Øyvind Isaksen: To poLight's Q3 presentation. Maybe today we need to make it very short since you are going to spend a full day with us tomorrow. Let's see how we make it. Together with me today is board chair, Grethe Viksaas, as always. Back, actually, last time we were not there. And of course, our Chief Financial Officer, Joakim Bredahl. The agenda is as usual, quick key events, introduction to poLight for those who are new, market review, financial review, outlook statement, and Q&A. Key events in the quarter. You may say maybe not so many. The first two bullets is related to what we already talked about last quarter, which is an extremely important event for us.
Øyvind Isaksen: It is related to a design-in case for which we expect something to happen relatively shortly, and we then can classify it as design-win. But you never know how long time it can take. But what the customer is communicating is in relatively short or few, what you would say? Soon, they claim. But if soon is this year or beginning of next year, we do not know, of course, but soon. We also have remaining continuing high activity on the TWedge. I would say impressive activity given that it has only been kind of related to a few handful, a small handful of OEMs. This is encouraging. A relatively sizable PO, taking into consideration it is only sample orders. And we expect more to come in this area. Barcode. Another smaller PO, but high margin type PO we have received on 22 September. Also, I would say, showing that these kind of products, they are really lasting for a long time.
Øyvind Isaksen: The first design-win in Barcode was in 2020, and we are still getting POs related to that specific program. So it is a long lifetime, high margin market, which is exactly what we are trying to do, combining potentially high volume, low volume, high margin. The high volume will cost reduce our activity, making we can take higher margin in selected professional markets. And then, quite interesting, I do not know so much actually yet, but we have a design-in and maybe not so far away from a design-win on the first application related to humanoids, which is a big market, which is a rapid developing market. We understand that this is the type of camera which is to be used on the hands or on the face, small compact cameras. So, it is interesting. As I said, I know little.
Øyvind Isaksen: But I know that this company did showcase their solutions in a big show in Shanghai recently. So, I will come back to it hopefully, and also maybe we can have a more kind of open presentation and press about this case. Interesting. First one. And I see it as an extension of our activity in the machine vision barcode type activity. So in that respect, it is nothing new when it comes to market segment, it is more like a new application in the machine vision. And then one new consumer AR/MR case. After we had concluded and presented the results to the board, we received now a PO for NOK 500,000 related to one of the other AR/MR cases. And that PO is meant for material and TLenses to be used for the final qualification of a product.
Øyvind Isaksen: I have by purpose not mentioned it when we talked about this before. It is one of the existing I have talked about, but I have not pinpointed which one. This is also an extremely important milestone for the company. It is now appropriate to classify it as a design-in, not design win, but a design-in. When they order that kind of volume of TLenses, still at relatively high prices, it is serious. Then we expect that the next PO related to this program will be a mass production PO ramping. That happened relatively few days ago. poLight, we focus on 2 main markets, I would say. The consumer related is mainly dominated by AR/MR, as we have said many times. There are other activities, like body cams, like laptops, which is also starting to show some visibility.
Øyvind Isaksen: AR/MR is by far the important, but most important and the highest activity, but other cases are also slowly maturing. There are so many new devices and cameras on your body, which you can say that instead of talking about AR/MR as the focus area, maybe it is more correct to say wearables, whatever wearable that is. Then, as I said, on more the professional side, it is barcode machine vision. Also, there are kind of professional mixed reality AR cases in the professional markets. We have several design wins already. For those who will be in the Capital Markets Day tomorrow, you will see one of the headsets relatively recently announced, the SnkeXR one, which you will see in engineering samples in the Capital Markets Day tomorrow. Also an important market.
Øyvind Isaksen: We also expect that that AR/MR market in the professional side will also grow as technology mature. Technology, very unique. Speed, compact, extremely low power consumption. This is why we are so wanted and popular in the wearable side. Power consumption is important, of course, compactness is important, and speed is important. Founded in 2005, and you can then ask me a question, how can you use a long time to be successful? I agree. It has been a long journey, but it is also tough to develop a hardware company with such a unique technology. We are not doing sales work, we are doing missionary. It takes time. We are headquartered in Norway, but we also present in Finland, France, UK, US, Taiwan, and Philippines, and growing the organization in most areas. Very active on IP side. The CTO, Pierre Craen, will talk more about that tomorrow.
Øyvind Isaksen: Quickly, the first product of this platform is the TLens, the tunable lens. TWedge may be the next one. TLens bending on the top right side of the slide, bending a membrane by a piezo membrane, transparent in the middle, shaping the polymer between, which is the lens, and that change the focus from close to infinity. Basically replicating the human eye. We are fabless. We produce the polymer in Tønsberg. We have a MEMS wafer supplier, which basically is the eye muscles, the membrane which is bending. We ship these components to our assembly partner who do the dicing, dispensing, and assembly. Either selling a naked TLens or a packaged TLens, and we do our own ASIC chip, providing the voltage to the membrane. Then we sell to the OEM, convincing the OEM, and they will instruct the camera module supplier what they should build.
Øyvind Isaksen: Typically, that is the way it is. Our marketing and sales activity is in a big degree, maybe 99% of the effort is towards the product owner, and the product owner is telling the camera module guys what to develop. There are other markets, which we could explore, and we do somehow a little bit. At the same time, it is important for us to stay focused. We have limited resources, even though we have grown quite a bit the last few years. I would say more than 90% of the effort we are doing is related to AR/MR today. I think that AR/MR maybe would start to be more type wearables, any type of wearables. We also are doing machine vision, barcode, as I said. Then also, there are emerging use cases we talked about for a long time, and specifically, I would say healthcare.
Øyvind Isaksen: We believe we are starting to see some more traction. Automotive, yeah, but I think we need a different product, a bigger TLens, and it will take many years before we basically have activity in that area. Healthcare could be more relevant in the next few years perspective. Yeah. There is no new design-wins in the quarter. There is design-ins, which is the step before design-win. The platform is strong. In all the defined market areas we are wanting to be successful, we have a strong platform and strong references. On the consumer side and related to TLens, as I said, activity has mainly been related to AR/MR and wearable/laptop. TLens is being considered by many relatively big companies. Some of the cases we are working with is, I would say, becoming increasingly mature. That is why we have now two PoCs which has been classified as design-in.
Øyvind Isaksen: There is some public debate about privacy, which of course we have also noticed, whether camera is good to have or not. I think we shouldn't underestimate what that can mean in certain applications in certain countries. When we talk to the market, I am just back from Asia and US, anybody customer have, to me, expressed a big concern about this, but it is an issue. You can just see in this country where we are having quite a heated debate about what regulation to be implemented to secure that we protect their privacy. Yeah, it is something which is not to follow. I think there will be glasses with cameras. I think there will be glasses without cameras. I think the glasses without cameras for video and picture-taking will probably have cameras, but for more sensing.
Øyvind Isaksen: I think it is prudent to mention that this debate, and of course, this debate, depending on how it is developed, may impact also the market when it comes to camera. We don't lose sleep on it, but I think it is prudent to mention it. During the quarter, three statistically important TLens purchase order was received. As I said in the beginning, we expect that that product which we did also design-in last quarter is to be in the market relatively soon. As I said, what is soon? Let's see. End of the year, beginning of next year, we don't know, but seems to be coming. I think we have received three mass production POs already, so they are building inventory before release. In addition, there are two other smaller POs which is kind of placing POs which is, I would say, also starting to be very mature PoCs.
Øyvind Isaksen: One of them is already now post-quarter, announced as a design-in. There is another one which is also getting very mature. Starting to see that finally the shift from PoCs activity to more design-in activity, which is, of course, very encouraging. We talked about this camera, which we were on top of. We announced that in October 2025. The cameras is now going through intensive reliability testing. They have been tested by the customer, and the test results, as far as we understand it, is in line with expectation, so that's good. I already mentioned that post-quarter, which is a very important case. We think that this PO is the last before ramping. If that last round goes well, they will then start to order TLenses for commercial use.
Øyvind Isaksen: On the TWedge side, as I said in the beginning, it's a little bit amazing to see how that interest continues. Even though we are not working broadly with a lot of customers on TWedge, it's very specific, small handful of audience, which has been with us from the beginning. We feel that we are getting closer to the phase that we need to consider whether to kick off the program. We did receive some purchase order. We are selling them very expensive per unit and use that as a way of also part-financing the development activity, but we haven't really kicked off the main development phase yet. We do aim to kick it off, but it will be dependent on several customer to chip in some financing. Just to repeat, why do we expect to do that? We didn't do that with TLens. That's correct.
Øyvind Isaksen: TLens has a massive application area, whereas we see TWedge, as of today, a niche market. Even though it's a very important niche market, it is a niche market for the big players for advanced AR glasses, and we need to develop this product in close cooperation. That's why we are negotiating an NRE funding for this activity. I would say that it's been relatively intense conversations and dialogue with specifically one customer. We are discussing now the decisive funding and also which will be significant, and also the terms, which is the difficult part. What do I get for chipping in money into this developer program? This is, as we said before, a relatively complex and difficult balance.
Øyvind Isaksen: We hope that we are getting closer to a conclusion and that we can kick off the program and get ready for mass production in, say, 2028, plus, minus. On the consumer side then, this plot was made before the post-quarter, so it doesn't include the second design-in. That will be another consumer glass. That will be updated for plot for next quarter. As you can see, very much dominating by AR/MR. This is some accessory and some laptop. See the same picture here. All the icons with a C is consumer, which is the majority of what's happening in the future.
Øyvind Isaksen: On the Barcode side, you see a picture of Jon Edwards at Vision in Stuttgart, where we had a small booth where we presented our TLens and the MLens quite successfully. The order intake in Barcode is varying, of course, quarter to quarter. We are having new customers coming. We do expect potentially within the next 6 months, some more design-wins in Barcode. It is still a low volume, but their price point is very attractive compared to anything else. We have removed this design-in and one PoC related to the IRIS program, remember? Why have we done that? It is because we have not really seen any progress in the last quarters. I could keep it there, but I feel it is better to remove it, and then if they wake up again and continue to make effort in this area, we could add it in again.
Øyvind Isaksen: It is for conservative judgment, but I think it is better to do like that than keep it when we do not get any new information. It is better remove it. For MLens, it has been quite an active time. We do promote it. The main reason for being there was to show that MLens. I feel that we get positive feedback, but so far, we are in the early stage. I think it is also fair to say that if you look at all the TLens and TWedge activity we have, which of course has higher potential, I think also we tend to put priority on those high volume cases and TWedge. We could have spent more time and effort on MLens, but I am not so sure it would have given us a lot of more progress. That is a fact. We spend less time on MLens than anything else, for sure.
Øyvind Isaksen: That is for sure. But good interest, and we can see other players who are launching this kind of cameras with AF, which shows that the market is there. Okay. Tomorrow, if you are in Capital Markets Day, we will also show you some of the products in this area. Healthcare. We continue to approach some of the, or as we say, we do not carry out, I would say, very proactive marketing in the healthcare, but we are reactive. For those cases we find interesting, we do respond. There is, on the Mini2P side, we now also have classified one new Mini 1P, with an existing customer who do a revision of the system to have Mini 1P. It is more simple, actually using TLenses in the visible spectra.
Øyvind Isaksen: That is actually now defined during the quarter as a new design-win, an existing customer with a revision, and we call it Mini 1P, one photon. That is good. Also, we have recently been involved in a quite interesting program where it is very, I would say, one of the leading players as the way we understand them in this kind of equipment, where they are considering implementing TLens into the new product family within call it endoscope. We have been there before, as you know. I have been saying that as long as the image sensor is around 2 mega, we do not see the big need. But talking to these guys, they are saying exactly what we have been predicting, that it seems like the megapixel is increasing and the need for AF will increase. Nothing short-term. The development cycle in the healthcare medical side is long.
Øyvind Isaksen: A lot of approval processes. There are actually now one which I am now talking about, and then there is even another one who is starting to consider using TLens for this kind of application. Compared to automotive, healthcare we could see. Today we are taking inbound course. We are not pushing very hard to find new opportunities. One day, I think that healthcare will be a potentially significant area for the company. We need to be laser-focused as of today. Nothing to say about automotive, to be honest. Maybe I should stop having a slide of it until it really starts to tick off. It is an interesting segment, but maybe more in a 10 years perspective. This is an updated table. Apologize, we did some mistake in the accounting last quarter, which was my bad.
Øyvind Isaksen: On the completed PoC, I think we counted wrongly. We moved, I think, to six new completed PoC when that was even more than was ongoing PoC. It was obviously a mistake. That has been corrected in this overview. Design win stays as is, 44. Design win is up with one, but if you measure today, up by two. The completed PoC, 158. Ongoing PoC is the same. Planning PoC is down from 48 to 36. Still an activity level which you can say it is relatively unhealthy for the company and the people there, but so far, we have been managing somehow. Øyvind Buø's graph is with us, and here we can see the trend since 2020 Q1, which was actually the first assignment. Joakim.
Joakim Bredahl: Yes.
Øyvind Isaksen: You are up.
Joakim Bredahl: Thank you, Øyvind. The quarter financials. We have a revenue in the quarter, which is significantly marked down from the previous two quarters, and it is in line with what we had the same quarter last year. If we dive a bit more behind the numbers, though, and compare it a bit to the last quarter, there is no NRE in this quarter. If you only look at the product sales, we are actually NOK 400,000 less this quarter than last quarter. It is not actually that different, but there is no NRE in this quarter. 50% of it comes from the AR/MR market, 30% from industrial market, and then 20% is from the healthcare. If we then also look at the gross margin, it is a gross margin of 33% if we include both the change in the obsolescence provision and the COGS.
Joakim Bredahl: Again, quite low margin compared to what we have reported previously. But if we only look at the product sales and the COGS, then it is actually 57% in this quarter. If you compare that to the same number, last quarter, it was 55%. It is more or less in line with that. I compare it a bit to the previous quarters now because we have had some quarters where we have had quite good revenue uptake. The change in obsolescence provision, though, that is due to age of the inventory. It is written down over time, which is a sort of accounting principle to take into account the risk that some of it might be too old to be accepted by the market. It is not a practical problem that we have encountered. Although we have been challenged on the age of our inventory, we have never had a problem with the age.
Joakim Bredahl: The EBITDA. If we look at the OpEx first, the OpEx is actually NOK 1 million less than it was in Q3 2025. Some of it is due to external development costs, which we had in that quarter, which we have not had in this quarter. Also, if we look behind a bit again, we see that the share option plan, the expenses related to the share option plans were higher in Q3 2025. This is due to the expense of the share option plan. It is higher in the beginning, and then it gets lower and lower as you go along. That was significantly higher. It is offset a bit by the fact that the employer's NICs is affected by changes in the share price. That is higher this quarter than in the same quarter last year.
Joakim Bredahl: If we adjust for that and look at the EBITDA ex share option expenses, we see that we actually have NOK 1.6 million higher OpEx than in Q3 2025. This is mainly related to a higher headcount, 56 people at the end of Q3 2026 compared to 48 the same period last year. This has resulted in us investing in people, investing in the organization to deliver on all the opportunities that Øyvind has been talking about. The balance sheet. The most notable numbers in the balance sheet are, as always, the cash, which is just south of NOK 225 million, and the inventory of NOK 45 million. We have written down the intangible assets to zero. That happened last quarter. We have not activated any development, but that number could, of course, change as we choose to activate or that we activate the development costs.
Joakim Bredahl: The inventory is affected by both COGS and the obsolescence provision that I talked about earlier, where we write it off over time, but also it is offset by. It increases in value a bit when we manufacture and we have finished goods. Then we add an element to the cost, so that increases it a bit. It is a bit of an up and down, which is described below here. Any other notable numbers on this is the current liabilities stand out a bit. That is mostly driven by a reserve for employer's NICs related to the share option program. That is why that is quite a bit higher than in the same quarter last year.
Joakim Bredahl: For the cash flow development, if we do the comparison between this quarter and the same quarter last year, it is quite a big difference because in Q3 2025, we had closed the subsequent offering, which was oversubscribed, and NOK 48 million net came into the company. But if we break it down into parts, we see that the operating activities were about the same level as at the same time last year, with some factors moving up and down within that number, particularly the working capital movements. The CapEx in the quarter, that was NOK 2.5 million. This is related to two things. It was more or less a 50/50 between investments into new test equipment and upgraded equipment for the headquarter labs in Tønsberg. Then we also had a cash inflow this quarter of NOK 5.8 million.
Joakim Bredahl: That is related to the exercise of share options by employees, which was larger than we have seen a few quarters, and that gave the company the NOK 5.8 million in cash in. That concludes the financial review. I will leave it to Øyvind for an outlook, and then we will come back with the Q&A.
Øyvind Isaksen: Yeah. Thank you, Joakim. Okay, one slide to go. I think it is difficult not to say that we feel that outlook is really positive. But also important to say, it is not going to be a walk in the park. There are many challenges. There are many things we need to address. Something will go well, something will go bad, I am sure. But I think the overall, I think the opportunity landscape we are sitting on is extremely positive. That is all about, of course, how market develops, how fast it comes, how well we execute, et cetera. But I think it is fair to say we believe and we feel we are sitting on some fantastic opportunities. Particularly, within AR/MR, where several of the, I would say the TLens related PoCs are now moving towards design-in and hopefully design-win.
Øyvind Isaksen: After years of investment, after years of convincing, after years of effort from employees, this has been really a tough journey. We are talking about not small companies in Karl Johan. We are talking about big companies internationally, which we need to convince. That has been an extreme sport, I would say. But now we are starting to see the benefit of having done that over so many years, and we started to see more real engagement and design-ins wins. So that we are extremely happy with. We are now two design-ins, and at least one of them we expect to release relatively shortly. The other one will be a little bit longer term, but I think it is fair to say that we strongly believe that in the mid of next year, we will also see something in that direction, in addition to others, we believe.
Øyvind Isaksen: AF seems to be on the roadmap for many players. I have said before, there will be glasses without AF, even without camera, and there will be glasses with AF with a different technology. We will not be alone. I think the biggest competitor we have is AF, sorry, cameras with no AF. After that, I am sure VCM will come. The way we read the market, the feedback we get, I am personally extremely active in the market side and talking to customers, I get the feeling that we are definitely high on that list, on many, I would say, important OEMs. TWedge. In my 35 years as a CEO, I have never seen a technology which has such a building, such an appetite. Of course, what will happen in this area is strongly related to AR glasses. I mean, the advanced AR glasses with display.
Øyvind Isaksen: If that happens, I think that the TWedge is very nicely positioned. As I said, there are a small handful of companies who all kind of engage with us. They are placing big POs for few samples at a very high price. They are engaging with us in NRE discussions. Tomorrow, in the Capital Markets Day, you will see one guy, Ajit Ninan, who will talk about the display and the difficulties in AR display. As I said, display has been moving from cinema to your nose, and those are very interesting challenges which follow so that the screen coming on your nose. Ajit Ninan will explain the challenges, and he may also talk about how TWedge can help. The volume for TWedge is strongly dependent on the success of AR glasses. We believe that AR glasses is the future. Not tomorrow, not even next year.
Øyvind Isaksen: There will be trends next year, which we will see, I assume. For the longer term, this is a potentially big market. As Joakim said, we are building the organization, and it is a balancing act between taking care of and spend less money so that the cash lasts longer and having the organization able to capitalize and deliver on the opportunities. That balance is extremely difficult. If something I maybe should have been criticized for, which could be many things, but one of them could be that we have been too slow. Too slow to build the organization. But we are where we are, and we have now, over the last couple of years, building the organization. It is extremely difficult to find the right people. Just yesterday, we interviewed two guys, not from Norway, but who is willing to move to Norway to join poLight.
Øyvind Isaksen: But finding these right people is so demanding. There is not a normal engineer we need. We need an engineer with experience in what we do. Finding those people is also difficult. It is not only that we have not tried, and we could not build faster, but also finding the right people is extremely difficult. But we will keep doing that. We have several recruitments in the process so that we can even be better engaging with and supporting customer, even better in doing innovation, even more efficient in developing new products, and also mature the strategic relationship to key players in the ecosystem. With those words, I would like you, Joakim, to join me for the Q&A.
Joakim Bredahl: Okay. We got some questions that came in by email.
Joakim Bredahl: We can start with those.
Joakim Bredahl: Slightly categorized, we will say, start with the AR TLens® related questions.
Joakim Bredahl: Regarding the consumer project that reached the design-in stage in Q2, can you say whether the customer has showcased their headsets at any public demonstrations?
Øyvind Isaksen: As far as we know, that has not happened. There could be some kind of private demos, I am sure, has been there, but not as far as we know, not public, no.
Joakim Bredahl: Last quarter, you mentioned several consumer projects that are maturing well, for which no stock exchange announcements have been made yet.
Joakim Bredahl: Could you provide more detail on the nature of these projects and perhaps indicate when we might see signs of them?
Øyvind Isaksen: Well, post-quarter, we now said that one of the PoC we classify as a design-in. Last quarter, that was a PoC, one of the further maturing PoC. That is now a design-in, and the PO for the units is to be the last qualification material. That means PO after that will likely be a mass production PO. Then there are other PoCs who is also, I would say, lining up to show something interesting development in the next 6 months, if I say that. But it is difficult, of course, to be precise, but I think most of the important PoCs are having progress. Now we have 2, and I expect more in the next 6 months. I expect more to come.
Joakim Bredahl: Good. The next question is referred to as the supporting OEM for Q Tech.
Joakim Bredahl: This relates back to the first press release
Joakim Bredahl: when we announced that Q Tech was coming in as a strategic investor.
Joakim Bredahl: If we aggregate the orders received to date
Joakim Bredahl: a significant number of TLenses.
Øyvind Isaksen: Visibility on this case will be next year. What will happen next year? In the best case, you will see a product in the market with our technology inside related to this case next year. This can slip, but this is one of the PoCs which is kind of moving towards design-in.
Joakim Bredahl: Good. Then we have some questions related to TWedge, or one question, actually.
Øyvind Isaksen: We have invested millions in this technology platform for many years and-
Joakim Bredahl: Could you provide an update on developments in the microscope sector?
Øyvind Isaksen: Yeah, I think we covered that.
Joakim Bredahl: Yeah.
Øyvind Isaksen: Yeah. Zuckerberg?
Joakim Bredahl: Then, yeah, I note that the Zuckerberg Foundation is providing significant support to Kavli's research field, specifically within the areas we often refer to as Mini2P domains. Is poLight involved in these types of collaborative areas, or is it exclusively within Kavli's remit to engage with such entities regarding financial support?
Øyvind Isaksen: Yeah. We knew about that, but it is nothing we are involved in. No.
Joakim Bredahl: Then, a bit of a long question. I see that poLight staff is expanding, which is very positive, a development that was previously signaled as necessary given the current growth phase.
Joakim Bredahl: I have a question regarding one of the new hires, which I find particularly interesting. Since you may not be at liberty to discuss specific individuals by name, I will approach the question from a different angle. You have to drive some slalom here. I noticed that Newmax, a subsidiary of Q Tech, has appointed a new president. This executive comes from Q Tech's senior leadership team.
Joakim Bredahl: However, I also see that this individual is listed as an employee of poLight.
Joakim Bredahl: Could you elaborate on the connection between poLight and Newmax?
Øyvind Isaksen: That is a pure business relationship. Some of the projects we have, some of the PoC we have is with Newmax lens stack. TLens, in many cases, they go inside the lens stack. Newmax has the capability of doing that kind of activity, in particular together with Q Tech. That is a pure business relationship. Of course, Q Tech owning 40 something percent of Newmax means that there is a connection between Q Tech and Newmax. Also Q Tech being a strategic investor in poLight means that, of course, this team is a quite close team. It is important for us to say and to state that even though this is the case, it does not mean that we do not treat the other lens maker camera modules players with the same priority. We do that.
Øyvind Isaksen: The thing is that it is not the camera module guy, it is not the lens maker who is deciding whether TLens will be in a product. It is basically the OEM. It is the OEM who decides which lens maker and which camera module player they would like to use. That is why we have to be, call it camera module lens maker neutral. We need to come across and we need to behave, and we need to show that we treat all these guys in the same way. Having said that, of course, we work closely with this team. When it comes to that person in specific, yes, that person in specific has been assigned as a general manager in Newmax.
Øyvind Isaksen: But we have decided that he will also be under our wings, so that he will kind of have a combined role, where he will, of course, cannot work 100% for us, but he will have a reduced position taking care of part of the projects he already is owning. At the same time, of course, it could be an opportunity to strengthen the cooperation between Newmax and poLight. So good luck to Jack. But as I said to Richard, he is still under my wings also. That was the first design-in which we talked about last quarter. What milestones seen from poLight? I think I dare to say that we are ready. We had some kind of technical challenges which we sorted out quarters ago. So now it is basically for them to finalize everything and to release it to the market and continue the ramp.
Øyvind Isaksen: They already built an inventory sufficient to support the market release, the initial coming months. Then when they release, they will look at the market feedback and then place the future POs. In a way, if you ask the common module guy here, he will say, "This is already in mass production." It is basically just that it is a strategic decision to when do they actually want to release it to the market. We believe that is relevant this year.
Joakim Bredahl: Without identifying the customer, good luck with that.
Øyvind Isaksen: Yeah.
Joakim Bredahl: Can you indicate the potential annual unit volume range if the current consumer AR/MR design-in, which is the one you were talking about now
Øyvind Isaksen: Yeah
Joakim Bredahl: reaches full commercial production?
Øyvind Isaksen: Yeah. We believe that this is a high-end product. We believe that we will typically be brought into this kind of cases where they see the high end, and they see the volume is manageable for today's poLight. We have a forecast number. That number is higher than we have seen from any product so far in poLight, but it is also lower than you can expect from a big consumer product. It is a high-end, niche, high-performance product, but for us, a significant opportunity. Was that a good answer?
Joakim Bredahl: That was a, yeah, it was an answer.
Øyvind Isaksen: Yeah, it was an answer.
Joakim Bredahl: Very diplomatic.
Øyvind Isaksen: Yes.
Joakim Bredahl: Is the new AR/MR design-in that we announced now in this report from the consumer OEM backing Q Tech?
Øyvind Isaksen: I was planning not to give you any hints on that, so I will pass that question.
Joakim Bredahl: Yeah. That's fine. I know it's at least asked.
Øyvind Isaksen: Yes.
Joakim Bredahl: Regarding TWedge, you aim to start the next development phase when sufficient customer commitment is secured. What specifically would count as sufficient? Is it just the NRE? Is that realistic for year-end? It seems like it's dragging out a bit compared to previous expectations.
Øyvind Isaksen: Yeah. I guess that's a fair statement. Yes, it is, because it's difficult. But the quarter it has progressed quite a bit. I don't know how many negotiations we have had. Many. One customer is getting quite close to something, but it's still to be done. It's not given that we can conclude in a positive way because of the complexity of these deals. Yeah, I think it's possible to have it done within this year. But I can't promise. It depends on how the customer react to our inflexibility, if I can say that. What was the next question on that one? What is sufficient, yeah? Sufficient, it could be a combination of things. It could be a cash contribution. The next phase we call EVT zero or EVT one, which is then the development phase before you start mass production development.
Øyvind Isaksen: That is a phase is a good year and with still some uncertainties. But that also is the phase where we will start capitalizing. Joakim mentioned that now we have all the intangible assets is right down to zero, so that will be a case when we start that program, is that then we will start naturally to capitalize. It could be a combination of cash contribution and commitment. Commitment for using their unit or buying number of TWedges given that we are successful in the program. It could be a combination or either/or. What we're discussing so far is mainly the cash contribution, because it's relatively costly development phase. Also, it's not so much of that they're wholly financing everything, but also that there is something which is significant, which proves their commitment.
Øyvind Isaksen: If it's nothing and they just ask us to do something, then it's easy not to take it into use. But if they're putting hard cash on the money and significant money on the table, then they are more committed. It's all about that. Let's see. We have some flexibility on how much but not on terms. The terms is the most important thing here. No exclusivity, no ownership. Those are for us fundamental. Because if we do that, we will reduce the potential market size for poLight in this product, and we cannot do that.
Joakim Bredahl: Then a question, I'm not 100% sure if I read it correctly, but it says, "Are any of the design-in OEMs involved expected to participate in an upcoming capital market, say, public presentation or similar event?" I'll just have to assume that the question is a poLight Capital Markets Day public presentation or a similar event.
Øyvind Isaksen: Or any of the design.
Joakim Bredahl: Yeah. Because of course, they could participate in their own event.
Øyvind Isaksen: I am a little bit uncertain also what that is, but, yeah, I think we need to get that clarified.
Joakim Bredahl: Then someone who wants to help with their gambling. What percentage probability would you assign to poLight securing at least one design-win before the end of 2026?
Øyvind Isaksen: I think it is likely. I think it is likely, but as I said, this is not in our control. I think it is likely.
Joakim Bredahl: Yeah. We are not putting a number on it. That is good. How about, what if we made a cheaper lens without autofocus for cheaper glasses, maybe also for endoscope?
Øyvind Isaksen: Yeah. We are back to fixed focus.
Øyvind Isaksen: This is not poLight. poLight offer autofocus, advanced display solutions, but for sure, that market is there, will be there, and is one of our main competitor. We are not the camera module supplier. The lenses which is used in the fixed-focus camera is a massive industry, big industry, and we are not there. We are in the tunable optics.
Joakim Bredahl: Here, there are several questions in one, but this is also the last one.
Joakim Bredahl: How about competition regarding TLens and TWedge? Is it increasing? Are there new players, copycats, incumbents improving their alternatives, or cutting prices?
Øyvind Isaksen: Okay. Can I take that first?
Joakim Bredahl: Yeah, take that first.
Øyvind Isaksen: Yeah. TLens, we haven't really seen new things. It's the liquid lens, the tunable optics liquid lens. They are there still. There's another company which is moving the sensor, which is not tunable optics, but it's also an alternative to the VCMs. Nothing new during the quarter. As I said, the main competition to TLens, I would say, is fixed focus in the AR/MR space. I'm sure also VCM will be a competition in that space. There is something about TLens which people like a lot. Low power consumption, compactness, and speed. This is something they like a lot, and that's why we are in the position where we are in. It's not without reason, it's exactly because of that. Many do not like the VCM in that kind of application.
Øyvind Isaksen: They love VCM for other things, and they use it a lot, but for AR/MR, we are high on that wanted list. What about the other tunable optics? I think for sure they will be there, but so far, we feel that, again, due to power consumption, compactness, we are, in many cases, preferred. The thing is that the other technologies, they do offer typically more aperture size, and they do offer more optical power. If that is the absolutely most important, then they will potentially displace a TLens application. We also, which you will learn tomorrow, are also working on concepts to move aperture size, bigger aperture size, but it comes with some drawbacks, easy cost. That was one. For TWedge, we haven't really seen so many competition. I think the major competition, they're probably not using evaluation technology.
Øyvind Isaksen: I know there are companies who have simpler solution, but speed and compactness is maybe an issue. If you look at all the guys we are working with, which is a small handful, we haven't heard any alternative than not using evaluation. TWedge or not.
Joakim Bredahl: Good.
Øyvind Isaksen: Which they don't like, by the way.
Joakim Bredahl: It has earlier been commented that the camera module makers have a strong power to control pricing and that it has been hard for a component supplier to get its fair share of added value. Is there any ambition to move into more of a camera module maker, and will this now be a possibility? There is also, will it then be poLight or Q Tech that would act as the camera module maker?
Øyvind Isaksen: I think this has a little bit different dynamic, I feel now. Because when we are negotiating a case, when we start selling, we start selling to the owner of the product, the glasses or the body or something, wherever. We sell to that OEM. And we are very often defined as a key component, meaning it is not really the camera module guy who puts the price on the TLens. It is actually a negotiation between us and the OEM. So that is how the dynamic is. The camera module guy is not in the kind of decision to say that you are going to negotiate the TLens price with us. No. That is happening with the OEM. Which is kind of good and bad, but that is how it works. And then they typically consign, they ask the camera module to purchase X TLenses, and the price is predefined.
Joakim Bredahl: So that dynamic has shifted a bit from what you.
Øyvind Isaksen: A little bit, but it has been that for quite a while, but that is typically the dynamic. For some other cases, but definitely for AR/MR. Definitely for AR/MR, it is like that. Been like that all the time. What was the other question? Camera. So, no, I do not see if we are going to do a camera module, go up in a camera module offering. I feel that most likely we will not do that, and if we do it will typically be in cooperation with a camera module supplier. That is a big industry, which is very mature. In the beginning, if we go a few years back, those guys, the camera module guys, were not interested in the AR/MR market because they were so busy with the smartphone.
Øyvind Isaksen: Back in the days, we consider actually to acquire a camera module company to be able to support OEMs with camera and not TLens®. But now, even the biggest camera module guys are all over that market, and they really want to invest in that market. They see that the camera module activity in the smartphone revenues dropping, say 10% every quarter. And they are really putting more and more focus on the AR/MR space. This is maybe one year old trend. For us now to think about doing something in the camera module level will be an impossible thing to do competing with those. But we are open to, in cooperation with camera module players, to develop kind of an off-the-shelf type camera solution, which includes TLens®, and we can do a co-investment so that we will be a strategic partner for cameras. That can happen.
Joakim Bredahl: Can we comment on this? As Q Tech considering the same approach with TWedge as with TLens®, or to assume that's a manufacturing line approach?
Øyvind Isaksen: Yeah. Q Tech is building together with us a manufacturing line for TLens®, which is still in the qualification process. And that is a line which we operate in the same way we operate the line in the Philippines. So it's not a Q Tech production line where they can do whatever they want. It's basically contract manufacturing between us and them, same way as we do in Philippines. Will they also be a candidate for making a TWedge? Yes. Any company who can assemble a TLens® will potentially be a candidate for assembling a TWedge.
Joakim Bredahl: And, oh, that question actually disappeared.
Øyvind Isaksen: Which one?
Joakim Bredahl: The rest of that question.
Øyvind Isaksen: Oh, yeah.
Joakim Bredahl: The last question was about recruitment.
Øyvind Isaksen: Okay.
Joakim Bredahl: Will we continue the rather moderate cash burn expansions in this large ramp-up, or will we then start recruiting even more people?
Øyvind Isaksen: No, we are in a phase where we recruit people, and we do it as fast as we can. As I said earlier today, it is really difficult to find the right people, and we rather use time to find the right people than rushing into the wrong people. That is how we do it. We are extremely picky and thorough when we recruit people. As my 35 years as a CEO, most difficult thing is to find the right people. That is really difficult to build a team. Today we have been, I would say, extremely successful in building a unique team, a very unique team, and we will continue to be picky. Of course, I think today we have ongoing recruitment for maybe between five and 10 positions more. We will continue, and we do it as fast as we can.
Øyvind Isaksen: This company, I do not envisage the company to be many hundred people. It is more like maybe 100, I do not know. We are fabless, so we do not need a lot of people. We need the specialists, and we need the people in the area where we have partners and customers. The main focus now is to ramp a little bit more up on the R&D side, people there. That will be a combination of people in Asia and headquarter. Also we need to have more resources. We call them FAEs, it is field application engineers, which are engineers, which is specialists and can sit on the customer lap and help them to integrate our technology, field application engineers. Those are the two areas I feel we need to ramp more.
Øyvind Isaksen: The operation side, you will learn from the COO, Marianne Sandal tomorrow, that has been a significant ramping in that area. I am not saying that we do not need more, but that has been ramping significantly the last few years. Okay.
Joakim Bredahl: Yeah, I think it is safe to say we either hire for skill or attitude, but we have to have both, too.
Øyvind Isaksen: Yeah.
Joakim Bredahl: Because the attitude and with the personality also needs to have a good fit to the position.
Øyvind Isaksen: Yeah. People coming into poLight, we are extremely thorough, and we want them to see poLight as a hobby, and we want them to see poLight as the family. So we are asking a lot, and we scare some. Some of them, we decide that this is not a good fit for me. If you are going to do what we want to do at poLight, which is achieving quite extraordinary results worldwide from a small high-tech company in Norway, if you are going to achieve that extraordinary achievement, you need extraordinary people who are willing to do extraordinary effort. poLight has to be part of your life, big part.
Joakim Bredahl: We have extra questions. That would be a fantastic way to end it.
Øyvind Isaksen: Okay.
Joakim Bredahl: But we got a clarification on the question we had earlier.
Øyvind Isaksen: Okay.
Joakim Bredahl: Is any of the OEMs currently defined as design-ins or PoC to participate in the poLight Capital Markets Day or any other joint public presentation in the future, as you know of?
Øyvind Isaksen: No, nobody would be in the Capital Markets Day. That is for sure. We always try to see if there is opportunity to do joint releases and joint press releases, but very often they do not like that. But we always try. Let us see what we can do with that.
Joakim Bredahl: Yeah. This is a question related to actual, to the main cameras on smartphones. Do we have a solution finished to deliver to the main cameras?
Øyvind Isaksen: No. For the main cameras on the smartphone, I would say smartphone has been for us, I wouldn't say not important because it can be important, but we feel that the sweet spot for our technology is in small compact cameras, which needs low focus and high speed, i.e., e.g. wearables. That's why we put all the efforts in making sure that we are early enough in that market, plus to pull our flag in that market and focus nearly everything on that. That means that we haven't really been pushing a lot on the smartphone side. Smartphone side is extremely difficult area. Yes, we had some successes, but we see that specifically on the main camera, the image sensor, 1 inch plus, the aperture size they need doesn't fit the small TLens.
Øyvind Isaksen: We have still something to play there potentially later, but as of today, we need to move where we believe we have the strongest fit, and that is in small wearable cameras. Selfie camera, though, we still believe that we have a very attractive solution. But when we are comparing a TLens camera for selfie to a VCM-based camera or no AF camera, there's a huge price difference. Because basically the VCMs are willing to sell for a few dollar cents, which we are not willing to sell for. I think the smartphone, I think we haven't left, but we're only addressing in coming course. We spend our energy on the wearables. Yeah?
Joakim Bredahl: Yeah. I don't know if we should comment on this last one.
Øyvind Isaksen: What is that? Okay. Yeah. You can read it, yeah.
Joakim Bredahl: Yeah. That question that we have returned to a couple of times about the Capital Markets Day, the previous question about the Capital Markets Day is about the Meta guy participating, Ajit Ninan that we are talking about.
Øyvind Isaksen: Oh, yeah.
Joakim Bredahl: It is a strong indicator that Meta is one of the big guys that we talk about, the design-win even perhaps.
Øyvind Isaksen: Yeah. Of course, Meta is a significant player in the market. When I say we have a relationship with many of the big guys, that means that Meta is obviously one of the candidates for that. More than that, I do not want to say. Yeah. I would not overread the fact that Ajit Ninan is there. He is bringing us maybe to a concluding remark because that was the last question.
Joakim Bredahl: That was the last question.
Øyvind Isaksen: Yeah. Tomorrow we have Capital Markets Day. Ajit Ninan is one of them who will give a speech. He is an extremely interesting guy, he is extremely capable. He has been having public speeches all over the place. He is award-winning guy for many things. He is an ex-Dolby guy, HDR. If you have time to listen to the Capital Markets Day and him, you really do that because it is some character and some extremely experienced guy. Of course, we have relationship to many people, and we try to. Ajit has left Meta, and when we see that, we of course, we try to grab him immediately to see whether he could advise us on a way into a successful TWedge release. So he is kind of advising us in a longer term on how to maneuver in this display world.
Øyvind Isaksen: Having this person to do that is of course very advantageous for us not being the system specialist. He is a system specialist in display. But it does not mean more than that. He is a character. Everybody would like to have him as an advisor, I am sure. We were lucky to kind of attract him. He will be there tomorrow, yeah.
Joakim Bredahl: As a speaker at the Capital Markets Day.
Øyvind Isaksen: As a speaker at the Capital Markets Day. A very good speaker. Capital Markets Day tomorrow is a big event for us. I said to somebody here that it is going to be a bit technical, so be aware. I have told people presenting to try to present it in a way that people can understand. But it is quite technical what we do. So we spend a lot of effort to make this happening. We have been successful in getting external people into it. So you see more than me and Joakim talking about poLight, but you see our external specialist, you will meet Q Tech, the head of the GM of the IoT, which we are kind of working with heavily. So you will have a snapshot of what they are doing and what they think about this and the market opportunities.
Øyvind Isaksen: You will see Jean Eloy, which is the founder of Yole, which is an industry expert, which will talk about the market in general. Then Arjun Mynampat, who is specialized in the space side. So these are three external speakers, which I think will give a very good introduction to the ecosystem we work in, the market we work in, the ecosystem we work in. I think it will be very educational for you guys to listen to that. Then it will be CTO, Pierre Craen, talking about the true development of this technology. It will be the VP Business Development, Jon Edwards, who will talk about more the market aspects and seen from internal. Marianne Sandal, Chief Operating Officer, who will talk about the operation and where we are and show a video from the operation activity. So I think it will be a good day.
Øyvind Isaksen: It will be a relatively long day, but hopefully worthwhile to listen to. It will be broadcasted, and it is possible to view offline. Also, of course, if you are there and you need to go after a certain time, that is also, of course, fine.
Joakim Bredahl: But there will also be demos.
Øyvind Isaksen: Yes, there will be demos. It was actually fully booked after two days, so certainly seems to be some good interest. Anyway, I run it off. Thanks a lot for all the questions. Thanks a lot for participating, and a lot of people here today, and thanks for you guys participating on the webcast. One more question from the audience. If so, we have a microphone, Grethe. Is there more question from the audience? If there exists more questions? Seems like not. See you tomorrow, and if not, see you next time, which is 24 February 2027. Have a great day. Thank you.
