Polight ASA
OSE:PLT
Polight ASA
poLight ASA engages in the distribution of camera tunable lens for mobile phones and industry applications ranging from medical to retail. The company is headquartered in Horten, Vestfold. The company went IPO on 2018-10-01. The firm uses technology TLens that replicates the lens of the human eye and enables production of wafer scale, active optical components based on shapeable polymers. The firm offers the camera module market considerable benefits, such as extremely fast focus, compact xy-dimension, no electromagnetic interference, no impact by gravity, low power consumption, and constant field of view. These features accommodate easy installation of single and multi-camera implementations, while achieving high optical quality. Polight has offices in Norway, Finland, China and France, and is represented in Korea, Taiwan and Japan.
Earnings Calls
In the latest earnings call, poLight reported revenue of NOK 3.8 million, a modest improvement, with a significant presence in AR/MR technologies. A strategic investment from Q Tech, promising a 30%+ shareholding, marks a turning point, enhancing credibility with potential customers. The AR/MR market shows encouraging PoC growth, moving from 12 to 16, while cash burn amounted to NOK 31 million. poLight aims for positive cash flow by 2026, supported by increased operational capacity and diverse market engagement. The focus remains on expanding into healthcare and automotive sectors, leveraging innovations such as lead-free TLens technology.
Good morning, everybody, and welcome to poLight's First Quarter Presentation. So my name is Oyvind Isaksen. I'm the CEO. Together with me today is also CFO, Joakim Bredahl; and Chair of the Board, Grethe Viksaas.
The agenda of today, key events, introduction to poLight, and also a short intro to the investment agreement signed post quarter. Of course, market review, financial review by the CFO and outlook statement and Q&A in the end.
Key events, existing machine vision/barcode customer launched 5 new products, so repeat or you can say repeat customer, existing customer, starting to using TLens in more products. It's, I would say, as the proof of the pudding is in the eating. So when customers expand the use of TLens, that's a very, very good sign. And also, it was backed by a mass production PO. This was announced March 24.
TWedge, high interest during the quarter, we actually received NOK 1.3 million worth of samples, evaluation kits from major OEMs. One of our Mini2p customer Transcend Vivoscope from China ordered new samples which have a different arc coating, which expands the useful wavelength spectrum worth EUR 32,000, and hopefully in future will trigger new demand and new revision of the product.
Specifically, AR/MR activity is continuing to be very positive. We kicked off a project to investigate the possibility of realizing a lead-free TLens. This is for some of the, I would say, big OEMs. They will try to force themselves to use components containing no lead. So this is an initiative to come up, prepare for that, a very interesting project. Hopefully, we will have samples in the end of the year, and potentially even sample new non-existing customer with that product.
Back in the high market activity, as you know, we participated at CES in Las Vegas and SPIE AR in San Francisco during January and post quarter, we announced a very, very important strategic news that we enter into a strategic investment agreement with Q Tech, Q Technology Group, and this is come out -- backed by a Tier 1 consumer electronic OEM in the U.S. I will come back to that.
So, yes, why we did this? Well, there is a perception in the markets, particularly between the big guys, that poLight, being small, not being profitable, having a single source supply chain, represent kind of a risk seen by some of the big guys. And there is one specific customer for which we have worked with for a long time, qualifying our technology, which show a high degree of interest in deploying our products into their products, but they saw this as a risk, and they had seen those risks before with other companies, and wanted to see that poLight was backed by a significant player in the ecosystem, which they also already had an existing relationship to, and also that this partner could be also capable of establishing a assembly test line of TLens. So there will be kind of different sources for the same product.
So this has been ongoing as a discussion for a long time, and finally, due to this backing from this customer, we managed to agree on an investment agreement. This is an extremely important milestone for the company. Now we are helped by one of the major players in the camera module world to deploy our technology.
We have established trust between customers or among customers, both when it comes to our financial position and also our capability and robustness in the supply chain. So back to some other details in the deal. So they will become around 30% plus shareholder issuing 63 million plus shares. So that will be after the -- if accepted by the Shareholder Meeting on the 21st of May, they will be the biggest shareholder in poLight.
They will also have the right to nominate 2 Board members, but 2 of the Board members also have to be independent. The Article of Association will be updated with these aspects. There are many, I would say, regulation in the investment agreement. One of them is related to, if there is a voluntary offer, there are certain rules which need to be followed. The Independent Directors will be controlling that process in the Board, and they either have to do something similar offer a similar deal, or sell their shares.
As I said, this is up to the shareholder meeting to finally decide, and that will be held 21st of May in Tonsberg. It's important to say that both Investinor and LHH, which are the 2 biggest shareholder, have agreed already. We will also subject to the -- on the same terms.
A statement from the Chairman Roy Ho, with a backing from a top-tier US consumer electronic customer, we are confident that this alliance will bring cutting-edge solution to the market, addressing key industry challenges. I think it's important to stress that this is a company, very innovative company, very well respected throughout, I would say, the whole ecosystem.
When they take such investment and such a position in poLight, that is an extremely strong validation, an extremely strong validation. And we have already seen the effect during the Easter, which is a no event in Asia. There was a lot of activity, joint activity, where we were able to kind of team up with the meetings, strategic meetings Q Tech have arranged and in many different market segments, and shows again that this kind of fact is going to change the game for poLight. We will be more trusted in all aspects, both financially and from an operational perspective.
Important to say that the all the existing supply chain we have established with our key strategic partner in our supply chain will continue to be emphasized and there will be activity in our existing supply chain, for sure.
Okay, so I'm coming a little bit back to it when it comes to the -- when I'm talking about the different market segments. So poLight is definitely positioned for growth. As you know, we have different focus areas, Consumer and Enterprise. Consumer being AR/MR, wearables, any kind of smartphone, webcam, laptop activity.
We have also in Industrial activity, barcode, Enterprise, AR/MR, machine vision and other things. So those are the kind of the 2 main legs we have, Consumer and Enterprise. If you're going to say something quick about our technology, it's extremely fast. It's unique in that aspect. Can realize very, very compact solutions, no breathing, so it's basically replicating human eye, very smooth, nice auto focusing function, and super important for all wearables, extremely low power consumption. There is nothing close to what we can achieve on that. We have been around for quite some time. Headquarter in Norway, offices and employees is Finland, France, U.K., U.S., China, Taiwan, Japan and the Philippines, and focusing heavily and will continue to do so in growing our IP situation.
Yes, I already talked about this briefly, but for those who are new, basically poLight's technology platform, have so far realized one product, and that is TLens, tunable lens and AS actuator. And what we do is replicating the function of the human eye. If you look at the left side, top left side, you see a membrane which is bending by putting voltage on it. That bending is shaping a lens material we call polymer underneath, changing the shape of that lens, changing the optical power in that lens. This is exactly what's happening in your human eye. This replaces moving lenses and VCM. And as I said, there are many advantages among them speed, no moving lenses, power consumption, because no moving lenses, etc.
From a supply chain perspective, we are fabless, more or less. We do, though, produce the polymer at headquarter, which is the lens material. We use STMicro for wafer supply, which is the eye muscles or the actuator you can say.
We ship those components to our partner in the Philippines today and also later that will be the case for Q Tech, and they assemble and test the TLens, either without package or with package. And then we deliver or sell to camera module partners, which then is selling their solutions to different OEMs.
As I mentioned in the beginning, the -- I would say high momentum markets are the AR/MR for sure, Consumer in general, and Industrial being kind of machine vision and more, should I say, barcode reading for supply chain purposes. Then we have some kind of emerging use cases, which we are less focusing on, but keeping in mind, which is related to the Automotive and also Healthcare.
So there's no doubt that the fact that we now have established the sign wins in all strategic market segments is helping us a lot. And of course, it's an element why Q Tech is signing this investment agreement because they see the potential in the technology. We have proven that potential in the technology.
Let me just -- there is some -- we are back? Sorry, there were some technical problems. Yeah. So that customer platform, which we have developed, is an important element. We have proven that we can. We have proven that it works. We have proven that we get repeat orders. This is super important for, of course, Q Tech and for us and for our new customers.
Let's go a little bit into the details. On the Consumer side, I think the most, I would say, exciting activity at the moment is the AR/MR. But there are extremely interesting and encouraging activity in the laptop and the webcam market. There seems to be, I mentioned it before, there seems to be a trend that they would, step by step, need an AF. And here we could be potentially very well-placed.
It's part of the AR/MR market, may be some years in front of us. Laptop and webcams is the market today. As I said, the advanced AR glasses, they are still in the early days, and there are technology which needs to be developed before this will scale in high volumes in Consumer side. It will happen, but it is not there today, as we know,
But smart glasses like the Ray-Bans, the -- earlier when I was at the CES, all the Chinese major OEMs are now having plans for developing smart glasses, and that is actually market which has quite quickly become very interesting. Smart glasses meaning they typically don't have very fancy display like an AR glass, but you do have a camera, and they do have sound, a microphone, and I think more and more people will start actually using these glasses.
Also, the Mixed Reality headsets are already there, shipping quite nice volumes, so in the AR/MR space, even though the most advanced AR glasses is some, some year ahead of us, they are already starting to develop a very interesting market and call it AI glasses or smart glasses and the MR headsets.
As I said at CES, it was very, very evident this year that this is a market which is in the process of being very, very visible. Yes, many of these products is using fixed focus. The way we understand the world through the communication with our partners and the ecosystem in general, is that this will need an AR solution sooner or later, for different reasons, from physics, from pure optics, but also for different driven by AI use cases.
And this is where we have put a boat or kind of foot into that market. Say, this is poLight, this is the sweet spot of the poLight technology and claiming that space. And that's what we've done, and that's what we continue doing. Also, I'm sure, a reason for why Q Tech would like to invest in poLight.
I would say that many of the PoCs in the Consumer side are progressing nicely. And I would say, we see now that more of the PoCs is about discussing real projects. So moving from evaluating our technology to say, "Oh yes, it works, yes, we like it," and discussing product intersection, where does it fit, which release, when.
Having Q Tech as a partner, an investor, I would say, is an extremely strong strength in positioning us in this market segment also, of course. And I would also say, as I said, during the couple of quarters now a laptop webcam is picking up. It's early to say.
I'm not saying that we are close to any of the sign-ins, but we are definitely close to many, many important PoCs. And I also would like to emphasize after this announcement with the investment agreement with Q Tech, we have already seen, as I said, a lot of interaction, new, I would say, re-engagement with old friends, where they want to re-look at our technology products due to the fact that they already have a business relationship to Q Tech and find it more, what should I say, trustworthy and secure to really consider poLight. This also actually the last week have triggered reengagement even with smartphone players.
We know that poLight's TLens is a good fit for the selfie camera. We also know that about TLens is less of a good fit as of today on the back camera due to the size. We also know that the cost of the selfie camera using TLens due to the add-in design is significantly higher than a camera module with VCM.
But of course, until now, we have been working and selling our technology into that market together with any camera module player and we will continue to do that. But very many of the camera module players, they have their own AF actuator. And of course, they will prefer, as a company, to use their own technology.
Q Tech becoming an investor in poLight would like poLight to be successful. And that's why they will take another look at that and how to price and how to communicate this solution to the market. Interesting days. Yes, you can see the numbers. So here, you see the Consumer status, including the AR/MR. You can see those 18 PoCs, 16 is AR/MR Consumer. There are 22 planning, 15 is AR/MR Consumer. And you can see a lot of laptop camera, webcam application.
Now I'm taking AR/MRS in general, which includes both the Enterprise and the Consumer, you can say. As I said, there's no doubt that we have become a -- yes, with the references we have and with the ongoing activity of the customer we have, we have built a very strong position.
TLens is being tested by so many, as you can see from the Consumer part, but also on the AR/MR side. And the pipeline is growing every quarter.
TWedge, it's a very interesting situation. Everybody we talk to, I would say, is, in the end of the day, showing high interest in TWedge. As you know, TWedge is early days for us. It is a technology platform, which we have developed. But as an example, only this quarter or the first quarter, we had income of NOK 1.3 million in selling eval kit, and that's only 2 customers. So it's a significant contribution to the development program. Also, we feel that we're starting to understand more and more the need and the specification. We're also starting to understand more and more that the TWedge over and above the initial target to enhance the resolution, remember vobulation, pixel shifting, taking a low-resolution display into a higher resolution display, which is the kind of the starting point of TWedge. But there are other applications.
As one example, motion blur, which we can compensate on system level. So we are starting now to see that there is actually a possibility to define a product, which we think will fit kind of, say, 80%, 90% of the market need. And that means that we may be in a position to go to the Board and ask for a concrete product development program. But we will still like to see a kind of commitment from the market, from the customer before we trigger that button.
So if you look at the numbers, the AR/MR PoC increased from 16 from 12. And as I said, a very, very solid activity in the AR/MR space and including the TWedge. Yes. Here you can see, again, this is AR/MR, including Enterprise, including Consumer. The icon with the C on is the Consumer side, basically, yes, illustrating the strong fundament we are building.
Barcode Industrial, as I said many, many, many times, it will take time to develop this market. The 5 new products released by an existing customer, 5 of those -- sorry, 2 of those, 5 -- sorry, 3 of those 5 will be new products, 2 will kind of replace existing products.
And as I said, an existing customer expanding the use of TLens is a very, very good sign, of course. An interesting activity we have kicked off the last couple of quarters is -- we have seen -- during our communication with the market, we have seen a need for a standardized product based on a certain image sensor and what they call M12 design, which we feel we can actually offer together with lens partner a standard solution, an off-the-shelf solution, which minimize the pain of taking TLens into the cameras.
And we are now in the finalization of defining that program together with this lens partner. And we think we can be able to launch this together with a lens partner as a standard product, not TLens but actually a lens stack with a certain defined interface, we call M12. And we think that this can be a very, very interesting business case and actually significantly increased revenue in this market segment.
We always said for many years, if we do things right in this market segment, it can be a significant contributor to the gross margin in the company. And these kind of initiatives is something we do to accelerate that to happen. Yes, here you can see the illustration, strong pipeline. We expect more to come in the barcode machine vision side before we close this year for sure.
Healthcare, not so many new things in the Healthcare side, even though we -- as I said, in the Mini2p, we did receive an NRE PO, which is developing a new coating, which may lead to a revision of the Mini2p scope. We do also engage in some commercial endoscope cases. As I said before, due to the low-resolution image sensor using, we don't see a strong need for the AF. But we do believe that, that will come one day. And that's why we keep contact with this market segment and may also be a trigger for a smaller TLens, not a bigger TLens, but a smaller TLens.
And that smaller TLens may also have application in future AR/MR glasses where there will be many variants and where the kind of mechanical ID design will be extremely important, some compactness being small, the camera not being in a way visible will also maybe trigger a need for a smaller TLens over time, which will be having synergy to other market segments such as endoscopes.
Yes, Automotive, nothing new. As I said, the most important thing with Automotive at the moment is that whatever we do on the technology platform side, we need to keep this market in mind because there likely will be a need. We feel that we are wanted due to no moving parts, as an example, for athermalization aspects.
But the market is not there today and also we need to have a bigger TLens to fit that market, which is already in process. But from a customer engagement, it's -- I would say, it's on the monitoring stage. We strongly feel that we have a very promising pipeline. And this is what is motivating us every day to nurse and to kind of mature these cases all the way into design-win. Yes, it takes time. But I think, again, I will come back to the investment agreement with Q Tech. There is a reason. And that reason is in Roy's statement, we strongly believe that there are so many very good fit applications for TLens and this table shows exactly that.
Yes, step-by-step, improving in activity, increasing activity, both on PoC, planning PoC and completed PoC. And financial review by my great CFO, Joakim.
Thank you. Yes. So we have -- if we do start with the revenues, we have revenues in the quarter of NOK 3.8 million, which is an improvement from the previous quarters, also improvement from the first quarter of 2024, but still not any breakthrough numbers.
Of this revenue, about 50% is in the AR/MR segment and the remaining 50% is divided between Industrial and medical, where Industrial represents most of it. If you look at the EBITDA, we have a loss of NOK 25 million, which is a higher loss than in the corresponding quarter of 2024.
This is mainly due to 2 reasons. And if we want to look at what the discrepancies there, we have to sort of have to look at the first quarter of 2024 when we had a large reverse of national insurance contribution from the employer's National Insurance Contribution or NICs that we pay on the share options, so we have to reserve.
That was NOK 5.8 million in Q1 2024, which was reversed, meaning if you go in and look at the administrative expenses on Q1 2024, you can see they were a -- is a negative cost. So it was actually -- that reversal took over all the cost.
In addition, we had an increased provision of inventory obsolescence of NOK 1.9 million, which follows our methodical approach to the inventory. And speaking of inventory, we can look over at the balance sheet. During the quarter or at the end of the quarter, the inventory stood at NOK 59.9 million, so just south of NOK 60 million compared to NOK 62 million at the year-end '24. And the decrease represents both the change in the provision of inventory obsolescence, but also COGS that relates back to the sales in the quarter.
The cash position was at NOK 136 million roughly, which compares to NOK 167 million at the year-end. And if we now then look at the cash burn for the quarter. We have a net decrease in cash of NOK 31 million in the quarter. And this compares to NOK 19.6 million in the corresponding quarter last year, but also NOK 13 million in Q4 '24. So we thought it would be prudent to bring up some of the things that influenced this since this is a very bouncy number. And obviously, this is sort of a snapshot of where we are at the end of the quarter.
So if we look at the working capital increase that was stood at the 31st of March, you have -- this is a mix of the receivables and the payables. So we have an increase in receivables, which means that we had invoiced quite a lot that we hadn't converted into cash yet. Quite a lot of the revenue from Q1 was invoiced at the end of the quarter.
We had decreased payables of NOK 2.7 million, which relates to us basically having paid off lots of invoices in the quarter. This is a bit random when that date hits. And then also, we have -- we previously mentioned a reserve of legal expenses related to an infringement claim against 2 of our customers.
This provision was used. So we received invoices, we paid them, and that was NOK 3.8 million during Q1. So there you have much of the difference in the quarter.
Yes, that's the cash flow analysis, and I'll refer back to you, Oyvind.
Thank you, Joakim. Okay. Then one slide and then a Q&A session. So given the market position poLight is in, the efforts we carry out to strengthen our presence in other market segments. We mentioned about Automotive and the Healthcare, which we even have only been scratching on the surface.
Also keeping in mind all the initiatives we do to improve and the future-proofing of our offering, our products, our solutions and developing the organization in general, and I should say, a strategic investment with Q Tech, it is really, for me evident that this company has a lot of opportunity in front of us.
And we feel that this is becoming more and more visible quarter-by-quarter. I think it's important also to say that one of the most important thing, not the only important thing, but one of the most important thing to -- for this to capitalize and to be real is, of course, the development of the AR/MR market. And that's why it's extremely encouraging to see how the smart glass business is picking up significantly.
Not only a few players, but all major OEMs, I'm sure, will enter this market. Yes, the advanced AR glasses is not a consumer kind of big volumes today. That will also happen, but there is actually AI glasses or smart glasses, which is picking up significantly. Yes, they are using fixed focus today. We cannot understand that, that will continue.
So we have, for many years, been working to strengthen our kind of ability to deploy our solution in different customer and different market segments. We have very actively for many, many years, worked to kind of establish -- try to establish a strategic, very close relationship with major players, both from the OEM side and the module integrator side.
poLight is a small company in this huge ecosystem. We have limited resources. So to having this strategic relationship, both on the OEM side and on the module integrator side is super important. And we have said together with the Board, this has been the case for many years. And that's why we are so thrilled and happy that we finally managed to find this, should I say, OEM/module integrator strategic partnership, which led to the signing of the investment agreement with Q Tech.
This is a start of a new era of poLight. And I'm really, really looking forward to see how this can build stronger shareholder values and a stronger company. Thank you.
Joakim, do you want to join me?
Yes.
Is there some questions?
We have received some questions.
Okay.
And we can try to categorize them a bit. And there are some questions about the -- we had a Q&A about the strategic investment agreement, which is available on our website, but we've had some new questions now also.
First one, can you say something about Q Tech and what it really means that they are backed by a top-tier U.S. customer?
Yes, I feel that we have answered to that during the presentation, but very quickly, that top-tier customer liked our technology. They have spent a lot of money and time to qualify our technology. They wanted to bring it into product but saw a risk. A small company, not profitable, single source, and that's why they said if you 2 guys can team up, Oyvind and Roy, Q Tech and poLight, that will help us a lot to take the right decision. That's what we mean by backing. And they are already showing willingness to move on with our products together with Q Tech.
Very good. And I think you also -- you mentioned this, you're right that this transaction has the potential to significantly accelerate scaling. Could you explain more specifically what you put into that?
Yes. What I mean is that 2 things. One thing is that the market will, after this build feel more trust, feel more safe, meaning there will be more customers wanting to use us. And secondly, when we -- today, we have one operational assembly line, and that can increase -- we can increase capacity there, but we can also increase capacity, of course, at the Q Tech. So there is a dual source capability being built. So more customers want to use us, more power to scale production.
And also production in 2 different countries, right, which can be quite important these days.
Correct, correct.
Now Q Tech is very innovative and forward-looking camera module manufacturer according to Chinese media. What does this mean for the collaboration with poLight? Could there be advantages or disadvantages?
I would say that my experience -- my relationship to Q Tech is not new. That has been around for quite a few years, a handful of years. We even did an add-on actually PoC with Q Tech. And I personally know the chairman and the main shareholder, Roy. And they are -- I would say they are a little bit different compared to many other, very much focused on execution, supply, we could see in Q Tech, there is a lot of willingness to be innovative, to be entrepreneurial, to build new businesses.
And that's why they also would like to invest in poLight because they see this as a strategic move and an important element in the ecosystem going forward. So I think this is -- this innovation strength, which I feel entrepreneurship mentality, which they show, I think is not typical what I've seen with other camera module players. And I think that could be a very unique match with poLight.
In addition to that, they definitely know how to scale production. And they are definitely having a lot of major customer, which they are actually today supplying components to our systems too. So good match.
How can it be that they, meaning Q Tech, making a strategic investment in poLight backed by a U.S. customer when they still have many large customers at home in China?
Of course, it's a global company. And also today, the AR/MR space so far has been very much driven from the innovation side from the U.S. Yes, we see now that Chinese are coming, and they will come. But so far, the innovation has been concentrated in the U.S., and that's why it's important for Q Tech to be there.
poLight works with all major OEMs in AR. This is a statement and is a potential candidate for all those that can come up with autofocus. How can the collaboration with Q Tech affect poLight's role towards all the other major OEMs when Q Tech has backing from this one top-tier OEM?
So of course, after the investment announcement, we already have been in interaction with other OEMs. And it's only positive feedback. It's only positive feedback. They see this as a big step in the direction of having more trust in what we can execute.
When will Q Tech's dedicated TLens assembly line be ready?
Yes, that will -- they will do the first run in mid this year and maybe in the end of Q3, there should be some qualification runs this year.
Is Q Tech working towards more verticals where TLens may be irrelevant?
Yes. They are, of course, very heavy in the consumer side, and we already have a lot of joint meetings with their customers. So consumer as such, being drones, being smartphones, being wearables, so consumer. But then also automotive, as an example, they definitely also show interest in healthcare. So I think they are -- they would go for -- they will follow the market where the market wants to see new technology and compact cameras and solutions.
When Q Tech plus poLight was announced, did you get attention from customers? And what type of customers possibly might find this collaboration as a derisk for using technology from poLight?
I think we answered that during the presentation.
Yes, we did actually. Then a couple of questions more related to the transaction and their shareholding. Q Tech while going forward, likely have more than 1/3 of the votes present on general meetings and can block key decisions like capital raises. Which steps have poLight done to identify and mitigate potential conflicts of interest between Q Tech being a camera module maker and the rest of the shareholders?
Yes. As mentioned in the press release and also mentioned during this presentation that there are mechanism in the investment agreement. As an example, what I mentioned with this, if there's a voluntary offer, there are mechanism through the Independent Directors that they will decide or recommend Q Tech will need to approve or they need to come with a competing offer. So I would say the investment agreement in that sense is well written and trying to protect as good as possible all shareholders.
With Q Tech getting to appoint Board members, will they then have access to trade secrets like the polymer recipe?
To be honest, only very few people inside poLight and not even me have access to that recipe.
Then a bit back to the production line. Then what will be the monthly capacity in the Q Tech production line?
We -- at the moment, we take, I would say, replicate what we can do today at Tong Hsing, but of course, that can easily be scaled and customer is asking us for a plan and how much it will take of time and cost to scale. So that is, I would say, scalable.
With the capital injection from Q Tech and then subsequently current shareholders, will poLight have enough runway to become cash flow positive?
Good for you. Good for me. Well, obviously, given that the Annual General Meeting supports the investment agreement and that the subsequent offering is fully subscribed for, we will have significant cash, which means that we will also have increased our runway quite heavily.
And we can see no immediate need then for capital raises. And there's a scenario where this could be sufficient. But also, there might be other strategic events happening that could lead to capital raises in the future. But then that typically would be communicated very clearly to the market.
And then there's a final question about Q Tech, which may be when we can lead into. Can you say something about QTech being the camera module maker player that in the second half of '24 was on the road to several smartphone customers with sales work to promote TLens? And then regardless of whether it was Q Tech or another camera module maker, can you say something about how this work continues in the future?
Yes. So no, it was not. That was another camera module supplier. And I think it's important to emphasize, we will continue to have cooperation with all the camera module supplier. Remember, it is basically the -- very often the OEM who is deciding which camera module supplier they would like to have in their products. And we will, of course, support all of them continue as we have done so far.
What is new now is that as I said in my -- during my presentation, sometimes many camera module suppliers, they are starting to get more and more vertically integrated. What do I mean by that? Meaning that they don't only assemble a camera module, but they also actually own components, the lens stack, they own the VCM, the actuator.
So being vertically integrated, they can -- they have a solution themselves. And this is -- why this has happened is because that the margin on only being a contract manufacturer assembly house is very squeezed. So they need to increase the value add, and that's why they have moved like that. And so most of the players in the system have that.
That means that when they are in interaction with the OEMs, those come -- they will always try to, of course, have solution, which is taking as much as of the components they have. Then -- so then the OEMs say, yes, but I would like to use poLight. Yes, okay, we can use poLight, but are you sure you don't want my inner focus VCM because that's also good. No, no, I would like to have the poLight -- okay.
But there will always be this kind of dancing. Whereas Q Tech then having an invested interest in poLight and poLight being successful, of course, they will be more -- of course, they also would like to, of course, use their own products, but they will be more kind of positive to make that happen anyway, if you understand what I mean. So I think this is a very, very important dynamic.
And then a few more questions about CMMs. How is the progression to add-in modules from camera module makers? Do many have the modules ready and possibly for which verticals?
Yes. I would say that step-by-step through the push from OEMs, more and more people will start this or camera module will start this activity. And we talked about it before, so a small handful maybe today. But Q Tech, as an example, of course, they would like to have that offering. But others also, this is coming from push from the OEM.
Then a long question. I think you've partly answered this in the presentation, but we'll go through it. The concept has been developed for a new small package where TLens in the package will be more similar in shape to a plastic lens. You mentioned that slide in TLens is for simplified construction of camera modules. Can you explain why this is a simplification for camera module manufacturers and what this could potentially mean for time to market?
Yes, it's a good and long question. Yes. So you remember, we talked about the add-in designs in the beginning. We said that it is a cost penalty. Why is it a cost penalty? Because the process of making an add-in camera module with TLens is quite complex as of today. Why? Because there are 2 lens groups, 1 and 2. And there is a TLens in between. And this has to be very, very accurately aligned.
So active alignment, somebody call it. That active alignment process is complex, relatively few have it, and they price it quite high. That trigger us with an initiative to try to make a design, a reference design and with TLens lens stack, where you didn't need to use active alignment to reduce costs. So that was the basis for that activity. And we did, and we have solutions, and we have already started some activity on that with some camera module guys.
But so far, we see that the slide in or these kind of non-active alignment concepts will not fit all use cases, where the optical design is extremely compact, high resolution, then active alignment is needed. But for many other applications, a slide in concept can be possible.
And then we have some questions about verticals. But first, we have some more general questions and one from the Annual Report. poLight's Annual Report mentions that the useful lives for the original patents are deemed to be 7 years from now on -- from now. After this period, is poLight technology free for others to use? And how easy is it for them to develop products using it?
Good question. So we very actively try to protect our IP, of course. The original TLens patent has, say, whatever, 1 or 2 year left. But then there is a kind of patents, which is supporting the TLens as we build it today, could be related to the polymer, could be related to the back window, which if you don't have access to those elements or that IP, that TLens you build and copy after 2 years will not work or it will be significantly less performance.
So we try all the time as we innovate new things and improvements, we always add that to the IP. Should we do IP, should we do patents, should we publish to have freedom to operate. And that's why we effectively are prolonging the lifetime of the protection.
How is it that high market activity is communicated several quarters, but a big PO or purchase order is still missing? How are poLight benefiting in terms of cash that market in general -- the market in general is maturing? And are you still expecting positive cash flow in 2026?
I think we have answered to this question many times. We have always said that the market we see and the big revenue jump is some years ahead of us. This has been communicated again and again and again. Of course, the relationship to Q Tech could change things. But I would say that if you look at, say, the AR/MR market, I think it's a fair statement still to say what we said before.
And then there's a couple of questions related to the -- I guess this is from the remuneration report. Given the 2024 reports, there's 100% bonus linked to the sale of poLight. What was the strategic basis for this? Can you comment on any related sale process and potential buyer interest?
I would say, generally speaking, the Board defines a bonus program, which have different triggers for different people and for different events happening. This is any event which may happen, and then it regulates what will happen if that happens, what will be the bonus trigger. So the Board is defining bonus triggers, which is kind of supporting this important strategic development of the company and to create shareholder value.
Those triggers are different from different events, triggers like, say, if we achieve a design win in Consumer AR/MR or smartphone, that will trigger some bonus for all the company's employees, different value for different people. But this is also an extremely important strategic event for the company and for the shareholders. So that's why bonus program is used by the Board to motivate an extraordinary effort from employees to achieve important strategic milestones.
We have another question about the bonus. There's another element of it, but I guess it's more or less the same answer to it. How is it that there is a bonus for capital raise for top employees?
Well, there is -- at the moment, there is one person, and that's me who had that as a trigger. And this is because if this company is not financed, we cannot realize shareholder values.
Then we can move on to a question about TWedge. How is the progress in finding partners for developing TWedge into a product?
Yes. I would say, so far, we are focusing on the customer side, the OEM side. So we try to build appetite. And of course, we are also working on the supply chain. So say, if we're going to start a kick off a real product development of TWedge, how will we do it? How would we manufacture a TLens -- sorry, a TWedge?
So there are core components in the TWedge. There are glasses, which we are used to use also in TLens. So we have already kind of somehow established supply chain there. There is [ bulk ] piezo which is new. We don't use bulk piezo in TLens. So there, we have to develop the supply chain, and we do that through our research program.
The operation part of the company will step-by-step be more involved to kind of establish the commercial relationship with potential bulk piezo suppliers in the sample. And then TWedge will be a polymer already existing, basically the same polymer as in TLens.
So then is the assembly part. The MEMS wafer as the current structure of TWedge today, no need. But there will be more assembly steps. Assembly partner, we already have with Tong Hsing in the Philippines. So they will see TWedge as a very interesting product because there's more assembly steps, and they live off assembly steps. And there's nothing ultra fancy or difficult in those assembly steps over and above what they already do. And of course, there will be other players, e.g. Q Tech, who also can do these things. So I really don't see this as an issue. Yes, it has to be done. Yes, it has to be developed and qualified. I think the most important thing now is to nail the customers to define the product and get the commitment. That is the important thing. I'm sure my team, which is super good, will manage to do the manufacturing.
Good. We have then a few questions about verticals, and we're -- at 10:00, we might want to have some of them.
Okay.
How do you feel that the development and interest in TLens and AR/MR glasses is from China?
We see more and more. I said it in the presentation. It's -- I had a meeting at CES with one of the big OEMs in China, and they told me, you know Oyvind, you will see that every major OEM in China will launch smart glasses.
A new design-in was added to AR in Q4. What progression do you see in this project in the last quarter?
They seem to be very committed. It's an Enterprise case, a very interesting one. They are -- that company doing the development is backed by a significant player, very interesting case. As far as I know, it's progressing well.
We have one question about the smartphone vertical, and I'm sure this can be answered pretty quickly. Can you say something about the smartphone customers who were interested in TLens a couple of years ago? Are any of them still thinking about poLight's TLens in autofocus, passive athermalization or other areas of use?
Yes. Yes, I would say so even though I have quarter-by-quarter now, I've been saying that we don't see any major activity in the smartphone side. And then we have -- we initiated some important activities to place us in a better position in the smartphone area. But I would say, as I said in the presentation, after we announced this investment agreement, there are already players in that area, which is now want to restart interaction with us.
I think that's again just again indicates the strategic importantness of this agreement. I'm not saying that it's going to happen tomorrow, but I'm saying that the trust in our technology, the trust in our capability is significantly improved, increased throughout this investment also in the smartphone side.
Then one for the medical vertical. How is it with the Mini2p players and assessment of TLens? Are any of them thinking about TLens in more applications?
There is one company, which is talking about that, but there's nothing new to report. They are, and they have mentioned that they would like to use our technology in all their products, whatever that means. And that's also related to the company who placed the PO on a new coating of TLens as mentioned in key events.
Then we have a barcode question. Do you have projects in this vertical that are moving towards products that are closer to the customer, i.e., products with higher volume potential? Can you say something about what it takes to get into those products?
Yes, if I only knew. I think that it seems like many of these high-volume cases, they -- you've seen them when you go to IKEA and [ Coup ] and shops like that. They like the user to do try again and try again and try again instead of having these equipment. So there seems to be a very much a fixed focus market for now.
But if you go one step kind of down their supply chain, these logistic hubs, there we will fight the VCM. There we will fight the VCM. So I feel that when we are able to scale our production in the Consumer side, we will be cost optimized, and we can be a better competitor in that area.
And also, I think sometimes we are limited in optical power and aperture size. So when we're working on this new technology that also will help. But it's definitely a part of something we're trying. As an example, we are trying to say, okay, yes, but we can sell you 2 TLenses, you can stack them to get more optical power and we give you a nice price. So we are trying actively to maneuver into that part of the -- that section of the market, definitely.
And I think also, it's all about also getting to know that market, getting the players to know us and to have trust on us. And that's, of course, done by repeat orders in the more high-end space of that market segment.
Is there any news about the display solution?
No, not really. They have done what they've done. They have developed a new form factor demo. They -- sorry, they are demonstrating that. But as far as I know, they haven't yet found any lead customer. So, no.
No? I think we're down to maybe answer this question about Japan. Japan is an exciting area for poLight. And there was recently an event in Japan where poLight participated. How would you describe the work in Japan? Are there any promising projects taking place within this geography and possibly in which verticals?
Yes. So for a long time, we were not at all focusing a lot on Japan. But relatively recently or is it 1 year ago, we did employ one resource, a senior [indiscernible] type of resource, which has helped a lot to open doors. Japan likes to speak Japanese. So which segments? I would say, all segments, definitely Consumer. There are some big names there.
But also Industrial, there are some also big names there. So I would say, generally speaking, almost laptop market we've been talking about, definitely laptop players there, which is of high interest. So we feel that it's still early days for us in Japan, but I think we are step-by-step, we are putting our foot in the door and see new opportunities.
I think we've answered most of the questions. There are some quite specific ones. Honeywell EX30 is still in production with TLens. Can you say something about how long this product can last and if Honeywell has any thoughts on a sequel?
We don't know that. There are, of course, on and off discussion about future, but there's no -- as far as we know, that product is still shipping. They hopefully will need more lenses throughout the year. It's still a very advanced product, very, very competitive product, performance-wise also. But I'm sure Honeywell has their road map, but of course, they don't show everything with us.
Also in barcode, do you have customers in PoC who are proof of concept who are showing test products to potential customers in this vertical?
We have many PoCs in that segment, very many of them actually in China. So absolutely.
And then we have one more question. This is from the medical vertical. How is the pipeline with Mini2p-related projects? Are there more in the process?
Yes. I would say it's been a relatively quiet Mini2p quarter, I would say. They -- as I remember, Professor Winter from PhenoSys in a conversation I had with him, he said, the Mini2p is still at a very early stage of understanding how they can utilize it. So there's many, many things that happen there in the use and how it's deployed.
So still early days there. But yes, the feedback we get is that they are very happy with the solution. There is one though, which we did announce or we didn't announce, but we got a PO this quarter, and that's related to the new coating, which is from one of our existing customers, which may actually develop into a new revision of that product.
Great. And that concludes our Q&A.
Wow, a super good Q&A again, at least the questions. So yes, so next event is a shareholder meeting 21st of May in Tonsberg and the Q2 presentation when the [ sun tan ] is on 14th of August day after my birthday.
Wow.
Super good. Thanks all for your interest, for your good questions. As I've emphasized and I would like to emphasize again, this is a start of a new era of poLight. I'm super happy to see already the initial reaction after this announcement. And hopefully, our shareholders will support us in the future, exciting future. Thank you.