Good morning, everybody, and welcome to Polite's Second Quarter Presentation. Agenda. As normal, key events, a recap on what Polite is all about. Market review, financial review, outlook and in the end, Q and A. Financial review will be presented by my CFO, Alfvening Bekkevich, which is here with me today.
Regarding Q and A, this presentation is only webcasted. If you have questions, you can add those into the interface on the web. Please leave your name and contact details in case we do not have time to answer all questions. Key events in the quarter. Yes, As you know, 1st assignment for web camera application, 1st assignment for a machine vision product, which is very much in a way type barcode market.
Good progress on most on the customer cases, We feel, as you know and we have already announced, after Q2, 2, we had a cancellation of a smartphone project due to portfolio changes. The same OEM, which canceled that particular phone, is still considering using TLENs and other OEMs have started evaluation. So I will come back to that. Also after the quarter, we received a follow-up purchase order for TLENZ worth approximately EUR 1.450 related to that barcode project we have been mentioning several times. And then as you may have seen today, Also, obviously, post Q2, we received a relatively sizable PO, probably the biggest ever actually for a medical case.
I will come back to that. Polite at a glance, what we can Maybe say which is new here is that we have expanded the team. So now we also have presence in USA, Bay Area, a senior VP responsible for North America, A background from the industry and been with a camera module manufacturer called OFIM for several years. We also have a representative and employees, senior business development guy in Southampton in U. K.
And also Taiwan, we have been increasing the presence and also in Zanshan. So the organization is step by step being professionalized to handle the opportunity pipeline we see. So Polite developed a unique lens, a tunable lens, which can be used in many different applications. Coming back to that, founded since 2,005, so it's been a long, long run to get where we are today. We have built a very, I would say, good IP platform, 15 worldwide patents, 11 pending and 3 registered trademarks.
We are now around 30 employees. And as I said, Houghton, headquarter office in Finland and China and representation in Finland, U. K, USA, Taiwan, Korea and Japan. Uniqueness of our technology can be summarized on the bottom right side. Instant focus, extremely fast speed, can realize very compact solutions, have a constant field of view, no pumping and have very low poke assumption, which is key technical attributes among other important things.
We are on our way. We have now actually Five customer wins where we are shipping products. We have the web camera from MaxHub. We have Sun Max Pro smartwatch for kids. We have the Xiaomi smartwatch for kids.
Both those watches are still in market. We are inside Horneveld EX30 barcode scanner, and also we are now in a machine vision direct marking reading relevant to kind of barcode unnamed company so far. So we are building step by step a customer base and are proving through this design wins, this customer wins that we have a technology which is It's suitable for many different applications and more will come. We definitely I would say we have 3 focus areas. The smartphone is definitely a high focus area and will remain so and it's quite a demanding market area to address, but That's the area where the volumes are today, and volumes for Polite and our manufacturing partner are key.
So we will continue to explore smartphone. We will not give up that market. We have had some up and downs, but we definitely see a very attractive pipeline, and we have no reason to not address that market with full force. You can also say smartphonewearablesaccessories. So That could be other and that's a picture of a smartwatch phone there on the right, which is also obviously a key area where we already have references.
Then another important area for us are the barcode, more the industrial market, whereas barcode probably represent the main focus, but there are also other application, which we are working on and which is a part of our POC table as you will see later. Augmented reality, definitely important for us. We have already several activities ongoing. We Think and other things that EIA will be probably the next big thing. It's not going to happen next year, but say in some years ahead, It's believed that augmented reality will be kind of overtaking the smartphone volumes and still to be seen, but that's kind of the prediction.
So we are using quite some effort to position Polite in that area at an early stage as opposed to the smartphone market, which has kind of been using auto focus technology for many, many years based on a VCM solution. Here we are really in the early stage and can take our position without having to compete with an incumbent solution. Super important area, and I will come back to it. Then there are other markets areas and there medical, Again, an example this morning, we just got actually the PO flying in just before we started this presentation, so I haven't included in this presentation. But medical area is definitely interesting for us.
Still, I would say, at early stage, but we see clear opportunities and the sign of that was given to you this morning. Other application Like automobile, machine vision, accessories is also definitely a part of our scope. So but I will say the 3 leftmost are today where we use most energy and then we have some other cases, which is kind of grouped in the other, which also are starting to mature and potentially can become an important segment. Okay. So we had a follow-up order for EX30.
You see the picture of EX30 on the bottom left. This is Honeywell latest Scan Engine. That Scan Engine, they sell to other OEMs. So it's kind of a heart, it's the engine inside a barcode reader. I just kind of picked some examples of who is using today E330, and I'm sure there are more and more to come.
But I'm just listed and you see a picture of those OEMs and the names and they are basically buying then this EX30 from Honeywell and installing and using it in these system solution delivered by these various OEMs. We have actually so far, as of today, received a small a little bit less than NOK 5,000,000 in order intake. And also which is important in itself, but also it's early beginning. This is typically a product which have a long lifetime as in a mobile phone, 6 to 12 months. This have years horizon for this product.
And also, we expect the volumes to gradually increase. But not only that, It's a super important reference for us to build appetite in other potential customers, which we are today. So I expect more good new slaughter corn in this AR. As I said, it's still a market in an early stage. We the people we talk to are specifically mentioning power consumption being with TLN's speed, Compactness and low gravity sensitivity as key reasons for using TLENZ.
There are, as I mentioned before, there are 2 use cases. It's we being used in the world facing camera on the glass for different applications, sensing, imaging, video. And also for laser based displays, We can also be a part of tuning the laser, so that when the user are Getting displayed a message on the glass, that message will always appear to be in focus for the user because the TLENs will tune The laser, depending on where you as a user of the glasses are focusing. So you can say Maybe in the extreme, for A, Airgas, there could be 2 world facing cars, potentially 3, I don't know. And there will be 1 laser system for 1 glass and maybe also 2 laser projected displays need to be chewed.
So everything between, say, 3 and 5 is possible of T lenses is possible in a system like this. The use cases we are today involved in is, I would say, professional use cases, meaning relatively low volume. But we are also engaged with the companies who is targeting more the consumer based market. That market will mature later. Some other cases we are working on the, I would say the professional use case could evolve into a consumer case, but we also, as I said, enrolled in pure consumer cases starting as a consumer case.
Those we expect will be released later. We are today involved in 3 concrete product projects and 3 proof of concepts. In addition to that, there are companies planning to start POCs. So quite a significant activity at Polite. And as I said many times, We will take a position in this market segment.
We have an extremely good basis for doing that and it could potentially be the most important consumer segment for Polite in some years ahead. There is a potential For I would say 3 design wins related to professional use case Within well, very optimistically end of the year, more realistically, maybe beginning of next year. So relatively, relatively near future. Okay. Extremely interesting area.
Smartphone. Yes, it was a disappointment for us, This cancellation, it is, as I mentioned before, a portfolio strategic reason, meaning that they have decided not to release that particular phone. That was negative for us and it's negative for our shareholders. I'm sorry for that. But I just want to remind us what we always have said in this market.
It's a really, really tough market. It's a tough market for newcomers and new technology to come in, and it takes a lot of convincing and testing. In addition to that, which we have done quite well, in addition to that, you are So much, of course, dependent on strategic product decision at the OEM. So that's what I said last quarter is that Looks extremely promising, but it's not a done deal. And that's basically the case.
And Specifically for these smartphone cases, they are difficult to be 100% sure. And as I said before, you really don't know that you're in that phone before it's released to the market. It can change often they have also dual tracks. So that's how this market works. And please keep that in mind when we're talking about all the opportunities that there are obviously risk And our visibility is limited when it comes to strategic decision inside OEMs.
But Same OEM who canceled that project, as I said, still have a good dialogue with us. They are still continuing doing tests and improvements. In addition to that, we have other OEMs and other camera module players who are also starting their own activity based on similar camera, but also based on their own kind of design. So it's still a promising area for us and we are using a lot of resources to support these planning POCs. And the way we see it today, There should be a potential for several candidates for phone project for Polite in the second half of twenty twenty two.
This phone, which was meant to be released, was released for Q1 'twenty two. That first half 'twenty two is gone for us, but there is possibility in the second half and maybe towards the end of second half the way we see it today. But this, we just need to see and support and work. And as I said, there are also continuous improvements and request on improvements, which we also need to answer to. But We are continuing our preparation for manufacturing.
We cannot afford not to do that. If we don't do that, we will for sure not have an opportunity. So we need to be ready. They need to see us ready. They need to see us producing, they need to see capacity in place before they dare to continue.
Now we have a little bit more time, which in many ways is, you can say, good, but the other side, I think, Having a pressure internally is also a very good tool to make sure that things are happening. So we are trying not to take that pressure down and pushing our own people and our suppliers to be ready and produce with good quality. I would say there are a significant investment being made by several players in the ecosystem to evaluate, prepare themselves for using a T lens based camera. For an OEM to do A proper proof of concept, designed own camera, add in design, building prototypes, We are talking of significant money to make that happen. And of course, that is a sign of clear interest and also That's why we dare to say that there are still candidates even though we have that setback.
So no reason not to focus extremely not to focus on this area, definitely. We feel that this add in solution will be a potentially a widely used solution for the self-service karma. But not only that, We have also seen sign of interest to when they start to get used to using this technology that it will evolve to the back of the camera, meaning as in AR case, there is a potential for Several uses and several T lenses in one smartphone. Okay. So we are sorry for the cancellation, nothing we can do with it, nothing to do with Helens, but no reason to not have extreme focus in this segment.
Yes, this is basically the same slide we used last quarter. MaxHub, very nice web camera. Web camera is and we are the autofocus solution. I've been talking to the Maxar people and the distributors and they are getting really good feedback on that camera. And I'm using it myself in daily work and many others and polite, of course, and I also understand that many of the shareholders have starting to use MaxSub camera.
So please test it yourself. It's a really good come up for that price. We feel that The relationship we have to that product and that company is going well. We also feel that it's represent a fantastic reference. Kind of the pandemic has forced us to work more virtually and Teams and what have you is something which we're widely using.
So this market, good web cameras will I think, will only increase in interest. And we think there are many other players who could benefit for using TLENZ and we are trying to explore those opportunities in a systematic manner. We are involved with a company, which Some of you know very well called Wuvtex, it's a Spanish innovative company, which is doing many nice things. One of the things they're working on is volumetric video conferencing, so 3 d video conferencing. And they are now considering and actually they are testing and the process of testing 2 TLEN space cameras to achieve 3 d conferencing.
Still, of course, on an early stage, but it's interesting to see Hope people regard Helens as fundamental for 3 d volumetric videoconferencing. So I think that's Web camera, 2 d, 3 d, I think potentially can be a very, very interesting segment for Polite. I think it will take time to develop, But I think it's definitely an interesting area. When it comes to optics, you have may seen that they have posted some videos using a T lens camera, then they can do bokeh, they can do all in focus, which we have kind of done ourselves more like, I would say, non professional software. They are commercialized and they can sell this kind of function, which then will depend on using a cleaner space camera.
So yes, we have quite some cooperation with that company and we'll continue to support Yes. Good progress in most of the customer cases. We have ongoing supply, 5, up from 4. Projects 5, dome from 6, and that is the smartphone project, which disappeared. We have completed PUC 32 as 27, so quite a few has been kind of completed and hopefully that makes Ground for more projects to come.
We have today ongoing PUCs, 23, down from 25, obviously connected to what has been completed and around 10 planning PUCs down from 11. So these numbers are overestimated. It's not always To clear where which phase the different kind of customers are. So obviously, this is not exact science, but it's our kind of estimate. Yes, maybe just a comment to this morning's press release.
So this is a medical area. It's not a design win. It is a product under development, a medical surgery very compact product, extremely innovative, nice product. We are today designed in, but it's not a design win. There are still developments to be done, But the company want us to prepare for mass production, and that's why they placed this PO of NOK 2 point NOK 3,000,000 which is actually I think the biggest PO in the company's history.
Let's hope that will continue to grow. And in that sense, significant and also significant as a clear evidence that medical surgical devices are using or testing T Lens. So far, they have been tested this device also with doctors medical doctors with very positive feedback so far. But again, things can happen, things can change, things can be stopped. But even though it's giving us clear an opportunity, which we are quite proud of.
Okay, Fanny, would you Take people through the financial review. Sure. Thank you.
And good morning to you. So deliveries of TLN's in ASICS for commercial use and customer development projects And some revenue related to deliveries related to our prototype of a potential new product gave $2,900,000 in revenue in the quarter compared with $600,000 the same quarter last year. EBITDA loss of $13,700,000 in the quarter compared with $10,400,000 in the same quarter last year. The increased loss is due to increased R and D expenses in the quarter, also including some material used for Manufacturing Technology Improvements. On the balance sheet.
The cash At the end of the quarter, it was $55,600,000 compared with $89,900,000 at the end of the same quarter last year. So according to current plan, The cash deposits will fund the group activities throughout this year. On the cash flow. We started the quarter with $68,400,000 in cash. We used $12,600,000 in operating activities compared with $8,300,000 the same quarter last year.
The increased spending is related to increased R and D activities. We used $100,000 in investing activities $100,000 in financing activities and ended up with $55,600,000 in cash at the end of the quarter. Okay. Thank you.
Thank you, Alfvening. So then only the outlook statement left. I hope you're still with us. I just wanted to update this slide. This slide was given in the Q1 presentation, a similar one, stating Operating milestones we are targeting and also financial ambitions.
As you all can understand, this is forward looking And the uncertainty in what we say here is definitely there and it depends on Many, many factors. So just again, I want to emphasize on that. Today, on the left side, we have 5 customer wins. We have several PUCs in many areas. So we have quite a handful and more to handle with a relatively lean organization, which I have to say also and give credit to, is doing a fantastic job to handle all these activities.
Okay. We target design win for AR, as I mentioned. In say, if we are very lucky, Andrea, Maybe more realistic, first half year. Also, we hope that we will have Finally, a confirmation on the medical side in that first half year. So that will be 2 new designs, which will again exemplify and put TLENZ and Polite into super important market segments and adding to our reference list and growth platform.
Then we target our first assignment for smartphone. That assignment will be related to autofocus for self camera and based on add in. That's definitely the target we have. Then we will start revenueing a smartphone in end of the year 'twenty two, begin of 'twenty three. 'twenty three, 'twenty four will be a ramp up phase.
And in 'twenty four, We will also potentially have the basis to announce and introduce to the market a new product. It could be OIS, it could be a big aperture T lens, it could be beam steering. We're having some, as you see from the report, Some quite interesting activity on that. Having said that, our resources on the tech side is today and also for quite a while mainly focusing on existing POC, existing customers And we have, I would say, more limited resources to do fundamental new product development, but we are trying So that is progressing step by step. Then as I mentioned on the smartphone slide, we think that The target the design win for selfie camera is also a path to be included in the main camera.
We think that selfie camera is a good start for Polite. We have a sweet spot there. We have the advantages we can show there It should place us in a good position. Then the camera engineers will be used to working with our technology and We invent our and include our T lens into the main camera structure. Main camera, as you know, is not It won't come anymore.
It's 2, 3, 4, 5, whoever that will end and there should be a space for a tailings application also on the back. We are saying that that's going to happen in the end of the 2024. So obviously that's some I'm ahead of us, but still clearly target we have. Then in When it comes to consumer and AR activity, we think that 2025 could be a year We start to see the leases for you and me Eyeglasses. And if we can build a position in the enterprise market AR, we should have a good platform to also be included in the consumer glasses and that's where obviously the volumes will start to pick up from 10 ks, 20 ks, 100 ks to 1,000,000 over time.
So that's the operating milestones. When it comes to 2025 and the revenue ambitions, we haven't changed that. From Q1, we still are targeting $100,000,000 in 2025 and also a 20% plus EBITDA. Revenue for non smartphone will covering a substantial part of our total OpEx if the world develops and polite develops as we anticipate. Okay.
So last slide, outlook. Overall progress has been relatively good in the quarter. It's obviously a little bit colored by the after the quarter cancellation, and that has impacted the company and the shareholder negatively, which we don't like to do, of course. But there is remains a high interest in TLENs also in the smartphone area, and the pipeline is really promising. And as I said, there are significant efforts being made by several players in the ecosystem to evaluate and prepare themselves for using TLENZ in the smartphone market and other markets.
There are several candidates for projects in the second half. Promising, I would say extremely promising progress in AR and medical use cases. We shouldn't underestimate the importance of that fact. All that positive, I have to say, which I'm saying every quarter, there's still a lot of things to be done and improved in all parts of the value chain for Polite. We are a company doing a lot of things with a limited lean efficient organization.
We are approaching many different markets and all Markets has its kind of challenges and demands and what have you. And when we go into the details in these markets, we clearly see things to be improved, Things to be changed. And that's the part of being a company like Polite and others that you don't see the problems before you are in projects and exposed extremely intense dialogue with the customer and that's what we also face. So it's not that everything is fantastic, it's also Challenges inside the company, but as I've said many times, that will always be the case. I've been managing tech companies for my whole life.
As always challenges, it's all about how does your organization cope with those challenges, how do you handle those challenges. And that's where I feel that step by step, we are getting better and better. According to our current plans, the group's cash position will fund activities throughout 'twenty 1. Okay. Then, Alfvening, would you like to join me for the Q and A session?
Sure. Just a second. And as I said, If you please if you have questions, there may be question we cannot answer due to time limitation or other reasons. But please leave your name and contact details, and we will get back to you if possible. Okay.
Okay. Ready? Yes. First one. In the Q1 presentation, it was mentioned that one OEM was Discussion which model and when to put TL Lens in a smartphone.
There are no several OEMs evaluating Use of TLN in smartphone. Are there now more than one discussing with which model and when?
Yes. I can understand the question, and it's a little bit difficult to answer to because we don't we are not a part of all the kind of OEM discussion which is happening in Ternby. Those are extremely sensitive product strategic decisions, and we don't have visibility in full of that. What I can say is that there is several OEMs who are now considering testing starting testing of a TLEN space camera. And of course, some of them are more mature than others.
I'm sure some of them are already thinking of what will be the time slot for us to potentially use a Helens based camera and others are maybe in the stage where they still are only looking at a more, what you say, a tech assessment without a clear plan. So that's the mixed bag, But there are candidates, yes.
How will the global semiconductor shortage influence the company?
Yes, good question. There's no doubt, and you probably see from the press, I saw today that Toyota will reduce 40% to 50% of of car manufacturing due to shortage of chips. So that is a challenging situation, And it's many companies have issues in how to get hold of capacity and components. We have obviously seen this coming for a while and that's also what we have done. We have placed a purchase order for components for 'twenty two and part of 'twenty three.
And that has been done for quite some time ago, and we have added to that added to that and placed new POs also relatively recently. So I think we should given that we get delivered on time, we should be okay, giving that we understand the forecast correct. So but it means that we have to place orders for capacity for components on our subsupplier long before We have clear visibilitycommitment from our customer. That's what this means.
Can you describe a little about the Whole manufacturing process and the status of ramp up capacity.
Yes. So our product comprises a lens material, which is this polymer, which is basically the lens itself, which we then shape to change focus. That, I would say, has unlimited capacity and it's done by ourselves. So not a capacity issue. Then it comprises the eye muscles, which is shaping that lens.
Those eye muscles are produced in the MEMS fab in Agrata, Estermichael. And of course, there is a, I would say, a significant capacity issue, but that's why we have placed orders long before we need them to make sure that we have what we need in 2022 and 2023 part of 2023. So those Kind of you have to basically plan a year ahead minimum and that's what we have done. Then we need somebody to put together the product, the polymer, the membrane, the muscles, and that's done by the assembly partner. And that is, I would say, also a capacity constraint at the assembly partner at the moment.
That's why we have built 2. And we are today doing, I would say, relatively low volume pilot production at both sites. And we are also preparing these partners to ramp up, and we have Placed a significant POs on them to kind of rehearse the machinery. Then there is Many of these machines which are being used to assemble the T NANDs are relatively standard machines, which typically Assembly Partners has a lot of in a way. And it's kind of not a big thing to get a new one.
Of course, they need 6 to 9 months, but yes, that can be done. One thing which is limiting the capacity quickly is what we call the final test machine. The T lens after being manufactured is being tested for all kind of parameters. That we call a final test machine. That final test machine is Our property is over the site.
And today, we work with 2 companies. The latest one you may see from a press release is Opto Fidelity, which is making test machines. Those test machines, we have now purchased new test machines to be installed. We have expanded the existing one with new functionality just to make sure that we are adding SEK 1,000,000 plus in capacity per month in addition to what we have today. So that need to be taken care of and that's an investment we have to take.
That was a long answer, but hopefully, give some information.
Regarding the production of TLENZ, after the cancellation smartphone project, What is the status of producing TLN modules today?
We are basically continuing as planned. And that we do because we believe that sooner or later there will be cases and we would like to make sure that we remove all uncertainty, which the OEM may have because of first time use, because of Small company because of all these reasons, so we want to continue to push to remove all uncertainty. So no change.
In the press release, you said other OEMs are evaluating TLNs. How can Polite handle a big PO As of now.
We think we have we think we understand how the ramp will happen. And as I mentioned before, we don't think there will be an OEM taking us into a kind of multimillion project without first running a smaller project. So I think that's how we see it today. Then and if that's the scenario, we have planned for that scenario and are ready for that scenario.
Sony Optical released their 2nd half interim report 16th August. In the report, presentation and transcript, they mentioned Both a Korean and a North American customer and an intention to replace VCM with TLENZ. Could you elaborate on this as the potential vendor seems to be Samsung and Apple?
Now I can't really comment on Sunny's statements. I haven't seen it myself. But what I can say, of course, is that there are definitely plans around the world to use TLENs as I've illustrated. You can say that kind of statement is also some kind of evidence for that. But I can't comment on Sunny's statement that I need to divert you to Sunny themselves.
But what I would like to say is that I don't think we should Fool ourselves and believe that any tunable lens will replace all VCM application. That will not be the case. Tunable lenses, being TLENs, being liquid lens, will coexist with VCM for many, many years and maybe always.
Sunny Optical mentions TLENs in a press release this week, so there's another one Renee Lutzenis, press release. They believe that the solution add in can become mainstream within 2022, 2023. With this statement, do they have specific customers who are interested in and have come a long way in the process of this concept?
Yeah, I can understand that question and it's obviously an important question. And again, I just have to say that I cannot speculate on Sunny's statements and what does it mean. Just say that we also feel encouraged about the interest in our product, But also just wanted to chip in that there is tunable optics, I would say in general is getting increasing interest in the market. We are one of the tunable optics. There are A lot of different words used for tunable optics, liquid and very often also T lens will refer to a liquid lens, but we as you know, we are polymer lens.
So T lens, some may even though we have a trademark, but T lens could also for some heads mean a tunable lens in general. So I just want to raise that awareness that tunable lens can be shortened to T lens and could mean more than a polymer lens from Polite. But yes, as I said, we are enthusiastic about it. We as they have referred it to a mainstream. Yes, we say we think it could be widely used, but we think there will be competition.
There will be other tunable lenses also in the market. And then you can say maybe particularly add in design, we could potentially have an advantage for add in compared to liquid lenses It remains to be seen. But yes, we are, of course, positive and enthusiastic about the market, but I cannot specifically comment to Sande's press releases.
As you see today, we're polite NINA share offering to Grow in the near future to deliver hopefully a steep ramp up of TLNs?
Yeah. As we say that the current funding will take us through this year. Imposite, we need new funding from next year and obviously share issue is one mechanism.
So might be a little concerned about the exercise of options and sale of shares by primary insiders And the signal effect it has, would not those here hopefully be worth more in the future, I think?
Yeah, it's understandable comment. What I can say that share option plans is being used and offered to employees in polite. And one of the reason why we do that is that we also try to keep the fixed salary level down. So that and that means Share option is a part of the overall compensation of people. So that's the right the board have given employees.
And then I think it's also understandable that somebody sometime Would like to use that right to maybe get some money they need there and then. In my history, I think there's been from primary incidents only one event in 7 years, And those same primary incentives still have a lot of share option remaining. And yes, you're right, The share price has increased since then, so maybe they regret and be more careful next time. But this is a part of the salary, And we need to respect that they sometimes exercise.
Can you please tell us more about the existing collaboration with Wubtec? And what different projects are you working on?
I think I covered that in the presentation.
Can you say anything about time for a new smartphone OEM to release an add in concept with the same camera model That's the one that was released.
Yeah. So the same camera module is also being considered by other OEMs and the OEMs which can So but I don't think any project will happen before second half 'twenty two.
No, it's an AR question. Are both camera for viewing outwards and the tuning of the retina glass for text in focus a possibility for TLNs at Or is tuning for retinal glass function further down in the road?
Yes. I mentioned it briefly in the AR slide. And I would say That is that will not be the first design wins. It will be further down the road. So but yes, it's a high relevance and we are involved in the case on that topic, but we don't expect that to be the first in line.
Are there a lot of camera models on stock now after the cell phone cancellation?
We don't know the camera module because we are supplying the T lens, but there is being produced T lenses for that project and that will probably go into a kind of module when we ship. But on the kind of module side, I can't comment, but on TLANS, It's building inventory, yes.
The Tier Lens module for the project that was canceled, can it easily be adapted to other smartphones, Also to other vendors that for the one that was canceled?
Yes. That is one option. But I would also want to comment on Kannadis' continuous improvement processes, which is ongoing, which will then maybe do some modification on that camera module, could be on the camera module, could be on the T lens, so it could be different things. But yes, we know that, that kind of model is being considered by other OEMs and the OEM who canceled. But there are also activities using kind of a similar concept, but slightly, slightly different for different reasons.
There will most probably be need for additional funding. Investors like to know in advance. So could you tell us anything about your plans?
Think we answered that.
Well, now there is quite a number of T Lenses in use for some time. How are they been running? And Have there been any complaints or returns? And how is the durability quality?
We have had Very little of course, things happen and there are issues in manufacturing quality, but I wouldn't say that has been a significant problem so far. As I mentioned related to the final test machine, We are doing extensive testing of lenses before they're being shipped out. So that obviously removes some of the kind of problems on the road. So I would say that so far so good.
How about competition? Do you see any new?
Not really. We there are some in the early beginnings, which will take some relatively fundamental technology to be developed. So those which are in the market today on tunable optics are a few players, I would say. It's TLENS, a bit polite, which is a polymer base. Is a few liquid based technologies also in the market.
So if I say there are 3 Active, we meet on daily basis on tunable optics, I think that's it. And then I know there are some early initiatives, which may surface sooner or later. I think it's good with competition by the way, because you look at it from an OEM perspective, if an OEM can only see tunable ends from Polite, They would like to see more players being able to do a tunable lens so that they can kind of have Source dual sources and security. So I think that competition is there, is kind of also in that aspect important.
How about IPR? Are you aware of infringements or close to from orders and on orders?
Yes, we are monitoring with help from external specialists the IP situation quite closely doing quarterly reviews. And so far, we are not in any dispute related to IP at all. But we obviously, we are continuously monitoring the situation. But at the moment, we don't see any big issue on that topic. That may come when kind of the use of TLENs is starting to be big in volume markets.
But so far, we haven't seen any We don't have any dispute ongoing to put it that way.
How is production yield progressing? Increasing? Is it stable or fluctuating?
In these days, the yield will typically fluctuate. Until we have been producing volumes over the time, it will stabilize. And then there will be hiccups of course, which will take yield down, but and that stabilized level takes time to establish and the target then is above 90% type yield, which we have proven possible in periods where we are producing a relatively steady flow. So but at the moment, it will kind of vary due to kind of early stage ramp up.
The hardware and software drivers have been around for some time now. Are they still up to date? Or could and should they be updated?
Now we have recently made a revision of the driver of TLENZ minimizing Some noise and stuff like that. So we have actually decently released from MP, a modified driver. We haven't talked a lot about it, but that's kind of continuous effort we do.
Have you, the Board and the 2 lead VCM owners, considered a finance round To really lift the company's capacity to scope with more customers' projects and future developments?
Yes. I think we answered that. Yes. I think so, too.
How about organization and key competence? Are you able to get the competence needed? How do you judge the company culture? Is staff strong, committed? Are you experienced any key staff quitting?
We as I said, I think we have under the circumstances, we have been able to build a very committed and loyal staff organization. We have also lately been able to attract, would say key senior people. I mentioned we have a new business development team. We have a guy, Very senior guy, having been in the industry many years based in U. K, same in the U.
S, in China. So and these are senior people, which have been around in different companies, relevant companies for many, many years. And So that I've been very happy with that. On the tech side, we have had some turnaround in our setup in Tampere. We still have key employees in Tampere and we'll continue to build that group.
Tampere has been an area which has been really difficult to recruit because there are like so many big known names. The latest one was Microsoft Surface team who established an organization there. And so it's in Tampa, it's been more challenging to keep and to recruit. What we have been also focusing on, I would say, lately is to because what we want is to have competence close to the customer. And since we have very few customer in Haute and Norway in general, and We tend to kind of look at where could we place that competence.
Asia is definitely a key area for us to have competence, not only on the business development side, but definitely also on the technical side. We have increased quite a bit in Asia, the team. So overall, I feel that we are working quite well. We went through a restructuring taking us down for some 34 to some 22. Now we are picking up again.
We are around 30. We will continue to increase And we try to find the resources we need and find them in places where we think there are a customer base. That's the strategy. In regard to high volume orders, smartphone, etcetera,
How long before the expected launch of the smartphone with Tier Lens do you expect to receive the PO? Also, what is the expected production capacity per month for TLENs after the planned upgrades and testing equipment is up and running?
So the thing is that an OEM typically in smartphone typically expect you to be ready And you may get the PO a few months ahead of them needing material. Maybe that could be a long some cases. But so we have to take a lot of the burden and the risk to establish a capacity and what should I say material. And that's what we do. When it comes to capacity as of today, That is a dynamic situation we are today increasing capacity, as I mentioned to illustrate it with the final test.
We today have a final test capacity of, say, NOK 700,000,000 per month. We are now adding a new machine, which will adding NOK 1,000,000 capacity. So and obviously then you're close to say NOK 2,000,000 capacity per month in testing. And why we do that is, of course, that's what we see we need to have when we minimum when we start ramping and more need to come. But that is at least the first step.
Are you webcasting with TLN's Max Hub Webcom? If not, please do it next time.
I will take that with the Hegna Media, whether they can use a webcam from Max Hub. I don't know the answer to that, but they are sitting here and
Will you try to sell TLENs to laptop OEM?
Yes. That has been an area we have been looking at. We think that the camera of a laptop, the challenge with that application is that the laptop Screen is really relatively thin. So to having kind of a big thick camera is It needs then something to stick out or needs a very special folded type structure. But yes, this is a market we have been exploring.
There has not today been a big willingness to invest a lot in that camera. And I was in a meeting with 1 of the big players about laptop cameras and he said to me, this is Nothing for high end and we don't need AF. And by the way, he said, why is that? And then he turned his computer And he had blocked with a post it lap the camera on the screen. So he said that the very limited use.
This is 2, 3 years ago. I think this will step by step change. I think the use of that Karma will increase. I think the quality will be asked to improve. Maybe a better Web camera, which you have adding on top of your screen is the first step and maybe that could have autofocus on TLENS as you see from Max Hub.
But maybe sooner or later also that will evolve into inside the laptop in if there is some smart design. But there is a Thickness challenge there, so it needs to be a very smart folder design. And today, it has been reluctant to invest a lot of money to do that. That may
change. There was a second question. Do you have any connection there?
Yes, definitely, we have connection in with camera module companies being Major suppliers in laptop cameras, yes.
Any interest from PC OEM using TLNs in web? That's another one, the same question. TLNs must be an obvious choice with out of focus, high zone, low energy consumption or Yes.
I think we answered to that.
And there's another one. And there's
some That's also a bad rest, I feel.
Can you explain how the upcoming AR cases are maturing for a potential design win in 'twenty one, 'twenty two. And are these use cases for medical AR or more like industrial working
Yes. I think that in the on the positive side of sorry, on the optimistic side, I think those AR cases can happen, The sign win perspective, meaning we get commitment in the end of this year. That is an optimistic view. We know that From time to time, there are delays and shifting time plan. But so anyway, maybe more realistic is kind of first half 2022.
But today, we know that there are design win plans for us in the end of the year, but as I said, don't be surprised if that is shifting to the first half of twenty twenty two. Those are all there are 3 in numbers, meaning individual, 3, And they are all on the professional use case, everything from, as you say here, industrial to more medical and other cases. So covering all those kind of, obviously, enterprise market industrial sorry, professional use case.
Was the smartphone canceled due to low volume ready for sales? Is this the reason for you now starting to produce volume even without the PO?
No. And by the way, we have always been producing TLENs and material without PO. If we don't do that, we can't get
And there's another one with a webcam using for this presentation.
Sorry, not yet.
Yes. Okay. Could you say anything regarding automotive and the STMicro project called Petro, wherein I understand 1 or multiple T lenses are used? Any progress in this regard?
Interesting. That's new for me. But what I can say is I can't comment specifically on that. We need to check that. But of course, ST knows very well TLENs.
They're producing half of it. But when it comes to automobile, I think as I said and as we show in the left corner picture of the Q and A slide that we have a picture of interior of a car. And we think that there could be opportunities, Polite, in that sector. But today, that's not a main Focus here, but it may come.
So that was the last one.
Okay. That was quite a bit. Thank you, everybody, for joining this webcast. And also thank you for making this Q and A session a dynamic and informative event That really makes a difference. Next event is Q3.
That will be held on 29 October 2021. Hope you will be there and follow us. Thanks for remaining support from shareholders. That really makes The difference and the motivation high for us fighting our day to create value. Have a nice day.
Thank you.
Thank you.