Good morning, everybody, and welcome to poLight's third quarter presentation. Together with me today is our brand new CFO, Joakim Hines Bredahl. He will present himself shortly, and as normal, our Board Chair, Grete Viksaas. The agenda, as we normally have: key events, a short introduction to poLight, operation and market review, financial review by Joakim, Outlook, and Q&A. On that topic, Q&A, if there is a question from the web, please leave your contact details in case we have not time to present or answer. If you have a question from the audience, please wait for the microphone so that those questions from the audience are also being possible to follow from the webcast. Key events: barcode, step by step, giving us some more business. We got a 950,000 PO related to the very first barcode design back in 2000.
That product is still shipping, which we, as expected, our long lifetime in this product. The AR/MR market continues to open business opportunity, but there's no doubt that this is a market in definition, and it's difficult to predict when things are happening. As we said many times, we have an extremely interesting and strong position in that market. When it comes to the machine vision and barcode pipeline, it continues to develop nicely. There is quite a good pipeline. We also have been informed that two of our customers have received a patent infringement file from a company, and our position is that there's no patent infringements related to this. That's what we can state. After Q3, Wooptix announced finally the RT1000, the development kit, wavefront sensor. Transcend Vivoscope, another Mini2P supplier, announced a product. Thorlabs, the same.
Now there are actually three commercial companies who are offering a Mini2P solution. They all three were presented at the conference in Chicago, the SfN Neuroscience 2024, and they actually highlighted the Mini2P solution as one of the kind of main showcases on their booth, so that's very interesting. It started all with a small collaboration with the Kavli team, Professor Moser and his team, and has now gradually developed into quite an attractive business and also spreading a lot of, I would say, messages and news into the healthcare research environment, which hopefully will help us to someday penetrate into other new applications in that area. Also, post-Q3, quite many news. One of our existing barcode customers announced two new products, and in a way, repeat orders are extremely important signals, and this is why we emphasize this a lot.
That came without the PO, but a few days after, there came a PO worth NOK 344,000 for new lenses for that application. So, poLight, for those who are new, a global player, as you can see on the top right, we are spread around the world. The strategy is to be with competent people where the customer and partners are situated. That's why we are so distributed. We have now built an organization of slightly, yeah, just below 50 people. As you have seen, we have increased that organization significantly over the last couple of years. That is the reason that if you go back, say, five years, we were extremely focused on getting assignments on existing products.
We used the majority of resources to support that and supported getting ready with the manufacturing, with the effect that we didn't have resources and time to do a lot of new innovation. What we have done now, we have built an organization where we have strengthened operations so that operations can concentrate on operations. And we have strengthened, meaning relieving kind of R&D tech resources to not necessarily only support operations and customers, but also doing important R&D and strengthening the sales organization. Of course, we do this investment because we strongly believe in the future, and we also see that to be able to show big customers that we are capable, we need to build and professionalize the organization step by step. Big investment, but fundamentally important to achieve what we want to achieve. Yeah, so we continue working on IP.
We have 22 worldwide patent families now and 11 pending applications. poLight, in four icons: extremely fast, a realized compact solution, constant field of view, and extremely low power consumption. All these attributes are being evaluated as key attributes for many of the market segments we are addressing. Also then, on the top right, you see a picture of the TLens, one of the versions, comparing to a tip of a pen. So it's a small, small, very compact solution. You can see the transparent section in the middle is where the light goes through. If you look at the left figure, the drawing, sorry, you can see how the principle is kind of replicating the function of the human eye. You have the polymer sandwich between two glass membranes.
You have a MEMS piezo actuator, which is kind of being excited with 0 to 10 volts, 50 volts, bending the glass membrane, shaping the polymer, changing the focus from infinity to close. We produce the polymer ourselves at headquarters. The actuator we get from 8-inch wafer from STMicroelectronics in Milan, Agrate Brianza. We are shipping those two ingredients to our assembly partner in the Philippines, who is then assembling this into a complete TLens. TLens can be supplied without a package. We call it bare TLens to minimize footprint and thickness, typically used for add-in designs. Or we can sell it in a package format, which is eased integration, typically used in, say, barcode products as an example. We have an ASIC, which is generating the voltage between 7 and 0 and 50 volts.
So these kind of components, we sell conceptually to OEM, and the OEM, being a smartphone, being a handheld barcode reader or glasses. So we do a lot of our sales and market activity in that end of that value chain. But in the end of the day, we have to enable a camera module supplier to build those camera modules. And typically, the money stream goes to the camera module, and we ship TLens to the camera module player, which we, of course, support. They build different types of designs. They do an add-in design, like the lower camera, and also an add-on design on the top there. We have built over some years now our own capability of doing reference design, as I mentioned several times, so that the camera module partner we work with is not starting from scratch.
We can give them so-called reference design for them to get a good start in optimizing their design, differentiating their solution. We are working in different market segments, and I would say that where we have the highest activity for some quarters now is AR/MR, definitely. It's a huge interest in these market segments, although, as I said, it is a market under definition. There are kind of changes on a monthly basis on plans and releases, but what I can confirm and come back to it is that we have an extremely high visibility among all, I would say, relevant players, most relevant players at least, when it comes to our technology, both for the TLens and the TWedge, which is the Wobulation. So that is a key market for us.
We are using significant kind of time in the sales and marketing activity in nurturing and supporting POCs and designs in this area. Having said that, the consumer part of us is still extremely important. There are laptops, there are watches, there are, of course, smartphones, and we keep on knocking on all those doors, and I will come back to a little bit of status on that a little bit later, and then we have the industrial side of us, which is low volume, better prices, lifetime five to 10 years, so kind of this combination is quite a nice combination for the company, and then I would say healthcare and automotive is still kind of on the radar, but it's not something we have resources and, I would say, product portfolio today to emphasize on a lot, but it's something we are monitoring.
Having said that, when we do kind of roadmap definition, product portfolio definition, we always have the need for these market segments in mind so that what we do now and maybe five to 10 years could be a key element in those two market segments. I think it's important that also we, even though we see so many opportunities, that we are, as a team, focused on what we see is the most important, and they are so easy to kind of be too spread, which means that we will not be able to achieve what we achieve in those most market segments. That's why we are relatively firm and laser-focused in these three market segments, so I can say that now I was forced to split the design-win slides into more than one because it started to be very crowded, luckily.
So here is just to remind ourselves, we have four consumer design wins, Meizu 20 Infinity, still shipping. So if you haven't bought the phone yet, it's just to go get it. It's still shipping. The MaxHub also, we recently bought some few more MaxHub cameras. We're using it widely. We are happy with it. The two smartwatches, as far as I know, are already end of life. We are shipping into four glasses: Magic Leap, LLVISION, the latest one, Vuzix, and the high-end head-mounted display MR device where we are in the see-through camera. Magic Leap using one TLens, Vuzix using two, LLVISION using one, and the HMD, the MR device is using two. Okay.
On the industrial machine vision side, I have now kind of redefined a little bit the design wins there because there is, we have before counted the customer and not necessarily the number of products. What we did now, we cleaned up that, so now we are counting products, and then you can see here, there is two from, there is a Hikrobot, there is a SuperLead, which has four. Teledyne have two. Wooptix is one. Axon is two. Honeywell is one. Thorlabs have two systems, which is actually quite interesting. One of the, I would say, relatively mature POCs and hopefully maybe design-in, started by the customer buying this kit from Thorlabs, which is much easier for them, and Thorlabs have this internet page they can buy, ship immediately.
And they did that POC without us knowing, based on that device, and suddenly we were enrolled in a POC. So quite interesting. And then there is this handheld barcode scanner, which is the latest announcement, which is two products now already shipping related to the last PO we got. That is actually, we are not allowed to tell, but that is also related to another kind of already existing customer on this drawing. So quite a significant platform we have built, even though it is a market, which I said before, which is developing in a way slowly, and we are still in the machine vision, low volume barcode side, which I think that over time, when we build momentum, I think we will get into a higher volume. But that means we need to get closer to the point of sales.
On the healthcare side, as I said, three companies now supplying mainly two-photon solutions: Transcend Vivoscope, Chinese, Thorlabs, U.S., Phasics, European, and Kavli is kind of our strategic partner in Norway, where we kind of learn a lot about this technology and how it's going to be used, and as you know, Professor Moser has already received a Nobel Prize for that research work, and I met Moser myself, and he said he was so thankful that we supported Kavli in this research, which is incredibly important for understanding different diseases like dementia and Alzheimer. Okay, a little bit into the details. Yeah, as a poLight, we are very firm and very persistent when it comes to the consumer market. It is important for us, and we will keep on working in many aspects and to try to improve the situation.
Of course, the AR/MR, which we will talk about a little bit later, will become an important consumer market. And that's why we are focusing a lot on that. It's interesting. The laptop market has somehow generated quite some activity the last couple of quarters, specifically this quarter. And yeah, we can see major players who kind of indicate that they, say, from 2025, 2026, they think they're going to need AF. It's not an easy application. It's a thin screen. You are taking the screen and hammering down to the keyboard. So the AF technology they need to use is under consideration. But our understanding is clearly that we are one of the technologies in the race. And we are already doing some reference design together with key partners. And it's not a small market. Of course, they will start AF in the high-end devices.
We are developing a business plan and preparing ourselves in this area, so let's see. Early to say, but I think it's correct to pinpoint it as I would say I've never seen so much activity before as we see this quarter in the laptop space. Smartphone remains challenging, although we do see that there has been some restart on some activity with a camera module supplier we know from before and has been actually working with in another consumer product. They have now done some design, and they're doing some testing, and they have two OEMs, smartphone OEMs in mind, and they also have other consumer applications in mind, so it's going to be interesting to see how that gels out, so good to see that after some kind of relatively silent quarters in that segment, at least there is some activity.
Yeah, how do we intend to kind of improve on this consumer side? Well, of course, AR/MR will be a consumer market sooner or later. We're going to be there. We have started several initiatives on the development side to come with a broader offering and more cost-effective offering that is ongoing, progressing quite well. And as you can see, we are also actively pursuing other consumer applications, e.g., laptop, which hopefully over time will need an AF solution. So consumer is something we definitely focus a lot on, and there are many, many ways into the consumer market. We have four design wins. We have completed 38 POC. We have six ongoing POC, which is up from two. And we have five planning POC, which is up from four. So here you can see the distribution on consumer side. On this slide, I've also included the AR/MR.
So now we can see that there are 17 ongoing POC, focusing on ongoing POC. Twelve of them are related to AR/MR. And the rest is different things. You can see also that now there are actually two laptops and one more kind of accessory type device. So good activity. AR. Actually, poLight is starting to be a relatively established AR/MR supplier. When it comes to the top diagram, the TLens in a camera module, both add-in and add-on, is showing an add-in in this case. So in 2021/22, we got into Magic Leap. Getting close to 23, we went into LLVISION. Next one, this high-end MR device. And after that, in Vuzix. So we are not a nobody in this market segment. And when it comes to AF technology, we are definitely the one with the most design wins.
If you look down on the bottom side, which is more related to display projects, both TWedge, which is the new product we are developing, and TLens are already in that kind of space. We started first with the Wobulation concept around 2021. We did TWedge POCs with customers. We started to ship design samples, first TS2 samples, then TS3 samples, so we are continuing to gain more customers for sampling. Same when it comes to the TLens. It is this one, which is a design-in project related to an LBS, started already in 2021 and has soon, and the customer has asked us to develop a purpose-made package, which we have shipped, and they are currently testing and integrating in their device. This customer is now in the process of finalizing a near form factor demonstration.
I talked to the customer management yesterday, and they are saying that they are on the road in the end of November and December. We are kind of cooperation also when it comes to who they meet and how things are going. Again, a little bit back to the AR/MR space. You can see and you can feel that there are still a lot of, as I say, things to be defined and things to be concluded, things to be sold. We are one of the solutions, but there are also other kind of technologies which need to kind of be developed for this to fly, which will happen. But of course, it's difficult to predict when it will happen and what will be the prime solution. Whatever solution we feel will happen on the display side, we will be a potential technology for use.
So what do we solve in AR/MR as poLight? If you look at this MR headset, pass-through MR headset is something which you are basically blind. And the only way to see the world is through a see-through video camera. So that's how you see the world because you are basically in a box. When in real life, our eyes are continuously focusing, accommodating focus to remain sharp, maintain sharp vision. That video see-through function of quality is extremely difficult to develop and to implement using conventional incumbent technology for AF, which leads that without that AF, it becomes very unnatural vision. TLens, we feel and have demonstrated, you may have seen some demonstration, is, as far as we can see today, a technology which is very attractive to enable a natural video see-through experience with minimum size and minimum power consumption.
That's the video see-through, which is kind of one of the big cameras on the front there, typically two. Then you have also here in this device. You have world-facing cameras, many of them. And also here, TLens has a clear role, as you know, as you've seen for other ambient cameras we are developing, with, again, very low focus assumption. And both for, I would say, focusing, you take a barcode, you want to scan that barcode, you want to see infinity, you would like to, the temperature in these headsets are changing. A fixed-focus camera will suddenly not be in focus. There will be drifting. So you need autofocus. TLens fixes that by design. So that's an application. Another application is that we are potentially also been talking to customers who seem that TWedge could actually enable super resolution for small compact cameras.
This is still, I would say, in early days for us to understand, but we have several customers who have mentioned that kind of application for TWedge, so as you can see, TLens has several applications in the very same headset and also space for TWedge, and in smart glasses, a little bit different, but ambient cameras, so we call them see-what-I-see cameras, so see what I see is kind of the new expression they like to use, and TLens is really making that see-what-I-see camera at a minimized power consumption and speed, resulting in a much nicer capture and automation. Display resolution, we make display much better, much higher resolution without sacrificing brightness, so there are so many applications for TLens technology in these two kind of headsets, and this is why we are so optimistic about the future.
When it comes to who we are working with in this space, I would say we are working with many. And we are working with many known names. You will know very well. And the number of companies we're working with is increasing. I also said that also the number of consumer-related devices is increasing and getting more mature. There was one design in this quarter which was stopped because of a company's strategic direction changes. And I would say that the other design ins, we have been saying that we don't really know. We were hoping at a point of time that there will be some design wins this year. But at the moment, I feel they are slipping out of the year. Of course, this is a visibility we don't have in detail at all. But I think that we shouldn't expect any short-term design wins.
These design-ins will not convert into design-wins this year the way we see it today. This is also illustrating a little bit that the market is in definition. People are considering if this is the right product to launch, when to launch, what will be the spec. This is something which we see when we have the customer interaction that they are still kind of processes which can change quite quickly depending on the market information they receive. Having said that, everybody we talk to has a strong belief that it's only a matter of time before AR/MR market is a big market. Then it's up to everyone to assess when that will happen. We have mentioned 2026, 2027. I think that's still potential good years. We need to just monitor that as we move on.
When it comes to the TWedge, what I mentioned now is more related to TLens. When it comes to TWedge, I feel that there is no doubt that we have a lot of activity on TWedge also. But as I said before, we will not kick off a real product development and mass production before we have a lead customer. And that lead customer, I feel it's not there yet to give us that commitment. But they are extremely committed to explore, test, and design and test us into form factor products. We have been tested already by several of them with good results. But I think they are still kind of considering what type of display, MicroLED, LCOS, what LBS, what. So they are kind of still, and we have a role in all these display solutions.
But I think there is. I feel there is things to be defined and things to be concluded before they are ready to commit to a mass production product development program. We will not, as poLight, take that risk without having a clear customer request because of the risk of we are sitting too far away from the definition of the display solution to be able to assess this. We need to wait for a customer holding our hand and guiding us into the right application. I hope you can see that the AR/MR market, even though it is in many aspects a little bit under definition and immature, it is a key area for poLight.
Today, I would say that I will say that we have so many opportunities in this space that I think the focus we currently have in putting our flag on that market segment is extremely important. Extremely important. I'm myself back from the U.S. and Asia, and there are so many motivating meetings discussing kind of volumes and readiness and testing. So it's really, really nice to see. Four design wins, three design ins, 20 completed POC, 14 ongoing POC, and 14 planning POC. Here you can see the same. If you look at ongoing POC 14, you can see 12 of them are consumer-related. I would say half of them are TLens or half of them are TWedge. Industrial. Yeah. Starting to be a crowded slide. Six companies using us in 13 products. All still shipping and expect to do some for several years.
Already mentioned that on the first page, so I don't want to repeat myself. I just wanted to say that even though if you can feel that this is slow, I would say that we are engaging with a lot of customers in all regions in this area. Some smaller ones, some significant big ones, and I feel that step by step, the pipeline is showing an increasing opportunity pipeline, which is clearly a positive design, even though we were, of course, hoping that things could move quicker, so as I said, 16 design wins in the industrial space, which is compared to seven, but remember, this is due to we changed a little bit the way we count. Now we count every product from the same customer, not only the customer, so there is two, sorry, none in the design in because they moved to the design win.
40 completed POC and 15 ongoing POC and 16 planning POC. Yeah, I don't need to repeat those details. It's basically split between machine vision, barcode, and some other things. Healthcare, automotive, already I have mentioned this, is all about Mini2P, really, and some, I would say, more commercial-related endoscope cases. Automotive, nothing new to report, I would say, so we can make that short, but still something we keep in mind when we define the roadmap, and one of the important things in automotive is that the big TLens with a bigger aperture size is the key enabler for this market, which is in our roadmap. Yeah, here you can see the sum. So we have 28 design-win. We have three design-in. We have 111 completed POC. We have 49 ongoing POC, and we have 48 planning POC divided by those market segments.
Here is the Øyvind plot showing the development of the POC pipeline, which is nicely developing quarter by quarter. Okay, my dear new CFO, you are Joakim. Yes, sir. You are hereby invited to talk about the financial, and maybe you can say a few words about yourself.
I will. Thank you so much. Thank you, Øyvind, and thank you for the opportunity to stand here today and present the quarterly numbers for Q3 2024 for poLight. Just a brief introduction to myself first. I am 47. I'm married with two kids. I graduated from Strathclyde Business School in Glasgow. My career has more or less been working in or with the growth companies. Previous nine years, I've been in not a growth company, but a very established player with the bank, Nordea.
But the last three years, I worked with financing of growth companies with debt, many of which were loss-making. So I also helped them find potential sources of equity, and I helped them pitch the company to different investors. So there's a lot of experience there. I also, before that, was eight years in Verdane, which is now a large Northern European private equity player. But when I worked there, we were very much an establishment, under establishment, and in a growth phase. So I experienced lots of growing pains in that company. And I believe they're now more than four times the number of people than when I worked there. And for a capital company, that's quite a lot. Before that, I also worked as an entrepreneur. I worked in several startups, none of which were very successful, so you wouldn't have heard of them.
Unless you were one of our direct customers. But you get the experience there with everything: planning, budgeting, control, business development, customer development, operations, basically everything that takes running a company. So now I find myself in the very fortunate and happy position of being the CFO of poLight. And I swear I will now also get down to business. So in the quarter, although having sluggish, the revenues for the quarter amounted to close to two million NOK, all of which represent the sale of TLens and ASIC. And there was no NRE in the period. The distribution of revenues was roughly 50-50 between the healthcare and the industrial segment. If we look at the EBITDA, it ended at around negative 25, which compares to a negative 20.5 in the corresponding quarter last year.
That change can be broken down to less revenue, NOK 1.1 million, which delivers quite a small gross margin for the period, and NOK 2.5 million in increased operating expenses. It can also be said that within the operating expenses numbers, there's a provision for known expected future costs. So it does not all have a cash effect in the quarter. So we'll get back to that. In addition, there was an increased provision for inventory obsolescence in the quarter of NOK 900,000. If we turn our eyes at the balance sheet, the movement in the quarter, the most important is definitely the cash position, which ended at NOK 180 million. This is, of course, a result of the rights issue carried out in May, and then the running cash burn from running the company.
You will also see that the inventory movement since the start of the year, you'll see that inventory movement from the start of the year, it was affected by the NOK 0.9 million increased provision of obsolescence, as mentioned under the operating expenses. Now, as mentioned, not all the operating expenses had a cash effect this quarter, which means that our financing of operating activities actually was lower this quarter than the corresponding quarter last year. Other than that, there were minor costs that leave the net cash flow movement of NOK 19.2 million, leading to a cash position of NOK 180.1 million. And with that, I'll leave you in the capable hands of Øyvind for the outlook before we go into the Q&A.
Thank you. Okay. Okay, one slide left and then Q&A.
As Joakim said, a bit sluggish revenue during the quarter, but we do feel as an overall assessment that there are very good reasons to be hopeful for the future. We have built a fantastic organization with a lot of energy and a lot of dedication. We have identified so many opportunities in all the strategic market segments representing significant business potential. Our technology platform, having today TLens products and, of course, ASIC, but also new products in the, I would say, the TWedge platform, which is the first product will be potentially populating. These kind of solutions and technology platforms are getting increasingly respected and well-known. The visibility for poLight is step by step increasing a lot. As I said, we have key design wins in all key market segments.
We have initiated, and as I said in the beginning, we have developed an organization which not only is capable of being in the market, getting us into new programs and POCs and design ins and design wins. We are having that organization, but in addition to that, we have built an organization which can continuously work on improving our supply chain. When I just back from Asia and the U.S., and when I sit with these big guys, this is so important to demonstrate that we are ready. We shipped 160 pieces of TLens in a few weeks to the Meizu 20 Infinity. When we show them this, when we tell them this, when we show the video from the assembly line, they are really, really impressed.
And what we now have done is built an operation team, both headquarters and locally, which is continuously working on aspects, on yield, on capacity. And this is something which is building a lot of trust by the big guys. Without doing this, we will not be actually involved in all the activities we are involved today. So that's why it's so important to invest in that area. So sales and marketing, operation side, and the investment we also do now on R&D, which is key for these new technology solutions for the future, is something we have invested a lot to build that organization. But this is for good reasons. We have to do it, and we have to show that commitment, even though it does increase our operating cost.
We just have kind of an all-hands seminar in Norway where we brought in all employees, which we do yearly, once a year. And I would say I'm very impressed by that competent organization we have built. There are now how many nationalities, Joakim? 15, 16, 17 nationalities. We are spread around. We are in the all-important areas in the world when it comes to customers and partners. And we see a dedication, and we can see the capability we have built. And it took a lot of time and a lot of resources and a lot of money to build that organization. But I think we are really, I feel, in a position where we can manage to convince the big names and the smaller names to trust on this organization.
I think, as I said, in addition to those kind of key markets, AR/MR, consumer, industrial, I think we need to keep in mind that there are other market segments which have huge potential, which are only scratching the surface, being healthcare, being automotive, and I think it's correct to only scratch it and only keep it on the radar because we need to focus. If you don't have focus, that's the recipe for disaster, so we need to have focus, but at the same time, we need to be aware of what's happening. There is a train, and we need to be on that train before it leaves the station, so what I'm saying is that in addition to what we see today of business opportunity, there are more to be explored when the time is right.
By working hard, by being persistent, and constantly being sales and market customer-oriented, poLight's progress will continue. There's no doubt.
Thank you.
Okay. Joakim, will you join me for Q&A?
Yes, sir.
So we have already received some questions. We will take them first. Then there is the opportunity to write questions through the portal. And then, of course, you can ask questions from the audience. If we start with the questions which were sent in beforehand. Yeah, that's my glass. Okay.
Okay, first question. We recently observed through shipping data that a new sorting and test machine was delivered to your assembly partner, Tong Hsing, in the Philippines. Could you provide an update on the new multi-production capacity now that this machine is in place?
First of all, I must say that I'm impressed that you are able to detect all these details.
I don't know myself how to find that out, but yes. What we're saying is that we believe that we have, depending on the spec of the TLens, because keep in mind, the different TLenses have different specs. The customer has different specs, meaning that they go through a little bit different final test scheme. But if you say we could, giving a certain assumption, and then we say a standard TLens, I think we could have an installed capacity closer to 1 million per month. Maybe not full, and it depends a little bit about the yield, of course, but that will be, of course, unyielded, but it's close to that. And then it depends a little bit on the spec of the TLens, what it has to go through in the final test. But yeah, if we're going to give a number, I would say towards that number.
Then, of course, it's important to say that that is installed capacity. Another thing is that there needs to be material coming in. So that, of course, needs to be planned carefully. But at the moment, as you've seen from the inventory, we have quite high inventory on the wafer. So it's going to be quite a big project if we are not capable of doing the first supply. Then we need to trigger new wafer supply, of course.
Okay. Good. Then a long question, so bear with us. Could you walk us through the development process of the first TLens add-in solution developed a few years ago, from concept to prototype, qualified camera module, and finally integration into a specific product? How long did it take from the start of prototyping to having a fully functional camera module ready for OEM use?
Are CCMs involved throughout the entire development cycle, and can we expect a similar development trajectory for the next simplified integration for a cheaper add-in solution, TLens Platinum, TLens Diamond, and/or TLens Micro?
That was an essay.
That was an essay.
Yeah. So good question. You know, when it comes to the add-in, it's quite an interesting story, actually, because when we were very close to design wins with an add-on TLens, suddenly Xiaomi came out with a phone with a very big screen, and they didn't want to have a big hole in that screen. So that was actually what was kind of closing some doors, and we were very depressed, and we went back home, and we started to think, and we said, you know, we need to make a smaller nose of the camera.
We need to get that TLens buried down in the lens stack so that the nose can be as small as possible so that we can fit into that scenario. Then we started to do some design work in the tech department, and we came up with some reference design and conceptual design, and we did a roadshow where we kind of placed that reference design on the table, showed this is what we can do, and the customers were interested, but they said, yeah, but this is too difficult for the ecosystem. So we just placed that kind of on the table for many OEMs and come up with the guys, but the feedback we got was, you know, too difficult.
We went home, we started to work heavily on the smartwatches and the barcodes and other things because we were kind of locked out for a moment on the smartphone side. And suddenly, one customer, a big one, said, you know, we like that idea. We would like to trigger a project together with our key camera module supplier, make a POC, and then see what we can do. That was the beginning of our kind of reference design, which was after some maturing in the ecosystem, kicked off the POC, which then that program, then that POC, OEM was involved and camera module was involved. And that, I would say, probably used two years, plus minus, before that POC went into a real product, which was the Meizu 20 Infinity. I think the next cases will be quicker, potentially, for different reasons, because we know more.
There are more camera module players who have been working on it for a while, and also that we have announced, or sorry, we have presented an easier way of doing it, which at least can fit some markets, and that's why I think there are hopes that this can be faster for the next camera module players, so that is basically a bit of history.
I think you did well.
Yeah, thank you.
How does competing tunable optics technologies compare to poLight's TLens solutions for compact add-in applications in smartphones, XR devices, small medical devices, handheld barcode scanners, and similar products? What specific advantages does the TLens technology offer in these markets?
Generally speaking, the difference between us and a liquid-based tunable lens is, in essence, it is that we can be quite so compact. We don't use any mechanical actuation, which someone will do.
We don't have liquid, so we are more robust. Temperature, reliability, drop test. We have much better speed. We don't have any posture effect. You move your head, liquid will move. We don't. The polymer don't. I think, and so those kind of differences are more or less relevant for all markets. Of course, if you go into the MR world, which I talk a lot about, this is about compactness. This is about having, say, a mechanical, some kind of actuator like VCM, which some of them use, will mean that the optical axis stability is bad, which means that you will have extremely bad image quality, and not to talk about power consumption. Power consumption is key. So at the moment, we don't see a lot of competition in this market.
What I can say is that the advantage, the liquid tunable optics based on liquid, is that they can realize bigger aperture size, and they can have more optical power compared to us. So that is an advantage. That's why they were early in the industrial market segment than we were, because they could add that advantage. Then there are other issues, reliability, and actually cost, which makes us also more and more attractive in those markets.
Good. What is the status of the new compact package add-in solution that you're developing with a well-known partner that involves a camera module manufacturer, a lens maker, and an OEM?
So if I understand correctly, this is a project which we kicked off based on a program where we made an extremely slim package to realize a new add-in design.
The status on that is that we have already achieved to find the first customer who, I have to think, in the AR/MR space, who actually are doing a POC as we speak. I just saw a picture of the lens stack, which is being shipped to a camera module supplier, which will then be shipped to a major OEM for trials. Quite good progress.
Good. Then there's a question for me. Ooh, that's fun.
I can read it.
You can read it. Yeah, yeah, yeah, you're welcome to.
Joakim, as the new CFO who joined us this year, what motivated you to take on this role at poLight? How have your initial months been? In what way has your perspective on the company evolved since you started?
Good questions. I'll try to keep it brief.
What motivated me to start? There were several factors. Of course, I have to say, first of all, I was actually very happy in my job at Nordea, so I wasn't actively searching for something else, but I received a call. I found out I had very limited previous knowledge of the company. And so I looked up, and I have to commend our shareholders there in various forums, which made it quite easy for me to get a grasp of the company, so thank you for doing such excellent analysis. And then coming in, talking to Øyvind, I think that's when I really started getting motivated, because there are plenty of growth companies, there are plenty of exciting technologies, but you're very reliant on the team to deliver it.
And meeting Øyvind, meeting the management team just sort of solidified that motivation and the belief that this team can actually do it. So that was definitely what pushed me over. Also, I think we had a final talk even before I accepted the position, and that was a very open and frank talk, which is a very high degree of trust. How have the initial months been? I mean, it's been hectic. There's definitely a difference from working at an established bank and working in a growth company. There are lots of different facets to have opinions about, to consider. But it's been very fun. I've had the fortune of, in my second week, we had our seminar. So I had the fortune of meeting the entire company, which is global, and that's a very lucky position to be in.
Yeah, I think I had like a couple of weeks of learning the ropes, and then you're sort of thrown into it, and you need to start taking decisions. So it's definitely been an exciting journey so far. And in what ways has my perspective on the company evolved since I started? Well, as I said, I feel like I got quite a good impression going in. So there haven't been that many surprises, to be frank. Also, given that I've worked in this similar type of companies, I've worked with similar types of companies before, I know I expect there to be some shortcomings on certain aspects. But I tried to make a note of everything that I see that down the line, things that we can improve on to increase our scalability, which is, yeah, so that's my analysis so far.
I sort of expected a marathon with sprints thrown into it. That's what you get in a growth company, and that's definitely what it is. I mean, we will have setbacks. Everyone has setbacks. You know that with each setback, within reach, there's a handful of massive opportunities to start working on. I have to say that I know we can't say a lot about who we're working with, but I have to say that when you come in and you actually see the names that we're working with, that's definitely motivating. Because these are big names. Big names. Too long, but yeah. Okay. Next question to you, Øyvind. Yes. When do you hope or expect to see poLight in the same unit for both camera and display?
Yeah, good question. I think that is definitely something which I think can happen.
Then we all know how this market is still kind of developing. But yeah, I think when I talked about this AR/MR market, it's starting to kind of happen in 2026, 2027, 2028. I think hopefully it's in that range.
What is the current status of major global semiconductor distribution channel partners that are expected to be added later this year?
Yeah. So I mentioned Thorlabs is in a way somehow a vehicle for getting people quickly to assess technology like poLight. We have different eval kits, evaluation kits which customers can buy. But it's not easy to buy it from us because there's a PO, we need to be an approved vendor, etc., etc. So we are thinking of adding the more kind of usual kind of distribution channels in this industry. We are still working on that and we are working on agreements.
But so far we haven't concluded, but this is something we definitely would like. And why do we do it? We would like many customers to see what we can offer when it comes to evaluation kits. So as many as possible engineers can easily buy a kit to assess our technology for their application. For achieving that, I think we need to be having a broader distribution channel, which we are working on, but not yet concluded.
So could you provide an update on the progress of your previously announced engagements with new significant customers in the barcode industrial sectors?
I would say that I can't say more than I said in the presentation. There is a pipeline which is developing positively. We are working with small guys and we are working with bigger guys.
I feel that we are making progress on all fronts, but it will take time.
Over the past few months, we've observed a positive trend in stock prices among most camera module manufacturers. Are you noticing an emerging optimism in the sector and increased interest in poLight's technology?
I would say that there's no doubt that the AR/MR big OEMs are pushing camera module suppliers to enable TLens camera modules. In that sense, yes.
Okay, so regarding AR/MR projects, approximately half are consumer-related. Could you provide a breakdown of these consumer projects specifically? How many are focused on camera solutions versus display solutions? For the display solutions, what's the distribution between LBS projection and TWedge technologies?
Yeah, if you focus on the POCs, there is, say, I can't remember now, but top of my head, so 12, 13, 14 POCs in AR/MR related to consumer.
I would say half, half. There is only one LBS, but that is in the design-in.
Okay, what steps has poLight taken to ensure readiness to meet the high volume manufacturing criteria set by your LBS display solution partner for potential initial mass production orders?
Yeah, so this case, which is in a design-in LBS, but using TLens to tune the laser, I was just meeting the customer. They have a very impressive demonstration, near form factor, which they will start to do roadshow end of November, beginning of December, both in Asia and the US. That program actually has given us a significant number of million kroner in NRE. And they asked us to develop a purpose-made package, which they integrate into their system. So it's not a standard poLight package, it's a purpose-made package for this customer.
That package was actually designed with mass production in mind. It was actually assembled. We shipped many units to the customer, which they currently are assessing, including that package. That is actually coming from the MP line. It's not coming from our lab, it's coming from our assembly partner. So in that sense, this has been already in our mind when we did that project.
Given that poLight's success in the LBS display project is dependent on the display partner, to what extent is the LBS display partner prepared and financially equipped to scale up production and make the display module ready for high volume market demands?
Financially, they are extremely strong. It's a big group. So that will not be the concern. I think the concern, the uncertainty here, it's a little bit back to the display. AR/MR solutions are under definition.
I think micro-LED, which is very relevant for TWedge. LBS, which some of the LBS solution is relevant for TLens. LCOS, all these different display solutions. I was just talking to one of the big guys in the US, and they released a program now, a product now, and they kind of are targeting this kind of display solution. But as I said, it may change. So I think that my understanding of the market, all the bigger players are still considering all options, and they're testing all options. What I also could hear is that the majority of the players feel that the different solutions will coexist. There will be not one solution, there will be a few solutions which will be used for different applications.
When it comes to LBS, I think like we are thinking with the TWedge, I think the LBS players, even though they are super big, they will also like to see a lead customer. So before they find that lead customer, they're not going to push the MP production. So that's why the market is still kind of under definition. It's very difficult to say to when and how, but in the end of the day, there will be LBS solutions on the market. There will be micro-LED solutions on the market. There will be LCOS solutions on the market. But it's extremely difficult to say how will that split be and when will it be announced. That's super difficult to say. But the LBS partner we have today is now, as I said, soon on the road to find that lead customer. We are in regular contact, compare notes.
When I meet customers, I said, this is maybe an opportunity. When they meet customer, would you like to be supporting us on this? So we are very close, and hopefully they will find that lead customer, but that remains to be seen.
Are you involved in the discussions between your LBS display partner and potential OEMs? How regularly are you updated on which OEMs are likely to adopt this solution? How many OEMs are currently considering this solution, and do you have any insights on whether a contract with one or more of them is imminent?
We don't have the details, but what I can say, we are in a very close dialogue with the management in this company. I'm regularly visiting them, and we do inform each other. But of course, I don't have all the details.
But my understanding is that they are now ramping up the marketing, and hopefully they will find somebody who can be that lead customer.
Oops. So what kind of combiner solutions such as waveguides, free space, holographic optical elements, or other optical combiners could potentially integrate with the LBS solution incorporating TLens?
Well, to be honest, I'm a little bit guessing it, but I think, if I'm correct, what today is used in that project we are involved in is holographic. But I guess there are other opportunities also, other ways of doing it also.
So Øyvind, in your public talk with York from PhenoSys, you asked what kind of improvements he would like to see in upcoming generations of lab products with TLens.
Can you share your thoughts about scientists and research labs going forward, and what kind of improvements or new opportunities the company has in mind?
Yeah, good question. And this is, by the way, it's a very nice, we have an extremely nice relationship to these Mini2P players. And just the Professor Moser willing to talk to us and announce that kind of talk is a clear sign of that. What they're telling me is that, Øyvind, this Mini2P solution is still in the very, very early days. And the researchers, they're still kind of considering how to use it. So they see, when you start to talk about improvements, improvements, we just launched this. You know, it's going to be years of use cases and to learn how to use it. So improvement was not in first priority in their head.
Having said that, we know that Kavli and the clever engineers, Weijian, they are working on other ways of doing it, being more compact, being more light, being more cheap. And we are in regular contacts with them, and it seems like they are still having TLens in their mind for new releases without us knowing the details. But it's one interesting aspect. The other one, one other customer we have in the space, they are wanting to use more wavelengths. So we need to kind of have better imaging. So that means that we will do a TLens with a little bit different, which is sensitive or has transmission for a higher bandwidth of wavelengths. So there are certain things happening in the space.
But yeah, we don't have the details, but we are in discussion now of starting an NRE program with one of the key customers, a significant NRE program, which they also committed by quite a volume of lenses. But they would like to have a kind of a little bit different coating to have different wavelengths. Interesting space. And also, one of the companies we are having this Mini2P solution, they have other products. And they said to me, I reminded them last week in Asia, they said to me that, you know, we like your technology so much, we would like to use it in all our products. So I think it, as I said many times, I think it is an entrance for us into other applications in that space.
Great. So we're done with the questions that came in. Now we're going into the live questions.
Yeah, we need to put, okay, we can go another five-10 minutes.
Five-10 minutes. Okay, so first question here, who is the unnamed high-end customer?
Yeah, that I can't, that is probably related to the MR headset. I can't say that. Sorry, I would like to say it, but I'm not allowed to say it.
So there's one question here that finds the patent infringement claim and lawsuits worrying. Can we elaborate on it? Industry sector? Is it the TLens functionality in general or?
I can understand that worrying side of it. But what I can say and be extremely firm, there is no patent infringement. Full stop. Then that's what we can say, and we will not elaborate more on that topic. It is no patent infringement. And of course, we take it seriously, but it's nothing to be worried about.
Can we expect a follow-on order for Meizu?
I'm asking the same every week. It's still shipping, and they cannot have so much inventory left. I don't know. It doesn't seem like it, to be honest, because we are not given any forecasts. I think they have enough before end of life, I think. Of course, I will be happy if it happens, but I don't think so.
There's a question about this customer that will go on the road near end November, December. Can we name them when they do go on the road?
No. But knowing you guys and the way you dig, you may find out.
Could you provide more details about poLight's recent restarted smartphone-related activity, particularly your collaboration with a camera module partner and at least two OEM customers? Are these OEMs considered major players in the industry?
Which geographical regions are they based in, and are they operating in the same area?
I will classify them as tier two, the OEMs, but important tier twos, which has been quite successful, at least one of them in many regions.
Okay, so this has several parts to this question. One is for expecting this we answered, increased volume production. There's been a forecast for how long cash will last, but I didn't see that this time. What we can say is that according to our recent forecast, what we've said before still holds, but of course, things can change as we go along. We can see the need for higher investment pace. Are you planning further increasing staff in the near future?
Yeah, we have done a lot now, but there are a few positions which are still not recruited.
So I would say maybe the next six months, we will maybe add two to four.
And a thank you for creating an exceptional company and congratulations on the whole dedicated team.
Thanks to the whole team. Yeah, thank you.
It's important. We have two more questions.
Okay.
Which one have we already answered? Is it possible that we will see new add-in solutions such as the simplified integration for a more cost-effective option launched in products during 2025? This comes in light of the fact that the first-generation add-in solution was developed and launched for smartphones in a relatively short time frame, and the new prototyping and versioning processes are expected to enable even quicker development cycles.
Yeah, if this happens, it has to be that POC, which is ongoing with lens maker. I saw a picture yesterday being shipped to camera module player for integration.
The camera module prototype was shipped to quite a big customer on the smart glass side. It has to be that case, which will, that will be the first case most likely. So they would probably come a long way on the POC this year. So yeah, maybe late 2025, maybe mid-2026, maybe.
We are out of questions. I do, though, feel that I need to say, because it's easy when you come into a new company in a role that has been previously held by someone else. It's easy to take the work that's been done for granted and you sort of work on that basis and see improvements. So I'll have to say a huge commendation to Alf Henning. And I'm very lucky to still have Alf Henning in the company with the degree of control he has and the dedication to the company.
So big thanks to Alf Henning for providing a very good foundation to work on.
Super good. We have time for one more question from the audience. I see Øyvind has bombarded us with questions from the laptop, so that's fine. Daniel already sent me yesterday. All will come to Horten soon. So yeah, I think we're good. So thank you, everybody, from the audience coming here, from you following us on the webcast. And next time we're going to meet in this setting will be 18th of February, 2025, after the lutefisk and everything. Thanks a lot. Thanks for your interest in the company. We will keep on working hard and hope you see that there are tremendous many opportunities. It's all about being patient and pushing hard. Thank you.