years, and the recipe for disaster is to do too many things at the same time. We do try to be extremely focused in that, and the main focus for us is to make TLens a success. We are on our way, but we still have a way to go, and that means that we need to continuously improve the TLens, make it easier to integrate, make it more reliable, make it more cost- efficient. That is from a portfolio perspective focus. We see other product opportunities, e.g., TLens with big aperture, medical TLens with small aperture. We see new products on the same technology platform, like, what we call the Wobulator for increasing high resolution display or for improving high resolution display. There are things which we really would like to do, but we need to do it step by step. Whatever new thing we try to do now, you can say the TLens we developed, call it in isolation, not isolation, but we did it our, on our own balance sheet. New things we do now. We try to get kind of a customer engagement very early so that we can get quicker out to the market. I would like to emphasize again that our capability in the company is getting better and better, every day. One specific thing I would like to mention is our ability to make system reference design. Not only competence on TLens as a component, but we can actually come to a customer, "Guy, you could use that design for your product," which it gives that customer a better start and easier start than starting from the very, very fundamental design. That's important. That's the main outlook statement. I would like to invite Alf Henning to join me for the Q&A. As I said before, while Alf Henning makes himself ready, if you do want to ask questions from the audience, wait for the microphone. Those of you asking questions through web, please leave your contact details in case we have no time to answer. Are you ready? I'm ready. Good. Optics is a megatrend. Is there somebody, being an OEM or a camera module player, who have first right to use TLens in an add-in configuration? No. We are very careful not to give kind of exclusivity or right of first refusal type deal. So the answer to that is no. In the first quarter presentation, you mentioned that the smartphone opportunities have been shifted to 2023 and beyond. Does that mean that some of these opportunities is shifted all the way to 2024? Yeah. Definitely, you're correct. We do, due to the situation specifically in China, expect that the 2022 opportunities we saw will happen in 2023. When I say beyond, of course, in our business plan, we expect that this guy, that guy, maybe be the first, and then after that there will be followers, meaning that the whole business plan, in a way, shifts to the right. Yes, some of them will also be later, but we do see candidates for 2023. Then, of course, but some of them will also shift into 2024. Onwards. Regarding the medical POC news, is this related to what you said about poLight going up in the value chain by making a camera module solution? Yeah. Good question. The medical cases we are involved in at the moment, in a way, yes, because we tend to, in these cases, to be asked to make TLens integrated into a special kit package so that the customer, the medical customer, can easier integrate a TLens. Handling a TLens, a bare TLens, a naked TLens is quite a challenging thing, and referring to this add-in design in the smartphone, you have to have quite high capability, both design-wise and manufacturing-wise, to be able to handle a bare TLens. But those kind of high-end camera module specialists in, say, in the AR space or in the smartphone space, they are capable, at least many of them. Whereas if you look at the kind of high-value medical type equipment, lower volume, they are typically not supported by those smartphone camera module guys. They're typically supported by other niche players, and they don't have that capability. We are, in a way, having the opportunity, being forced to move up in the value chain in that way that we take a bigger responsibility in integrating the TLens into something they easily can use. But it's more like an opportunity than anything else. But, of course, it means that from an assembly perspective, we may, for those cases, which is a relatively low-volume, high- value, do not want to do that at our assembly partner because that will be kind of a noise in their kind of high- volume plans. That means that we may want to do that ourselves at Skoppum, that those special integrated projects. Long answer, but in a way, yes. Does this enable poLight to provide this solution to more medical equipment OEMs? Yes. Typically every one of these customers would like to have their own, their own design. Also, the guys who want to do it, they typically also will try to protect themselves by patents. Okay, we have integrated TLens in this way, they will try to patent that. Another guy need to do it slightly different. Typically system patents on that level is, I would say, less difficult to go around, but that's typically what they try to do. Regarding Xiaomi Child Watch, why are TLens not included in news releases? I think I may mentioned this about smartwatches. This is a super competitive landscape. Very, I would say, cheap devices. You remember that when Xiaomi released a TLens camera in their watch and same did Sonix, it was actually in the beginning of the COVID. These smartwatches we have been involved in is basically used for as a security device for kids, parents, kids having contact when they're not together. Of course, two years with COVID in China means that the parents and the kids are more or less in the same flat twenty-four seven. That kind of watches which was supposed to be a quite high-volume became a very low-volume device for all the players, not only those guys. That's why the focus of these watches now is not performance, but cost. We are a cost increase element for them when they can buy a VCM for $0.3, which we will not sell TLens for. That is the reason, cost. I think that market will normalize. I think that smart watches we are wearing will also sooner or later have camera. I just have a story there. I was out fishing one day, and in my net, there was a huge lobster, you know. I mean huge, like this. I forgot my phone, but I have my watch, but there was no camera. My kids, I was bragging to my kids and say, "You know, I had this fantastic lobster." "Yeah, send me a picture." "Don't have a picture. Ha ha ha." Of course, they didn't believe me. I think sooner or later, there is a need for a camera in those watches, because it's so much easier to instead of having the big phone with you when you're fishing or jogging. I think this market is still an important market. If volumes get high related to medical solutions, are you able to scale up production to market demand at Skoppum, or do you need to expand? A very intelligent question because exactly that we see in the medical market, we may need to take a bigger role. Then we need to increase capacity in Skoppum, and that may happen. Has there been any follow-up orders by other players than Honeywell? I'm a little bit uncertain what you mean there, but when it comes to barcode, no. The reason for that is that the guys who have this order design wins in barcode has been this machine vision manufacturing line application, where we are forcing them to buy, say, 9K or 10K or 12K. That is kind of they're only using, say, 3K a year or as an example. That's why they are not ready to have any repeat orders, but that will come, of course. For other markets, yes, we have. Regarding smartphone, did the add-in design models draw new players' interests? Yeah. I think I answered that already. Over time, patents appear more frequent from many different camera module players. Can you say anything about maturity and traction in the market? I feel also we answered that during the presentation. Many reports show direction switch from low-end camera modules to high-end OIS and auto focus modules and hence more expensive solutions. Does poLight benefit from this trend? Yeah. I think that the fact that the camera becomes more and more important, selfie camera becomes more and more important. They put more value, the more budget in the selfie camera. Like take TikTok, which I am not using, but which I know many, many are using, will mean something for the selfie camera. It will dictate a better selfie camera, and that's clearly an advantage for us. Of the completed POCs, how many percentage is realistic to use TLens in a product? I can't give a number, but what I can say is that what we do see is that I would say many of these major players in the different market segments have done POCs. Not only one, maybe two, maybe three. And I think I can say that majority of those POCs have concluded with a positive statement. Then they take that kind of findings, that research report in the drawer, and they're waiting for opportunities. Somebody are waiting for opportunities, and they are willing to be the first mover. Somebody just look at this as, "No, we are ready. Technically speaking, we know TLens, we know how to use it, and when the first mover is moving, we're gonna follow quickly." So I think there it's a catch-up effect in a way. When one player will move, there are many people who are ready to move. If TLens, should I say when TLens is a mainstream technology in this different market segment, coexisting with other technology of course, I think there are many people being ready and will follow. But without giving a number, I think a significant part of that has at least the potential. You said add-in design is the solution for selfie cam in smartphone. Is this recognized by the camera module players as well? Yeah. It's not only our statement. We have customers saying that, exactly that. Regarding investors, did you notice any international interest in the market breakthrough? Yeah. Of course, there are always dialogues in that context without going into details. Yeah, I mean, there are companies and investors who are talking to us, and without going into more details. Recently, one of the world's largest camera module companies came out with a report showing that they have reached the mass production stage of their camera module for selfies. This company works with TLens and referred to TLens in previous presentations. How does such a development affect poLight in terms of being ready for possible order? Of course, I think you know who you're referring to and there are, I would say, particular one which are, I would say, mass production-ready in add-in designs. That is fundamental for us. A customer, an OEM doesn't buy a TLens, they buy a camera system. So that there are qualified camera module who could deliver high quality add-in TLens designs are fundamental, extremely important. There will come more, and we have different activities with different camera module players for different market segments working on add-in design as we speak. The same company mentions that they have completed R&D on OIS with TLens. Can you tell us a bit about the development of OIS with TLens? Yeah, we have some, I would say, research activity and concepts which we are doing. I'm not aware. You know, also, you know, things can happen on the OIS side based on TLens with other places with the camera module guys, which we don't in a way know about. From internal poLight perspective, we have, as I mentioned, that when it comes to innovation and new products, we are carefully monitoring and doing some, I would say, some investigation. We are focusing on success for TLens, meaning we can't do too many things on completely new things. There are concepts which are kind of ready to be executed. Today we are relatively less mature than definitely the AF. The smartphone companies now seem to prioritize the development of the selfie camera more than the rear camera. How has the time from Q1 until today been for poLight in terms of inquiries from the smartphone companies? Is there any increased activity to track? I would say, still I would say even though there's an increasing interest in selfie and better selfie camera and selfie camera with AF, I would still say that the main budget and the main focus for the OEMs are the back camera structure. That's also why we have invested in reference design, which will be compatible with, say, wide field of view back camera. We think that we will get into the selfie camera, but then also we think that we're gonna evolve to the back camera. I think if you look at the budget and the focus at the OEMs, I still, I would still say that the back camera is the main area they invest in. In the fourth quarter, it was reported that three companies had come a long way in planning smartphones with TLens. Slower activity was reported in China in the first quarter, but at the Capital Markets Day, it was barely mentioned that the fourth player has a relatively fast-growing POC. Can you say something about how things are going with this actor and how far they have come in the process? I'm not 100% sure what you are, what that question is hinting to, but as I said in the smartphone slide, we are working definitely on that, in that area. There are good progress in the area. We have progress with both Chinese OEMs and others. Maybe you're hinting here to that non-Chinese OEM, and if I'm right, that is still, I would say, continuing in a good way. It has been mentioned that there is a smartphone customer who has run the first process of building a TLens module together with a camera module player, and that this customer is expected to be the first with a TLens mobile. Are there now opportunities for one or the other potential customers to arrive before this customer, or is this work still being done so concretely that it can be assumed as this first customer will be the earliest? Yeah. Good question. Who knows? If you take it from the camera module perspective, of course, the camera module guy who supported that smartphone, who looked to be the first one to release, is definitely also talking to other OEMs. The possibility of that camera module guy to be the first one is still there. It's still there. Will it still be the same OEM? Maybe not. As I see it today, there are other smartphone players which have matured faster lately. Still, I would say that the guy who was kind of ready to, in a way use it is still maybe the most advanced, but somebody picking up very quickly, meaning that potentially it could be another OEM, but it could potentially be the same camera module guy. AR is being mentioned to be the next big thing in tech, and orders were recently announced for the first mass production batch with an expected re-release in 2022. Can you say anything about the product or what role this product will play in the AR market? I would love to do, but I cannot. What I can say is that it's a well-recognized player, expected to be out this year, and start up something good for us. I can't say more details, sorry. Several of the projects poLight has in AR were stated in the recently published stock exchange announcement to be the category important AR market players. Can you name which companies you consider to be in this category? No, sorry. What I can say and what Jon Edwards explained in the Capital Markets Day, which you can go and look at still, is that it is those usual names, and you will find them typically in the U.S. poLight has many projects with customers that have moved into the completed POCs category. Can you estimate how large a portion of this can actually result in one or more products? Yeah, I think we answered that already. It has been mentioned in previous presentations that poLight has worked on three AR projects that could perhaps be realized with a design win already in 2022. The first came already in December last year. How many could potentially come as design wins in 2022? Are there any of the current candidates for 2022 or perhaps early 2023 in the important AR marketplace category? Yeah. I think there are opportunities for more design wins in AR this year. I think they will be smaller players. The first one will be a, I would say, a significant player, which we all will know. The two other potentials is maybe smaller, less visible, potentially. Those other major players, I think, is potentially more consumer- related devices, which will more be type 25 onwards releases. How do you see the collaboration with existing barcode and other industrial customers developing the next year? Do you see any customers who could potentially come up with a product number two with TLens? Definitely. Absolutely. We do see that and I'm quite confident that that will happen. Keep in mind, the lifetime for these kinds of products are quite long, and the development cycle is also quite long. Definitely we see more than potential, we see clear opportunities. Webcam has shown superior quality. Do you have several stakeholders within the segment that could become concrete projects? Yeah. Teledyne was mentioned earlier as a design in in the industrial segment. Teledyne now operates with order codes for MIPI to MEMS autofocus models with TLens in both black, white and color versions. Have any concrete products been released with this camera model? If not, what will it take for Teledyne to be listed as a design win? A good question. Teledyne is apparently very openly advocating their capability with this MIPI 2- mega. MIPI 2-mega. Yeah. Sorry. I can't remember that. Yes. That's a good camera module. I would say yeah, it is the first version, and we may have claimed that as a design win. We haven't, but we are working together with Teledyne still, and there will be more visibility with Teledyne in this year, where they will kind of I would say enhance maybe that version. That will be the time where we maybe will claim that as a design win. There is a potential there for this year, and we are working very closely with Teledyne and their partners. How far have you come in the LBS projects you are working on? Yeah, laser beam scanning projects. Now we are doing quite a bit there, and in a way you can say the AR activity there is clearly an opportunity. We do see quite many laser application for TLens. Moving quite well. How is the development going with different coatings on TLens? I'm impressed by the quality of the question and all the details, but next time I will bring my CTO. No, the coating and just so that you understand, the glass membrane on the TLens needs to be as transparent as possible, so that all the light coming in through that glass membrane is going into the image sensor and not being reflected. This is where you have ARC coating. ARC stands for anti-reflective coating, which means that as much light as possible go through that without reflection. We have already an ARC coating installed in our at MEMS level. That ARC coating has been improved. We have reported that, and it's now qualified, and we will be in mass production with new ARC coating this year. That has gone very well, and there are new plans for even further development. This is what I said. This is an element of making sure that the TLens continues to improve. This is an element of that. Can you say something about how many companies have carried out a review and evaluation of poLight's production? Well, that's quite a few. Recently, several, and over the years, many. poLight and shareholders for- How many questions have we left? Oh, many still many. Okay. We need to watch the time. Okay. poLight and shareholders' forum inform us of many non-poLight patent applications with TLens. This shows promising engagement from potential customers, I'm sure you would agree. Does poLight, by the way, systematically follow patent applications concerning this technology and market? Could there be a risk that such patents and patent strategies could limit or hamper poLight's potential customer base? Yeah. It's an important area. We do spend quite some effort on this. We have quarterly review with our advisors, and then we have weekly review with our private shareholders who's giving us input to various patents. So we are relatively well, I would say, equipped. It is important and need to follow. Of course, what is important for us is that our customers have, which will try to kind of protect their solution, but still that there is freedom to operate. This is why reference designs from poLight, publishing papers about how to use TLens is an important element of what we call keep the freedom to operate. It's a big topic, and in a way, sooner or later, we need to have dedicated people working only on that patent aspects. As I said, we are helped by external advisors, and we also very much help, and thank you for that, with this poLight pod guys who's spending a lot of time on searching patents. The inventory is increasing. Are you still increasing it? Is it mostly complete modules, wafers or what? Yeah. That's, I think the CFO mentioned that. It's mainly wafer- level and we do limited assembly without orders. Something we have to do, of course, to keep the line active. The inventory is mainly related to, I would say, Alf Henning Bekkevik, to Wafers. The wafers, yes. That wafer situation throughout the world is still challenging. We need to make sure that we have. There is a lead time, you know, from say 12-24 months on this kind of wafer still. That means that we need to take quite an early commitment to make sure that we have what we need. Also, a wafer fab, you don't easily turn on and off. There needs to be certain level of activity. Of course, there's a limit how long time we could do that. There is quite a high restart cost if you stop it. Where do you stand with the next generation with MAXHUB? Can you indicate the partners/client in AR/VR? Now, when it comes to MAXHUB, that product is still on the market. We don't have any. We obviously are talking to that customer, and I hope we can get more opportunities. As I said, generally speaking, webcam is an area we are exploring. Very cost sensitive. Maybe, as I said, in I think in the Q1 report, maybe that is a better case for us over time. Yes, there are still opportunities which we are exploring. Regarding the design win from Superlead, do you see this case to develop similar to EX30 from Honeywell when it comes to sales? Yeah. Potentially, yes. Superlead is in a way a little bit known to be a quick follower of Honeywell, so could potentially be that, yes. How can TLens be useful in conjunction with the metaverse and new VR technology in the coming years? I think we have answered that, use cases for that. What is the situation for the iris recognition? Yeah. We have a few cases where we are working on iris recognition. I would say they're still on POC level, but yeah, have potential. Hi. Thank you for good presentation. Good to see continued progress. What is meant with high activity in smartphone area? Can you give us some more details, percentage of all activity in the company, problem-solving with TLens solutions, problem-solving manufacturing, problem-solving assembly, or the challenges? How many camera module partners? How many smartphone companies? Yeah. My problem-solving on TLens solution, I feel that, and this is one thing which is actually very important, when we work closely with POC with different customers, but say, specifically the smartphone, we do have a very close interaction between the OEM, the camera module guy, and us. They all have kind of different specifications and demands. Somebody wants to drop from 1.2 m to 2 m, somebody wants to drop from 1.5 m, somebody wants to drop from 1.8 m. Somebody would like to have this spec and that spec. All these kind of activity we are very engaged with is meaning that it's a great opportunity to continue improve the product. That's a tough process. They would like to know everything, how we manufacture, how we do assembly, the qualifications we have done. This is really a demanding process, but very also we learn a lot. Of course, when it comes to manufacturing, the big guys don't take our PowerPoints for an answer. They would like themselves to go and do a review. We recently had one, and we're gonna have another one soon, where they go to the factory. They come to Horten headquarters to meet management, look at the polymer line. They typically visit SD to talk to them, to see do you have control, do you have material for poLight. They go really deep into that. They go to Asia to look at the assembly line. We are hosting a visitor coming there now this next month. They are going really into the details, which is good. When it comes to problems in manufacturing, I would say that there is not one problem, but we are still in a stage where we every day work on better yield. Yield meaning if you inject material for 1,000 TLens, how many good TLens is coming out of the factory? That's the yield. Is it half of it? You have 500 lenses, which you can sell, then you have 50% yield. That yield activity has an extremely high attention in the company, and yield will be something you work on all the time. It's not something you stop working on. You will work on yield all the time. Good yield comes over time, with over time producing high-volumes. Meaning that will step by step be better. It's not a one problem, it's just all the many, many different processes and all have the potential of making a TLens bad. All these processes need to be optimized and improved, and over time you will have the yield you are targeting, which is far beyond 90%. Your portfolio looks impressive, but when do you really deliver revenue? Are your competitors generating more revenues than you? Are you everywhere single source? That's a good question. You could say one of the, I would say, few disappointing things this quarter is that revenue is not picking up. The reason for that is that so far we have been in low-volume design wins, and they are forced to buy quite a bit day one, and that's why it takes some time before it builds up. Competition, more revenue, definitely if you look at the VCM player, they, which is the mainstream product today, they have huge. I mean, that's a whole industry in itself. Definitely yes. When it comes to tunable optics, I don't think they like others like Optotune they have, they're more established in the industrial segments. I would expect them to have a higher revenue. We are kind of a newcomer in that area. I think that when it comes to single source, yes, we are single sourced in many applications. That doesn't mean that they cannot design their product based on another technology. When you first are getting into production, it's not easy to substitute you with something else. That was actually the last one. Was it? Yeah. Well, did we do it too quick maybe? Did we answer all the questions? Yes. Okay. If you're not happy with the answer, you can reach us on mail or SMS, or whatever. Thank you a lot for coming to Continental. Thank you so much for following us on the webcast. Thank you so much for questions. As I said many times, that really makes the presentation more dynamic. Sorry if we didn't answer all the way you expected. As I said, contact us if not. Next event, one thing is that we have a Q3 in November third, but also there will be a release of a new webpage in poLight in the coming weeks. That will be a very professional, a very informative webpage, so please look out for that. We will send probably a link in a post when it happens. Okay, thank you so much. Have a good day, and see you next time.