Good morning, everybody, and welcome to poLight's fourth quarter presentation. My name is Øyvind Isaksen, I'm the CEO in poLight. Together with me today is the Board Chair, Grete Vik Soss, and CFO, Joakim Bredahl. The agenda of today is key events: introduction to poLight for those who are new, update from market side, financial review by CFO, outlook, and Q&A. Since this presentation is webcasted, if there's any question from the audience, please wait for the microphone. Also, for those who are entering questions through the portal, please leave your credentials so that we can reach out to you if there is no time to address your question. Key events. Many of these key events listed here were actually also informed about last quarter since they happened kind of after that quarter.
It is about WUPDX, which is a very, I would say, scientific instrument, a wavefront sensor. They claim that they have very good feedback from customers. Transcend VivoScope is one of the Mini2P suppliers now. This is a Chinese company, Thorlabs, also an American Mini2P supplier. Actually, all three commercial players now, including Phinysis, did demonstrate their capability and the product at Neuroscience 2024 conference in October. Also, we got in the quarter an existing customer which launched two new barcode readers with T-Lens, so basically a repeat customer. They claim that it is super good performance, and this is also one reason why they would like to remain anonymous, not kind of announcing who this is due to they do not want to disclose the solution they have used to get that performance. Also, we got the follow-up order worth NOK 344,000 related to an existing barcode product.
Quite a few events, but they were also announced as post-quarter, last quarter. Recently, a few days ago, we received a significant, I would say, eval kit order from a, I would say, tier one OEM, consumer OEM related to AR application, actually worth close to NOK 730,000, which is a significant order for sampling and eval kit. This customer also has, I would say, a very mature activity related to T-Lens. Now they are both considering T-Lens and early stage T-Wedge. This is exactly the situation and the dream we have that we get into glasses both with the T-Lens and the T-Wedge, so there were multiple products in the same product. Also, we participated in at CES and SPIE, AR VR MR, in Las Vegas and in San Francisco.
I would say extremely useful to be there, extremely efficient way to meet customers all over the world. Yeah, for those who are new, founded in 2005, which means that we have a celebration this year, which we are planning. We are a global player, as you can see from the map. We are in all key areas with our own people. We have a strong IP platform, 22 worldwide granted patent families, 13 pending applications, and four registered trademarks. Our technology enables and powers breakthrough applications in several markets. If you can see on the top graphics there, you see the glasses, you see the phone, you see the laptops/webcams, you see the industrial, you see the healthcare. We have enabling technology for many of these market segments. 51 employees, as I said, very much distributed. We are, say, around 15 at headquarters.
The rest is distributed throughout the world. The strategy we have when it comes to the organization is that we are with competent people where we have customers and where we have partners. That is why the growth of the company is happening mainly abroad. Fabless, and that is why we can be so, I would say, address so many opportunities is because we do not, and we have relatively few people. This is because we do not own the manufacturing facility. We are working through partners both on the wafer side and on the assembly side. Listed in 2018, and I would say the unmatched technical characteristics of poLight technology: extremely fast speed, very compact solution, constant field of view, no breathing, no pumping, and very, very low power consumption. As you can see, these attributes, these characteristics are extremely important for any wearable.
That is why we are focusing highly on that market segment. Yeah, so again, for you, many of you, this is a repetition. We basically replicate the human eye. Lens is the polymer. Our eye muscles is a glass membrane with different layers, one of them being piezo. Putting voltage on the piezo starts to bend, shapes the lens, changes the focus. We change the voltage from 0 to 50 to make the bending, to change the optical power, to change the focus. So the polymer is a key ingredient in our product, being actually, I said fabless, but this is actually the only thing we do fabricate in headquarters. Very scalable. One liter polymer is one million lenses, so it is very, very scalable. Wafer is coming from SD Micro, 18 in wafer, comprises more than 2,000 eye muscles.
We can assemble this either with or without a package, which is done at Tongsin in the Philippines. We sell to the OEMs. We try to convince OEMs that you have to use the technology from poLight because of the unmatched characteristics. They then instruct the camera module guys to make a solution with T-Lens or T-Wedge. We have many areas we can address. We have decided to focus on three, which is the consumer, the AR MR, and you can say a subsegment of AR MR is also the consumer sooner or later, and then the industrial side. There are other application areas where we kind of sometimes are dragged into. Healthcare is an example. Mini2P is an example of that. Really, the effort where we kind of proactively use our organization is in these three market segments and maybe particular anything consumer-related.
Yeah, we have some important assignments. On the AR MR side, you have the four glasses, which we've talked about before, already shipping. We have the latest one, which is the Vuzix. You may have seen the interview talk I had with Paul Travers, who is the CEO of Vuzix, where I had a conversation with him where he explained the importance of this kind of optics. You might find that video of interest to look at. That was the latest assignment. We have the consumer space, which is represented by a smartphone, high-performance smartphone, smart glasses, smartphone, sorry, and webcam. We are still active in all these areas as of today also. The industrial side started to be quite a busy slide. So many customers, six, if I remember correctly, and several customers have several designs based on T-Lens.
Then you have the Mini2P cases we already talked about. Okay, more and more we are stepping up in being visible at important events. Two of them is definitely CES, which is beginning of January every year. This year, we took the investment of having a suite where we populated the suite with all our demonstrations and our technology demos. We were five people, including myself, who kind of manned that suite. We had a lot of meetings, extremely constructive. The suite works very well. It's a quiet area instead of having a booth with a lot of noise. This was pre-agreed meetings, so it was high-quality meetings. Even we got visitors from shareholders, Liv and Bjornar, trying our smart glasses on. I think Liv has the Vuzix and Bjornar has the LLVision from China. These are long-term investors in poLight.
It's been there from the early beginning through LHH, Liv and Bjornar. We were lastly in San Francisco for SPIE. This year, we decided to be in the AR VR MR space. Why we did that is we really would like to tell the world that we have an extremely important technology and products to offer in the AR MR space. It is kind of brand building in that segment. In this case, we had a booth, five people again who were together in San Francisco, Tristan for the left, our CTO Pierre Craen, John Edwards, and Pete, and then Marcia, who is the marketing lady. They reported a very, very busy show. They were kind of all busy by talking to people and potential customers. In addition, there were people standing waiting to get access to the booth. The coffee was on us.
We sponsorship coffee, and that gave us a very good profile. People dropped in and said, "Thank you for the coffee." Not to mention Pierre Craen, our CTO. He was also giving a presentation, which dragged a lot of visitors to the booth. They wanted to continue the talk. This is, of course, costing money. It is an investment costing time, but it is a part of stepping off the kind of brand building of poLight and what we can do. This is extremely important. Okay, consumer. We have said it before, we will repeat it. We are very persistent. We will have breakthrough in the consumer. The main activity in the quarter, I have to say, has been AR MR. The consumer-related activity is definitely dominated at the moment by AR MR.
At CES, it was amazing to see from compared to last year how many players who were now profiling themselves as an AR MR player with different solutions of glasses. It seems to be a big step up on the AR MR side. I had a meeting with several, and I remember one comment from one customer saying that this was a Chinese OEM, a smartphone OEM. He said, "You know, everybody, everybody big OEMs will sooner or later have AR MR products." That was very visible. That is why, as we said before, this is why it is so important that we have these assignments, these four assignments, that we have such a good position in this market is super, super important for future consumer business for T-Lens and T-Wedge. Laptop, worth mentioning, webcam, absolutely, several cases, yes, smartphone is not dead.
We are still hammering there. There are activities, even though we have to say that it is a challenging sentiment. The innovation and the willingness to invest is much more related to other areas like AR MR than in the smartphone. Even smartwatches are being addressed and discussed. When it comes to AR MR in general, even though we can see that there is definitely a step up in activity and interest, it is still a market in early stage. I've said before, it's still a market under definition. Many changes happen from quarter to quarter what priority customers are wanting to focus on. Maybe the most notable change in the quarter is that the planned POC have increased significantly compared to last quarter. Also, I would say that some of the ongoing POCs, consumer-related, mind you, this is consumer-related, have definitely matured.
Matured in the sense that we are discussing concrete possibilities in products. I'm coming back to it in the AR MR section. On the enterprise side, we did have two cancellations due to priority of customers, which we saw could come. We got one new, so net one. This is enterprise AR, not consumer. Yeah, as mentioned, to position poLight, we have in the consumer side, we have a significant investment in, I would say, several things. One of the things I would like maybe to emphasize today is these reference designs activity. These are not trivial activity. This is highly competent optical engineers who are taking actually the responsibility as poLight in designing the whole lens stack and optimizing how to integrate T-Lens in that lens stack to get the performance the customer is asking.
We are doing these reference designs based on our own kind of over and investment. We take that investment because that means that we can bring to the market solutions rather than only a component. We see now also in the AR MR space, in the laptop space, how actually important this is to come to the table with the big guys. Not to say actually with the tier twos and the tier threes because they do not have those resources. This is a significant activity we have. Yeah, the status is given below. Design in four, same. Design in same, compete with POC up two, ongoing POC down one, and planning POC up two. Here you can see the more graphical representation. That table I showed is not including AR MR.
This table is including AR MR, as you can see from the icons. You can see now there are 12 ongoing POCs, mind you, consumer, and there are 16 planning POC, consumer. This is not only T-Lens. This is also comprising T-Wedge. In the report, you will find the number. As you can see, laptop, accessory, smartphone, smartwatch are also a part of the activity. AR, we have been challenged to illustrate a little bit use cases for our technology in AR. We are trying for the first time to show an animation, which hopefully will be successful. It will take a couple of minutes, so bear with me. This animation shows a person sitting at the airport having AR glasses.
The first section of the movie shows him having glasses without AF, fixed focus, which is mostly what is used today or only what's used today. Why we make this animation is to demonstrate what kind of user experience you can improve by having AF. The first part of the movie is that he's sitting there with the fixed focus glasses. He wants to monitor his flights to San Francisco. He's sitting there with his computer doing some work. He's looking at different things and using the intelligence engines to get answers to what he's looking at. He's looking at restaurants to pick up the menu and to order. He's asking the glasses to follow his flight so he doesn't miss it. You will see the result. After that, he did exactly the same, but having T-Lens AF and having T-Wedge for the micro display.
Bear with me. It will take a couple of minutes. I'm a little bit excited to see whether this is going to go well or not, but let's try. Nobody's fixed focus. He's looking at the boarding screen, asking for San Francisco boarding. Sorry, I cannot find your flight. I can't see it. He's looking at the plant, asking the engine to help him. He couldn't do. Looking at the restaurant. He has to tell what restaurant he's looking at to get up the menu. Look at the display. Also, the display is very, very bad resolution in the glasses. Look at that. He ordered the package. He's looking forward to his paying. He has to use his voice. He's waiting to pick up. Look at the image in the glass. It's very blurry and not very good resolution. He's getting hungry.
The problem is that the flight is now boarding, but he can't see it because of the bad quality. Now it's departed. At least, I guess he got a good lunch, but he didn't get his flight. Here is the same, but here is using the T-Lens and T-Wedge technology. Look at the brightness of the screen. Easy for the engine to look at. He can learn something about flowers easily. Look at also the screen of the glasses. It's much better resolution. He's looking at the restaurant. Quickly detect the restaurant. Go to the web page. Show the menu. He ordered package one and confirmed payment. He has seven minutes to pick up. Boarding, San Francisco. He saw it, boarding. He got it on his phone, and he goes to the gate. The question, did he bring his lunch? I don't know.
This is a use case. This is what we will use towards our customers and product managers to explain use cases. This is what is so important as a message from the company: do not talk about the technology. Talk about what the user can gain, how our customer can sell more glasses. This is the key. Difficult, but important. As I said, AR MR, a key focus area for poLight, but it needs to mature. I think we are going to repeat that a few times, I am sure. It is definitely a market which will happen. The ecosystem and the key players in the ecosystem are definitely saying that this is a market we believe in. It will happen. That gives us comfort that this is the case.
The CES focus this year is a proof of that, we feel, how people look at this market. As I said, consumer-oriented opportunity is growing in number and becoming increasingly mature. When it comes to T-Wedge, I think I'm not overstating this. I think everybody we talk to has great interest in T-Wedge. What's also quite interesting, many of them have different ways and problems T-Wedge will solve. It is potentially not only one thing or one product. It is a platform which can solve different things. We are continuing to promote. You can say we are developing this technology platform on open scene. We are showing customers at a very early stage what we can do. We have technology demonstration both at CES and at SPIE AR MR. It is creating a lot of enthusiasm.
I was myself in a meeting after CES in the Bay Area, and we had a meeting with one OEM. Two weeks after, we got that big PO of NOK 700,000 plus order. They wanted to start immediately the evaluation. This shows the huge interest which is in this area. When it comes to what we do now on development side, we are still in a situation where, as I said, this market is under definition. There are definitely many things we can solve. We need a lead customer or lead customers to handheld us towards final development into mass production because of so many different specifications and needs. It would be wrong of poLight today to kick off mass production or do the development and do the mass production because of this, I would say, different demands the market see and have.
We need to be handheld by lead customers so that we can hit the market with the right product, basically. We are continuing to develop the technology platform, the T-Wedge technology platform, and to enable more functions to have better performance. One example, we would like to be tilting more than we do today with technical samples for validation to realize other application areas. The technology platform is continuing to be developed. As I mentioned, since last quarter, there are two cases which disappeared. They are small cases from a volume perspective, small cases since it's enterprise. They have gone away because the customer decided not to go ahead with these products for their own strategic reason, nothing to do about T-Lens.
Having said that, I would say one other, maybe more interesting case came in and has design ins into their headset for enterprise use, quite an interesting use case. We met them also at CES. The number of planned POCs increased significantly from 14 to 22. As I said, we had that very important sample order happening after the quarter. Four design win, two design in, one down. Completed POC, 21, one up, two down, ongoing POC, and planning POC up with, what is it, eight. Here you can see the graphic representation where you see a strong contribution from the consumer side. Industrial, yeah, maybe not so many things to say. Not to repeat myself, I would say that there are constantly coming new things in. We got an order for an existing barcode customer. I mentioned that.
But also a relatively significant sample order from another customer, which is a completely different application, early stage. When you buy a sample of T-Lens of 400K, it's serious. Very interesting case, by the way. Yeah, use case, healthcare automotive. I would say here there is nothing new to be said. I already mentioned all of these topics during my presentation, so I think I'm going to skip that to the benefit of time. The same for automotive. Automotive is still on the radar screen, but we are not emphasizing a lot. We are preparing our technology for that market. Yeah, 28 design wins, two design ins, one down, 116 completed POC, 44 ongoing POC, and 49 planning POC crossover all market segments. Here is the trend plot where you see planning POC and completed POC and POC in one as a function of time.
Steady growing. Joakim, you're up.
Thank you. Hello. The key financials for the quarter, it's not a quarter with revenues that we are satisfied with. What has come in has been NOK 1.2 million, of which 40% is non-recurring engineering, so customer work. Of the remaining sales of T-Lens and ASICs, around 60% is industrial, mainly in barcode, as can almost be seen in the orders that David has presented. There is an EBITDA loss in the quarter of NOK 29.3 million. This is NOK 3 million lower than last year in the same period, but against quite different revenues of NOK 5 million last year. The difference is actually, the cost is actually at a lower cost if you look over it. Parts of the EBITDA loss is also an increased provision of indenture obsolescence of just over NOK 1 million.
We have an increase that we have in the provision for legal expenses that's related to the patent claim that we talked about last quarter. Yeah, we can move over to the balance sheet. Still with quite a solid cash position of close to NOK 167 million, which is significantly higher than what we had going out of 2023. The inventory is at NOK 62 million. Most of that reduction in inventory is due to a write-down of the inventory. The positive news, I guess, is the inventory is getting sort of booked at a smaller and smaller cost. When sold, that will increase our margins on that sale. For cash flow analysis, we have around NOK 12 million used on operating activities during the quarter, which is not that high.
I mean, our cash burn, if you compare our total cash burn in the quarter of NOK 13.5 million and compare that to last year, that was NOK 18 million. It is quite reduced. Parts of that is the government grant, the Skattefond, that we received in the fourth quarter of 2024. Also, conversion into cash of receivables, which was far better in the fourth quarter of 2024 than in 2023. We have also made some investments, most notably in the lab, where we bought some technical equipment. In conjunction with our move to Tønsberg and new headquarter, we had some necessary IT equipment that we needed upgrading. We hope some of you will come and visit us. Yes, I think that will cover it. We will move back to Øyvind.
Thank you, Joakim. Okay, one slide left. Outlook. I think, yes, things have taken time.
We are still in the early stage of commercialization of the company and the product. As Joakim said, we are definitely not happy with the revenue level we achieved in the quarter. I think it's more important to try to communicate to you that there is a lot of important positive things happening in the company. I think that when we also participate in these kind of shows where we meet so many people and different players in different segments, it gives a lot of energy back to the organization. It's confirmation that, guys, you are definitely onto something. Not only with one product, with a platform which can realize different products. Not only in one market segment, but in market segments which has an impressive, I would say, outlook.
There are market segments which we also are relevant, which we do not even scratch, at least only on the surface. I think that in addition to that, we have, as a platform for communication with the customer, we have reference designs. We have key design wins, which is helping us to be trusted. When it comes to our organization, I am actually very proud of what we have developed. When it comes to our partners and the quality and the relationship to our partners, it is of high quality, long commitment. What we then are achieving is when we get visitors to kind of make a due diligence of the company and our capability, we always get thumbs up. Always get thumbs up. We are talking about big players coming in, doing due diligence with us.
I think what we need to do is to continue to work hard, be persistent, be strong believers, constantly be customer and market oriented. I think sooner or later, we will be rewarded. The shareholders will be rewarded. This is what we go to bed every night and say, "Amen." Thank you. Okay. We have Q&A. Joakim, do you want to join me?
Yes, I will.
Right.
We'll just get straight at it.
Yeah, please.
2025 is projected to be a defining year on a path towards significant growth in the AR glasses market. How does poLight's strategic roadmap align with this projection? What are the critical factors that would determine whether 2025 marks a turning point for poLight's commercial performance in the sector?
Yeah. Good question.
I think when it comes to our roadmap, I think that is a very good fit to the current what's happening in the AR/MR market. I think we feel that for the application we are addressing, resolution enhancement, autofocus, or change of focus, the products we have, we feel that is basically high on that list of customers. You will see that many of the glasses coming out today and tomorrow will use conventional technology, very often meaning fixed focus, very often meaning resolution, which is not performing this way, which is not performing very well. We also know the plan of the customers. Of course, why are people buying these expensive Eval Kits and T-Lenses for evaluation if they do not have a plan to implement it and improve the products? I think that was a long answer to say we definitely feel that we are aligned. Yes.
What are the key technical challenges in developing a combined autofocus and OIS solution using poLight's tunable optics technology? How is poLight addressing these challenges, and how might they impact the timeline for commercial availability?
Yeah. This is also an interesting question. OIS may become important in applications. High-speed focus will potentially limit the need, you can say. Yes, we could potentially foresee that our technology platform could both do AF and OIS in one product. We have talked about it, I think, in the capital market day presentation. That is something which is possible. Of course, there is a lot of integration aspects and synchronization aspects that need to be done. We have not started that combined program as of yet. I would like to mention that a first step could be that we do two separate products before you combine into one product.
If you look at the T-Wedge platform, that is basically a beam steering platform. That could be vibration, but it could also, over time, do OIS. The next phase could be a combined product. Next question. poLight holds patents for adjustable focus spectacle lenses. What is the current status of this technology, and what is the outlook for its integration into commercial eyewear? Yeah. This is something which we now and then get asked. We did some, I would say, paper studies. Actually, we built some quick and dirty prototypes, which is typically our technology but fitted into big glasses. We prove it works. Of course, it will be a challenge to find an actuator which can do this good enough because we're talking about relatively big stuff, and you need a quite big force. There are ways potentially in the future.
We felt that this was something we would like to protect. That is why we did the patent. We have not started any concrete product development. It is too early to say.
Do AI-powered humanoid robots, camera-equipped earbuds, and other wearable AI devices represent potential target markets for poLight?
I think any wearable with camera is a potential application for T-Lens. Not only that. It is the sweet spot of poLight's technology: compact, speed, and low power consumption. No gravity impact. Those characteristics are so important for everything about wearable.
If T-Wedge reaches mass production, can we say any plans regarding pricing?
Yes. Of course, we have some ideas. As we talk to the market, we are developing a business plan. Before we start a product development program, I need to go to Grete, my board chair, and ask for permission to do so.
I need a business plan. I need pricing. I need cost. I think it will be more expensive than T-Lens.
How do you envision the margins per sold T-Wedge compared to T-Lens, considering that there seems to be little competing technology for T-Wedge?
Yeah, that's a difficult one. We know too little about the cost today. One of the drivers for cost is the bulk piezo. What we are asking is quite special piezo. We are kind of the only customer, and they have never been produced in any volume. We need to develop that supply chain, to be honest. It is a question mark on the cost. There are other ways of doing that actuation, still with piezo, but other methodologies. Too early to say. I would say all consumer-type products will be hammered heavily on cost. These are professional buyers.
Even though you can say, "Yes, it seems like we are definitely the solution," as we see it today, the sourcing guy, he would say to me, "But I can live without." They do not compare us to necessary alternative technology. They compare us to not doing it. Yes, of course, we should use the fact that we are the preferred and we are the best. Yes. Hopefully, that will improve margin. I cannot be more specific than that.
Here is one also that can be difficult to determine. As you see it today, will the first AR consumer design win be with T-Lens for an autofocus camera or T-Lens as part of a display solution?
I will be speculating.
But I think what I can say, we are involved in much more T-Lens activity related to camera, many, many more cases than LBS. I think I would like to answer it that way.
Have you been showing a demo of a larger T-Lens to customers yet? And if so, how's the feedback?
No. Not a physical demo. Of course, we have been discussing spec and simulations and how it can work. We did hope to have working prototypes we could show to customers. We were not happy with the performance, so we didn't. We did show simulations. We are still kind of working on getting prototyping built in a good way. That is the status. The dialogue is based on paperwork so far.
Is it possible to combine a projector with both T-Lens and T-Wedge vibrator?
If so, could you tell us how the synergy could work?
I'm not sure. If the intention with this question is, can T-Lens and T-Wedge be needed in a projector solution? Potentially, yes, but we haven't seen it yet.
Another question about T-Wedge. Your T-Wedge solution is driven by piezo and is therefore a very power-efficient solution. Is this the reason why the solution does not give a high-frequency sound, or is it due to less moving mechanical parts?
This is quite an important question/comment because if you're going to wear these glasses with some resolution enhancement type equipment like T-Wedge, you're going to wear them here. It is extremely sensitive towards noise, audible noise. You have to use a technology which is very silent, which you use so it will not be annoyed by some sounds transferring into your brain.
This is where actually T-Wedge is quite unique. I think there could be several reasons for this. You're correct. Piezo makes us fast and low power consumption. You're absolutely right. Maybe the size, the compactness of the solution is an important reason why we are so quiet and not noisy at all compared to other technology used in projectors, as an example, which is very noisy.
There have recently been two orders for T-Wedge POCs from top consumer OEMs. Is this the same OEM?
No.
Short answer there. Did you get any feedback regarding interest from OEMs around the LBS design in?
In a way, it's not us getting that feedback. It's our customer getting that feedback. I know the customer was at CES, our customer. I know the customer has been on roadshow.
We haven't heard any, I would say, significant changes of how they perceive the opportunities. They are still promoting. They are still pushing. They haven't gone into any mass production because they're still seeking for the lead customer. The status is basically the same as last quarter. Question regarding wafers. Is it so that you notice a difference between T-Lenses on the wafers? And if so, how do you tackle this? Okay. From in the early days of manufacturing wafers, with all the processes that takes, there will be wafer-to-wafer variation, meaning the characteristic of one wafer can be a little bit different from the next wafer, from batch to batch. Of course, as the CPK, which is a measurement of how stable and repeatable a process is, as that increases, that will improve by volume and by training.
This variation will be less and less. You're right. If you take one wafer and you produce T-Lenses, there could be different performance for that T-Lens depending on wafer and depending on where on the wafer. We handle that by, I would say, two things: defining a spec of the T-Lens, specification of the T-Lens, say, on optical power, which means that all will be within that limit, even though there are variations. Also, if there is a situation that a customer wants to have a particular spec for that particular T-Lens, we can do sorting and binning, meaning that we are testing every T-Lens, and we know the performance of every T-Lens so that we go, "Okay, you want T-Lenses with this performance. You go there. You go there. You go there." You do sorting.
Any progress in simplifying integration on add-in design? You are working on a new way of mounting it?
I think the main there's nothing new on that one. We have an add-in design. We have different add-in designs. We have small packages. We did the program POC with one camera module guy, which is towards a concrete OEM. We have continued. When we do this reference design, we are using that kind of design knowledge about how we can integrate T-Lens. There's no new, I would say, design hardware activity. It's more on the reference design we have been emphasizing now.
Okay. Another point, returning to the bulk piezo and T-Wedge that we talked about earlier, it seems to have a lower lead time than the one you use in T-Lens. How is the pricing in comparison to this device versus the T-Lens piezo?
Today, it's higher. Those bulk piezo are quite expensive, but it's sampling. Also, it's purpose-made for us. It's too early to say how this will look like in the mass production. On the sampling level, it's definitely quite expensive. We also sell expensive.
Can you give a comment about the scalability of T-Wedge if it hits commercial launch, given that you are working with Texas Instruments that is very capable in this field?
Yeah. Without referring to Texas, I mean, the scalability of T-Wedge is very good. Compared to T-Lens, it will be, as it is today, it will not be a MEMS-based piezo. It will be bulk piezo, as we see it today. It can change, meaning that the long lead item on wafer is less of an issue. There will be more assembly steps. It will be more extensive assembly steps.
Scalability would not really be a problem. We only need to plan properly.
One more question about T-Wedge. Can you say anything about partners in the value chain?
Today, we are heavily focusing on the OEM to let them know and understand what T-Wedge can do for them. That is where we get different answers from the market. The way we see it is that when it comes to partners, we are actively working with many partners to demonstrate T-Wedge performance in a system solution. You have seen some of the press releases we have done. What we showed at CES and SPIE is that we are planning, and also we do more. We are planning to do demos with partners where we demo the system solution and not only the T-Wedge as such.
When it comes to, and this is in the promoting phase, having powerful demos is super important. Here, our partners are extremely important. What I see in the, and of course, those partners are potentially future customers. I think also it's important to say the customer who in the end decides is those OEMs, tier one, tier two, who buy samples directly from us and do an evaluation. Those are the guys who decide. The partners we do demonstration and prototyping with could be potentially integrators towards the same OEMs.
Okay. We have some more questions that come in the latest hour. Does it look like you will need a share issue in 2025? Should I answer that?
You can answer that. Yes.
Share issue or any capital infusion will be a product of a discussion with the board and a conclusion by the board who continuously assess, do we have sufficient funds? When the board reaches a conclusion that we will go out and fund the company further, we will then communicate a need for a share issue. I think there are many factors that can influence that need. It's a bit premature to be talking about that at the moment. Next question. Can you say something regarding Tampere and what and how many projects you're involved in there? We have an office in Tampere.
We have an office in Tampere, yeah, and Steinar knows that. Our main activity at the moment in Tampere is, I would say, technology development. Of course, there are potential customers in Tampere also, which we on and off have a project with.
I can't be more specific than that.
While the report mentions some setbacks in the enterprise AR/MR market, it also highlights a significant increase in consumer and potential high-volume AR/MR projects. What is driving this increased interest? Can you elaborate on this trend and discuss the potential for poLight's technology in this growing market, including a timeline for when we might see these consumer-focused products come to fruition?
I think the animation we showed is a good example. There are early entrants of early products, and people clearly feel that they need a better solution for the camera. At the same time, you see more and more players, as I mentioned, coming into this market segment, meaning that there's an increased activity. I think also during my presentation, I think we highlighted why this is super interesting at the moment. Yeah.
The report also indicates that some consumer-related POCs are progressing well with discussions about real product possibilities. Can you provide examples of these POCs and discuss their potential timelines for commercialization?
I have to be very careful here. There could be sign of something in the late this year. That can quickly become next year because this is something which is completely out of our control. I would expect that in 2026 and 2027 onwards will be the year where you would see several activities in that space. If we are lucky or if the customer wants, there can be some sign of activity in the end of this year also.
All these questions come from reading the report. It was released the 7th, so it's quite impressive, the quality of the questions.
The report highlights poLight's investment in new camera reference designs for various consumer applications. Can you explain how these reference designs can accelerate the adoption of T-Lens and give examples of specific consumer products they are targeting?
Yeah. I think I'll answer that at least partly, but let me quickly try to reiterate. We are addressing many different customers, the high-end, tier one, tier two, tier three. Some organizations, they are themselves equipped to do a lot of things from scratch, taking T-Lens as a component, do the design, do the prototyping, and go all the way to MP together with us. Some is capable of doing that. T-Lens is a special and a sensitive lady.
The competence we have in T-Lens, and we have seen it several times when we are in the design phase, when we are fronting it, when we are advising, things end up better. That is why we took the decision to build an organization which is capable of making these reference designs so that we are not only coming here as a component customer. You figure out how to do it. We are coming with a solution proposal. By the way, we have already some activity with a camera module guy to be able to give you samples of a camera module. You are talking. You are talking about solution. This is an example. We do this for AR/MR. We do this also actually for industrial application. We do this for type selfie cameras. We do this for webcams. We will do this for laptop.
We do it for many different segments.
Okay. You have one entry here. There are seven questions in one, but we'll divide them up. What does the strategic decision from the AR/MR customers more exactly mean? I think this refers to the cases where the strategic decision to close the—
Oh yeah, oh yeah, oh yeah, oh yeah, oh yeah. You know, it can be—I have one example in mind. I will use that as an example. One customer is having a roadmap with several products. He is launching the first product. He is extremely busy by supporting that product. I know I am talking about a real case, which I cannot name the name. He is extremely busy supporting customers. He is getting more customers than he advanced customers than he planned.
He said, "You know, that version of that program, which was meant to go live, I need to cancel. I need to concentrate on making sure that my customer is supported on the existing release. I need to wait the next product two years or whatever." This is the kind of judgment they continue to do completely out of our control. That's an example.
Regarding one of our more explorative segments, regarding automotive, why is a new revision of T-Lens required? What does it more specifically mean, and why would it take so long to develop? Have any development activity started?
Yeah. Good question. Automotive, most of the dialogue we have had in automotive shows that the T-Lens we have today is too small. You may have heard us talking about a bigger T-Lens, which we have a program ongoing.
That is kind of that kind of T-Lens which needs to be developed to go into those markets, we believe. Why is that so difficult? T-Lens likes to go small. That is by design. It really likes to go small. Going bigger, meaning there's something bigger we have to bend and becoming more difficult to bend. Need more power to get the right optical power. Need new actuator technology. These are fundamental research which we are doing at the moment under the context of a bigger T-Lens for different applications, e.g., automotive.
This we have answered. There have been significant inventory for some time now. Is there a risk of it getting too old and obsolete?
I think I would say that we have a way of handling that inventory, which is if you're more than one year, if you're more than two years, more than three years, you write down, as Joakim explained before. Then we do concrete judgment on certain inventory. Is it good or is it not good? Each quarter, we take that evaluation. I would say today, we feel that we are on the conservative side. Of course, if we never ramp, we have too much inventory, of course. I guess you can have a different aspect to that. Is there a technical wear when they store for a long time? Does their performance go down? The question to that is no.
How about competing technologies? Is there any new or anyone progressing significantly?
Nothing really new on the competing side.
I think the biggest competition is conventional VCMs or not using AF at all. When it comes to T-Wedge, I would say today, we see the competition is not doing anything. Live with the resolution you have and be happy because we do not see any other solution today. Of course, the world does not stand still, but today, that is the situation.
A question inspired by some of our POs, latest POs. It seems that T-Wedge is potentially better positioned than T-Lens to drive poLight's near-term revenue growth. What factors support this assessment, and does this impact your strategy and focus for the coming quarters?
I would not say so. I would not say so. I would say that T-Lens is in mass production. What we need for T-Lens is an OEM saying, "Yes, I would like to have that T-Lens in my consumer product," being this or that.
I think there are shorter ways to successful T-Lens than T-Wedge. T-Wedge definitely shows a lot of promising outlook, no doubt about it. We are going to make sure that T-Lens and T-Wedge will be two very successful products. At the moment, the interest in T-Wedge is phenomenal, but it is not a product yet. We need to keep that in mind.
The outlook sections in the more recent reports seem notably more optimistic than those in the earlier reports. Are things looking better now compared to previous quarters? What factors are contributing to this more positive outlook?
Yeah. Okay. You read that more positive than before. I would say that I feel it is positive. I mean, there is no doubt that the outlook is promising. We have said that many, many quarters, but then we use different wordings, maybe. Maybe it is your fault.
I feel that there is step by step, we are getting more confident. Maybe that's the right word to say. I would say fundamentally, if you go through the reports, which I know you've done even, I think we have been quite optimistic about the future for quite some time.
Okay. Here's a question where you can go mad, Øyvind. What key factors give you confidence in poLight's path to commercial success?
You know, I think here there are extremely many answers and long answers. I would like to refer to our feedback after CES and SPIE. If you look at that interest and if you look at those quality meetings, we are not talking about small names, huh? We're talking about big names. Look at the interest, the PO two weeks after for NOK 700,000 for T-Wedge generation.
We know what big players are also planning with T-Lens. I think it's just we have to execute. Of course, the customer needs to decide. When they decide, we will be ready.
This is a very concrete question. Are there many customers working on products similar to the Ray-Ban metaglasses that are interested in your product?
Yeah. I think there are several glasses coming out, and I think they're all, I think many of them will start with a fixed focus. I think that's the way to go, quick, easy. I think sooner or later, due to my animation today, they will come and say, "We need AF."
Absolutely. Why aren't there more car producers in POC? One would think that the benefit of using T-Lens for cameras monitoring the road would be great since it is not that affected by the temperature.
The reason for that is that I think that market is not ready yet. We said when we started talking about automotive, we talked about five years perspective. Remember that. Also, our T-Lens is not ready. Of course, it's not big enough.
Y eah. There's a question about T-Wedge will solve potential customer problems if there are examples, but you have given some.
Yeah, I've given some. Yeah. I think we need to maybe one more question. Okay. How many left is there? How many are there?
There are quite a few left.
Yeah. I think we need to take one more, and then we need to take rest offline.
Yeah. We've answered that quite. We can do that one.
Which one? Yeah. Okay. You decide.
I think we can do that quickly if you look at this one.
Because this is a question about the share issue, how close we are to another share issue, which we've answered. The question also is, are loans off the table still? I mean, any financing instrument will never be completely off the table, but it would need to be a highly specialized loan scheme as banks typically depend on future cash flow for their repayment capability. I mean, in our own projections, we have a sufficient cash flow, but the bank also needs to trust that and believe in that and have that pass through their credit committees. A regular bank loan is probably not on the table yet. You have hybrid loan instruments, which can affect equity in the long term if repayments become delayed. Loan is associated with quite high risk.
If there's anything, it should be probably a government-subsidized loan, a subsidized loan, or an EU-subsidized loan. That might be interesting, but that's the only thing that could be at this point. Is it a challenge that poLight is a small company that will probably serve the largest companies in the world? Is it an issue to bring in a partner that provides greater security for customers?
Yeah, I think it's a good question, comment. Of course, bigger companies, they will do carefully due diligence on the sustainability of poLight so they don't take a decision and then suddenly poLight has an issue. That is clearly a challenge. That's why building the organization, being strongly financed, having shown that we can do mass production. We have an assembly partner for 14 years now. Potentially, over time, you need to have a dual source.
It is challenging, but I would say we are addressing those challenges as we go. Okay. I think to the benefit of those who have other things to do, I would like to thank you, everybody, for, again, a very dynamic and interesting presentation and Q&A session, mostly, I would say. Next time, we will have the Q1 report, end of April. Hope to see you then. Thanks for you in the audience. Thanks for you following us from the webcast. And thanks to Joakim and to Grete.