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Good morning, everybody, and welcome to poLight's Third Quarter Presentation. My name is Oyvind Isaksen. I'm the CEO in poLight. Together with me today is also Alf Henning Bekkevik, CFO, and he will go through the financial review. We will have key events, introduction to poLight for newcomers, update on the market side, financial review, outlook, and Q&A. On the Q&A session, if time doesn't allow, we need to come back to some answers, so please leave your contact details so that we can ensure that everybody is getting feedback.Key events in the quarter. So we had a follow-up purchase order for barcode scan engine, worth approximately NOK 1.450 million. This was also mentioned in the Q2 report just to be precise. We have received 2 purchase orders related to a surgical device, and that is actually accumulated to NOK 4 million already. That was mentioned -- part of that was mentioned verbally during the Q2 presentation, but the orders were booked in the Q3. We luckily had a private placement successfully raise the net NOK 130 million including a subsequent offering in October. And we are happy to say that all in all, most -- for most cases, we have very good progress towards customers.Yes, poLight in summary. Global player in tunable optics. Application in many different sectors. We have been around since 2005. We have today around 15 worldwide patent families and pending applications. Step-by-step, we are increasing little bit in head count. We are today, including consultants, around 32. Those are distributed throughout the world. We are, as you know, headquartered in Horten outside Oslo. We have offices in Finland, China, and representation/people in France, U.K., USA, Taiwan, Korea, and Japan. We are working in a global market. Most of our customers is far away from Norway, so local organization is key for us.The highlights of the technology as seen in the right bottom is extremely fast response time, instant focus. Do not -- you do not have to wait for your camera to focus, very compact solution, constant field of view, and very low power consumption, which is super important for many of the applications we are addressing.We have already customer wins. We are already in a web camera called MAXHUB UC W20. We are already in XUN and Xiaomi smartwatch for kids. We are already in a scan engine from Honeywell, and we are already in a machine vision system. We cannot still -- we cannot mention the name of the company. So already proven that we can deliver into consumer and industrial.PoLight products and technology is having, what should I say, an impressive number of verticals, market segments we can apply our technology. The focus for the company is smartphone and wearables, barcode/industrial, augmented reality is becoming more and more important for the company, and other segments and I specifically want to mention then. Medical, which is -- and video conferencing, which is starting to be a very interesting area also for poLight, but still in somewhat early days.Okay. Let's go into the market update, starting with the industrial, the barcode side of the business. As you know, we have the -- we are included in the EX30. Left bottom picture. You should see the scan engine from Honeywell. They are reporting good feedback to us. So far, we have accumulated NOK 4.7 million order intake. Supplies is going well. No complaints and no returns. It has definitely increased the appetite for other customers, similar customers. As we can see on the bottom left, sorry, of the presentation, you can see EX30 starting to be more and more used by different OEMs realizing their barcode systems.In addition to Honeywell, we have today 3 design-ins. One example of that is on the right side of the slide, which I say design-in example, which is a Teledyne 2-megapixel multi-focus model, and is highlighting the key feature, fast-focus MEMS-based technology combined with wide aperture. So this is relatively advanced in the process. They are already talking about it. They already received some awards for the design. And this is, as you can see on the top right, has a poLight TLens installed on top of the camera model. This is still for us -- still to receive commercial mass production order, but hopefully, that will happen in the future.So that's 1 of the 3. We have, in addition, 2 Proof of Concepts ongoing and we have 3 OEMs planning to start PoC. We do feel that there is a design win potential for the first half 2022. A very important area for the company, slow-moving market, relatively low volume in Italy will step up the high volumes and will be a significant gross margin contributor over the time -- over time for the company.AR. AR is an extremely interesting area for the company. Augmented reality, smart glasses. As mentioned before, still in an early stage with relatively low volumes, and the main products order are related to, I would say, professional use cases, enterprise. You can see on the right side of the slide we have highlighted some of the use cases. We see education, healthcare, manufacturing, and logistics. Those are the, what we say, professional use cases where we see most of the projects we see are in that area.The one thing which is highlighted by the customer related to our technology and the fit of our technology is that, of course, the speed, which is always very often important. But also the power consumption. The power consumption budget in a glass is very tight, and much more tighter in a big phone with a big battery. So our power consumption being so low is very, very much an important attribute. Then, of course, we have the compactness and no gravity sensitivity et cetera.2 use cases for poLight in the AR space. World facing cameras, so similar application as in the smartphone area and other areas. But also some of these devices have laser-based displays. And that laser-based display, it needs a key lens tuning the laser so that the user always see the messages on this -- on the glass in focus independent of where the user is focusing. So we feel that poLight is very well positioned for market entry at an early stage. You can say in the extreme, you can say there are multiple TLenses per glass. Say, 1, 2, 3 cameras, I don't know. At least 1, maybe 2, maybe 3. And then also we have the laser display. So there is, say, a small handful maximum use cases for poLight TLens in one glass.We have actually 3 design-ins, we have 6 ongoing PoCs, we have 4 additional OEMs planning a PoC. There are 3 potential design wins within first half next year. Maybe it will slip some of them into Q3, but there is a significant potential of designs wins -- sorry, first half next year. Some of them slipping maybe into Q3. All of those are related to the professional use case. Of the ongoing PoC, which is 6, 3 of them are related to consumer. So you can already now see that we are involved in Proof of Concepts, which is targeting to use our technology into a consumer-oriented device. And obviously, that's why I'm saying, in the last bullet, that long term, this could be a super important area for poLight when it comes to volume. Very interesting and very positive development in this segment for poLight.Smartphone, not at least. Super interesting and super exciting. I would say, interest in TLens remains high. The add-in showing on the right bottom where we see the blue TLens being added into the lens pack realizing a very compact design. It's definitely getting still a lot of interest. And one obvious application is for the selfie camera as illustrated in the figure to the right. But also, we see other application and we do think that when the camera engineers start to get used to this technology in the front, which is I would say a sweet spot for us, they will hopefully evolve that technology also as a part of the back camera structure.We have progress on several Proof of Concept projects. There are definitely improvement activities at the OEM and the camera module players and also poLight to optimize their performance including dimensions, optical performance, yield, reliability, et cetera. And this will kind of go all the way to be -- will be in a phone being to the released to the market. They will do testing and scrutinizing every single way to be super safe that this is a solid and robust technology. That is how that market works. And as I said, the closer the TLens come to a real smartphone application, the more detailed testing will be carried out and new improvement areas normally surface. And then it's all up to us and the people we work with to debug those and optimize the solution.So we have today 7 ongoing PoCs, and I will say we have 3 design-in possibilities first half 2022. Potentially, maybe we can see -- start shipping into a phone in end of the Q2 '22, sorry. And it will be then a phone release second half '22. So that's a typo. Okay. Let's move and just summarizing. Very many opportunities, still work to be done, but constructive cooperation with our customer is going to make this happen. We are very confident.Other cases. Web camera, video conferencing. Definitely, the pandemic, the Corona situation has forced us to cooperate more virtually. Video conferencing has been definitely a topic and has been selling very well. poLight technology is a good fit for webcam application. We have already 1 design win, MAXHUB. We get good feedback from the customer. I was made aware by some of the eager shareholders about a kind of rating.On the right side, you can see this camera has been rated as #1 of 15 best tiny cameras in '21. I don't know the basis for that rating and how they do it, but I think it was fun to show it. And thanks to the eager shareholders who are making my -- aware of these kind of things. So good feedback. Still a relatively low-volume product, which was kind of already told us that it will be, but it's going to last for some years. So let's see what's happen. As somebody told me yesterday that it's sold out currently at Amazon, so maybe new shipping will be coming.Also, we are involved in, I would say, early stages of the trial for volumetric video conferencing based on dual camera. So then 2 cameras with both TLens to have 3-dimensional video conferencing. That is kind of the target for this company. And they are highlighting to us that the performance of TLens is crucial for this to be possible. So let's see. I think this is some time ahead, but still interesting to monitor.Healthcare has also started to show us more and more opportunities we -- specifically for kind of compact surgical equipment, endoscopes, and equipment like that. We have 1 design win, which we have already received NOK 4 million POs. So we are planning -- we are now sampling the customer, and we are also preparing for mass production for that particular device.In this case, we do a little bit more and only shipping the TLens. We are also integrating the TLens into their system. We are 4 ongoing PoCs on the medical and 4 planning to start. So also similar activity as that NOK 4 million case is also starting to show possibility. And yes, I mean, laparoscope, endoscope, poLight TLens can be a very good fit for this area. Typically high-value, low-volume market. The design-in we have already announced can potentially be converted to design win in the first half 2022.Then from a volume perspective, not so potentially important, but there is a very famous group in Norway at Kavli Institute for Systems for Neuroscience and Centre of Neural Computation, which has recently published a paper, which has received a lot of -- generated a lot of interest in poLight and TLens. They basically developed, as you can see, a very detail and plot or picture on the right side.You can see on the very right side you can see a mouse, which they installed a microscope, and that microscope has inside some TLenses. If you see -- look at the top right, you can see actually 4 TLenses stacked together giving them a fantastic optical power, which they need. And they are saying that the improved cell yield was achieved through a new optical system designed featuring in a large field of view and a new micro-tunable lens with increased z-scanning range and speed that allowed for fast and stable imaging of multiple, interleaved planes as well as 3D functional imaging.That micro-tunable lens is based on 4, as I said, TLenses stacked together to achieve the optical power they needed for that application. Other research teams, companies around the world has been contacted with poLight, and we are currently in dialogue for them also to enable them to do similar kind of devices. They report the reason why they have selected TLens and they have used other technologies before. Why they have converted to TLens is due to the small size XYZ, focus range, focus speed, low weight, and extremely nice thermal stability. As I said, not a volume -- high-volume case for poLight, definitely not, but it contributes to making TLens as a component into a different system kind of visible for a wider, which I should say, audience within the health space. So thanks to Kavli.So in sum, most customer cases do have good progress. Of course, there are things we would like to move faster that we do not control. But if you look at the bottom line here, we have ongoing supplies 5, same as last quarter. We now have 7 projects meaning design-ins, which is compared to 5 last quarter. We have completed now 39 PoCs compared to 35 last quarter. We have ongoing PoC 21 compared to 23, and we have 18 planning PoCs compared to 9 last quarter in sum, progress.Alf Henning, will you support me on financial review?
Okay, and thanks for that, Oyvind, and good morning to you. So rev deliveries of TLenses and ASICs gave NOK 1.7 million in the quarter compared with NOK 600,000 the last -- the same quarter last year. EBITDA loss of NOK 2.9 million compared with NOK 2.7 million last year.In the first quarter this year, we recognized approximately NOK 7 million related to the social securities to only in share option program since the share price of poLight have increased in that quarter. This quarter, we have reversed NOK 5 million related to the share options social security due to the decline in share price. In the third quarter last year, we had a VAT receivable of approximately NOK 8 million due to the fact that we were re-registered in the VAT Register and got VAT back 3 years.On the balance sheet, we had cash of NOK 164 million at the end of the quarter this year compared with approximately NOK 80 million last year. As already mentioned, the private placement gave, including the subsequent offering, NOK 130 million. And of course, the approximately NOK 12 million in the subsequent have not been recognized yet. That will be fourth quarter.On the cash flow. We started the quarter with NOK 55 million, give or take. We used NOK 9 million in operating activities compared with NOK 10 million last year. We used NOK 600,000 in investing activities, received NOK 118 million in financing activities, ending up with NOK 164 million in cash deposits at the end of the quarter. Okay.
Thank you, Alf Henning. So outlook before we go to the Q&A. As mentioned, overall, good progress in the quarter in all market segments. Smartphone customer still in Proof of Concept level, there is no concrete project yet. There are challenges to be addressed and solved, but the possibility of a real phone project in the second half '22 is definitely in place.In the augmented reality space, the company is starting to build an impressive and promising pipeline. Longer-term, as mentioned, this can be key for us in the high-volume segment. Further, progress continues in the barcode segment, although it is a slow-moving market. But just to remind ourselves that kind of products last for, say, 5 to 8 years. So it will represent a good -- an element of a very good fundament for the company. And we do see, as I said, more and more cases, and we will get more and more design wins in this area. So medical application, as I mentioned, is definitely starting to show visibility. We have 1 very concrete design-in for this compact surgical device. And if we are able to get in -- to penetrate this market, it's definitely going to contribute significantly to those high-value market segments as barcode is representing.It's extremely busy days in the company. The team in poLight is very dedicated. They work extremely hard, many of us too much, and there are so many opportunities we are addressing that we will step by step need to increase staff worldwide. And that we do. We're not going to do something very fast and a lot, but there will be step by step added resources throughout the world and maybe mostly in Asia. We also need to continue to invest in our capability and capacity in the supply chain. We are continuing to ramp up as we have communicated before. So there's no reason that we're going to be out of job. This is a fantastic opportunity for us. We have so many market segments we're working on. And luckily, we are financed in a good way enabling us to follow these different opportunities in a good and robust way.Alf Henning, will you join me for Q&A?
Okay. Ready? First question. Since it now exists various patents related to add-in design from various camera models and Tire 2 and 3 OEMs, which may move faster, is it possible to get market launch earlier than second half 2022 mentioned in the Q2 presentation?
Well, that was a nice typo in my slide because that was Q2 '21. So that's earlier, but that was a typo. Beware of that. I don't think it's realistic to have a phone released before second half in '22 with a TLens. As I mentioned, you may see that we are showing signs and even supply of TLenses in say, end of Q2 next year, but market release phone will most likely or, I would say, definitely be the second half. Everything else will surprise me.
Is there interest to use the existing TLens platform as a part of the back cam structure or will it need the concept development already announced MoU to be completed?
I would say that the TLens structure, ASIC and also enabled by the add-in design do definitely have potential for the back cam and we are discussing with OEMs how that could be done. I think, however, that the beginning will be selfie camera. And then as they get used to it, they will evolve it to the back camera structure. So I think back camera is definitely a potential with an ASIC product.
If so, can you mention the advantages in using TLens in the back cam?
I think that's very much the same advantages as we already talked about, which I also mentioned in the beginning. But of course, there is one thing also, which I can maybe emphasize is that the back camera structure is not 1 camera anymore. It's 2, 3, 4 cameras. And obviously, they are placed relatively close to each other from an application. And if you have a VCM solution, those are building, making a relatively fat footprint, XY.If you have a TLens that could be much more compact. Also, the electromagnetic noise, which a VCM-based system will have, you have coils, you have magnets, that completely disappears in a TLens-based camera. So I think that many of the same advantages as for the selfie camera, but that footprint is definitely an additional one, which is important on the back.
Can you comment on the market strategy in the company?
Market strategy. We have been -- so far, we have been very focused business-to-business. Face-to-face meetings, having local organization, and we have less so been kind of broadcasting poLight in social media and other things. And of course, we are participating in key events like Mobile World Congress typically, and also we are participating in different ways at the CES in Las Vegas. Then, I think that we acknowledge that the use of social media when a company is now gradually coming into many different types of application and including consumer, I think the company probably need to, I will say, step up in more kind of modern way of doing marketing. But so far, it has been very much a business-to-business activity. Yes.
Can you elaborate on the markets in U.S., U.K., Japan, as you recently have had resources in these countries?
Yes. When it comes to U.S., it's a good example. When we started to see traction in that market in different sectors, different markets, we said that -- when we saw that -- when we decided when we saw that at a significant level, we said then we're going to establish our own resources in the U.S. and that we have done. So that is basically because we see so many opportunities, and we have seen, after we established ourselves, those opportunity has only been increasing every week. When it comes to U.K., that's more an establishment because there is a very clever guy sitting there, and he would like to live in U.K. and not because of the market. When it comes to Japan, that's basically our distributor in Asia who have opened a Japan office. And what else? Yes, those were it.
When the Xiaomi and XUN smartwatches were developed, were they registered as 1 or 2 PoCs in your table?
To be honest, I'm not recalling that. But I would assume we registered as 1 PoC because XUN and Xiaomi has been developed by the same design house. And they -- so that was, in a way, 1 PoC and which quickly became 2 projects.
Will Honeywell, MAXHUB or Xiaomi, XUN launch the new product based on the same TLens setup, will there be registers of one PoC in your table? Or will they most likely go straight to design win?
That's let's a little bit dependent. It can be yes or no. If say -- if XUN MAXHUB is wanting to design a -- because they have many different products. If they want to sign TLens into a completely different product, having different spec and different functionality, they may want to do a PoC with that in mind. If they're going to do -- MAXHUB is going to do a 3320 version 2, they may go directly to the project. So that depends on the application.
Is the medical smartwatch from SAMPLIFY registered as a PoC, or is this the same smartwatch with a different brand name and modified software?
Yes. It is the same XUN watch, but with some modification. And yes, it is as a PoC in the medical table.
Teledyne's 2M multi-focus optical module with fast out-of-focus MEMS-based technology were recently awarded the Gold Award for innovative technology, did you in poLight celebrate that award?
That one, we need to make sure we do that, of course. We are kind of waiting for -- as I said in the presentation, we're kind of waiting for the first MP version PO. But when that comes, we will definitely celebrate.
MAXHUB had recently 10 out of 10 possible points on webcam tests and is sold out on Amazon. This suggests a good product. Has this led to greater interest from MAXHUB in the development of other products with TLens?
As was mentioned by MAXHUB in the press release we -- when we announced this design win, they do see different application for TLens. They stated that without asking them to state that. And we believe that. They are -- they have many products. As -- I know we have been performing well. We have been shipping and we haven't seen no complaints so far. So if we can continue that, I don't see any reason why not.
How do you see future development with the barcode customers you have now? Will there be more products with higher volumes?
It will definitely be more products. Everybody believes that auto focus for scan engines and barcode system will be more and more used. So it is also anticipated to see an increased volume. I think though it will take time, yes, for that volume to be significantly increased but we will get new design wins in this area definitely.
Xiaomi has been using the TLens in smartwatches, but it has been quiet from there for a long time now. How is the relationship with Xiaomi?
We are talking to and working with and promoting to all the OEMs, including Xiaomi. So we are in dialogue also with Xiaomi and better -- in a way, if you pick up a Xiaomi smartphone, there's no link between Xiaomi smartphone organization and the watch organization. As I said, the Xiaomi child watch is developed by a design partner. So the link there is, I would say, limited. Of course, we use that Xiaomi watch in all ways we can use it to promote to Xiaomi smartphone what we can do and of course, that's helping, but there is no direct connection.
Teledyne has won several awards for its 2-megapixel MIPI camera model with TLens, when will such a project become a design win?
Yes. That I can't say, but that depends on the progress for Teledyne and the customer they have. But I guess it will clearly be a candidate for 2022.
You work with many smartphone customers perhaps at different levels, you -- would you say that there are only a few of those? Or is there contact with a vast majority?
There is in a way not so many smartphone players of significance anymore. China had a lot of them, but there are really relatively few now. But yes, we are working relatively broadly in the -- towards smartphone OEMs. And I would say that we have -- as I've said several times, we have I would say several possibility of smartphone project in 2022.
You have set up a financial guide going forward, how much of this guiding was the suggested smartphone?
Smartphone. Without being very specific and detailed on this, but smartphone from the volume perspective is basically majority in the foreseeable 2, 3, 4 years. But we do expect AR to in '25 and maybe '24 and almost to also be a significant contributor on volume. So yes, that is -- then we have also the high-value verticals like the medical, the barcode, and other which is contributing nicely to the gross margin. But on the top line, they are insignificant compared to smartphone.
I see that at least 3 of the world's large camera model suppliers mentioned TLens specifically in their quarterly reports and investment reports, and some of these claim that TLens can become standard in smartphone selfie cam already in 2022. Is this in line with signals poLight has from collaborative camera models on the potential add-in?
I think I've actually stated in one of my statements in quarterly reports that, that add-in TLens design it is fantastic. It is solving a lot of problems and that has definitely the opportunity to be a widely used solution for selfie cameras. So that other people are commenting something which is similar, it's motivating to see. But other than that, I can only say what I've said and refer to that.
Related to the smartphone OEM for which you have had design-in with TLens. Have there been signals that TLens may be relevant for more than 1 model from them?
Yes.
The company now has very solid financing in place. How will poLight be able to build a reasonable production capacity without too high a cash burn? Will it then be possible with a high capacity towards the end of 2022, so that the largest smartphone customers can order TLens for one of their models if it should become relevant?
That was a good and long question. I would say that when it comes to capacity and -- because one thing is capacity, how much can all partners produce, but another thing how much material are we ordering. Those are 2 different things. I think that we also need to balance, of course, the cash burn. But there is no doubt, and also in specific, related to today's situation where lead-time for material, the lead-time for capacity is really, really tough. And we see it in our daily life. We do not get components, we do not get different things we need because of the supply chain issues throughout the world, and that will probably last for some time. That has been a consequence for us, is that we need to place PO long before we have commitment for a customer to have material and capacity. And that's what we need to do, but we need to balance that, of course. But as I'm also saying in my Q3 report, which I didn't say in the presentation that we definitely have quite tough ambitions to -- during 2022 to maybe have a capacity install of -- at the standard level at 1.5 million a month, which is a lot.
If an order is received for a high-volume product, how large a volume can you handle if it is a model that is due towards the end of 2022?
Yes. I just mentioned 1.5 million per month during 2022. Then you have the material situation, which we need to continuously consider how much we dare to buy. But so -- but anyway, that's the potentially installed capacity in 2022, if everything goes well. But I think now the first project, which I have said many times for poLight, they will not go directly into a high-volume device. They will go into a device, which could be, say, a few 100,000, maybe 1 million, maybe 2 million. That's the most likely scenario. And we are -- as we speak, we are producing step-by-step to stock, to be ready to -- and to reduce risk for the OEMs but to go directly into 5 million or 10 million project in 2022, that is unlikely.
How does poLight envisage the value chain in the future? Will it be relevant to take a larger part of this yourself, for instance, the assembly?
Good question. So far, we are -- for the high-volume business, we definitely need partners, manufacturing partners for all, except the polymer, the lens material, which we produce ourself. For -- there is a scenario where we say for other, I would say, verticals, high-value verticals that we could see benefits of having some activity overall. So that is possible.
In an earlier quarterly presentation, Oyvind said our TLens with add-in design is also relevant for the smartwatch market. Do you have any news regarding the statement?
No. I would say, but I will reiterate that, that is a fact. It is definitely not only smartwatch, even AR.
In retrospect, do you think the share price in the recent share issue was too low? Why did the company accept the price of NOK 110 per share?
Yes. First of all, I think, actually, if you looked at what happened some weeks after, I think the timing was relatively good. Yes, it was seen by many to be a low price. The way the process is, is that our advisers is trying to line up investors. And the volume/the money, the level of interest, and then how much money they would like to invest, to get the money we wanted to get, that's where the market wanted to be. So it's not that we set the price.We try, talk to investors, and said, yes, we would like to participate, and we would like to participate with X million. But then we think that the pricing for the company should be like this. And then you can anyway take it to leave it. And we felt that it's more important to be financed in a good way than at all time optimize the share price. And then we will work damn hard, produce it so that the share price we will get is what we deserve.
Has any of the smartphone manufacturers that have shown interest in TLens with add-in design lost their interest and communicated that they will not use the TLens technology at this moment.
Definitely not, and on the opposite, a very strong investment from OEM partners still in this area.
Has the customer with a medical case communicated unexpected sales number or an expected first PO size if you receive a design in on this case.
We do feel that this is a relatively low volume. There's, I would say, some 10,000 a year, maybe in the beginning. But this is an interesting market and not relating specifically to that one. But there is also a trend that there are disposable solutions coming. And of course -- and that kind of surgery and use of that kind of devices is really increasing. So if that is combined by being disposable, it means, of course, that there is a significant volume potential. But we know -- I feel that we, as poLight, we know too little to be too bullish. So I will say, still, it is a relatively high value, relatively low volume market, but there should be potential for higher volumes.
Is there more than 1 camera model supplier using TLens in the project? If so, can poLight then potentially tick off most of the major smartphone OEMs customers if the projects succeed?
Yes. So there are camera module, guys, and not more than 1 who is working with poLight and who also you're doing add-in design. I don't want to comment on those biggest OEM. We have talked about what's the status in the smartphone, but there are several camera module guys working with add-in designs.
How will the new funding affect operation, example, new projects, larger stocking to meet increased deliveries?
Well, it will enable us to continue as we have planned, ramping the supply chain and also further building the organization. So of course, without that funding, it would be much more risky and challenging to prepare us for the design wins we hope will come in 2022.
Large volume customers often require second source. How do poLight cope with that?
Very good question. Yes, that is true. And that is also, you can say, a little bit challenging when it comes to TLens because TLens, there is 1 supplier, and that is poLight. But there are other tunable companies based on liquid. So there is kind of -- there is an option for them to kind of use both technologies. So -- and then, they can say that on the camera module level, the -- our dual supply and more. But on the TLens component today only 1, then you can say that, yes, it could potentially be that we could license to somebody to produce the TLens. So that is one way of doing -- creating dual source on TLenses component. But as I said then, you have other tunable optics and then you have several camera module guys who can do TLens integration.
How is competition doing? Do you see any progress on new products?
No, I wouldn't say so. Same situation as last quarter.
What do you mean about the following point, in the Augmented Reality segment, the company is starting to build an impressive and promising pipeline?
What I mean? I mean that we see more and more opportunities, basically. That's what I mean. And we see better and better fit, impressive development in this area, basically.
You say that more people are needed to be able to execute current plans. What are these current plans? And how is the current employment status?
Yes. The current plan is, as we said -- we listed in the guiding operational and financial last quarter and the quarter before that. And those are the plans, meaning we're going to have -- we want to have design-wins in the medical, we want to have more design-wins in barcode, we want to have more -- we want to have our first design-wins in the smartphone. We want to have a design-win in several AR cases. That's the plan. And to execute on that, which I said initially today, we are super busy. We need more people to support our customer. So that's the plan.
Do you see any high risk around this or...
Always, always. I mean, we are going in 2 different very advanced verticals and there are always risk while doing that. A risk for delays, the risk for failure, but my duty is to have an organization in place who can handle that risk. I feel we have come a long way in doing that.
Which are the alternatives for the AR glasses?
No. But I think they can use also potentially other tunable optics, I assume.
3 design wins, potential deliveries to smartphone in 2022 can mean 12 million of TLens. How do this plan of production looks?
Yes. I think we answered to that already by having, say, a target to have, say, capacity of 1.5 million per month in 2022.
Would you say that you are on track related to the guiding given in the second quarter presentation?
Yes. We don't have any new guiding than that now.
Any sign of additional orders to the children watches?
We see that, as I say in my quarterly report a few times now, we do see that after the COVID, which kind of -- that impacted a lot the sell of these kind of devices. These devices, security devices, children want to be in contact with the parents or vice versa maybe, and call them and see them and understand where they are. And when they are sitting in the same 30 square meter flat, why do you need that? So you don't need it. So you don't buy it. If you buy it, you buy a cheaper version.So -- and that is really, really had -- in a way, impacted a lot -- all players in that area, and that still is kind of relatively depressed, I would say, that those high-end versions of that watch. And that's still the case, very cost-sensitive market now and probably will be. I think it will take some time before that change. I think also one benefit, though, which may come later is that the platform, the hardware platform, the software platform in the watches will be better and better. I think as that happens, the performance and the difference between a poLight TLens and a VCM camera would be bigger and bigger, which may drive it to using TLens for all the designs.
And the last one, how many lenses do you have in stock?
Yes. That is starting to build up. But still, we are, I would say, step-by-step doing yield improvement processes, and we have to produce something to stock. We don't talk about millions. We talk about kind of hundreds-plus handful hundreds we are kind of building. And then, we have buffer stock at different levels. We have stock at the material and stock of obviously finalized TLenses. We would like to minimize stock at finalized TLenses, but we have massive stock of wafer, which has the longest lead time. But we need to build some stock of finalized TLenses also to massage the line, to debug the line, we need to do something, but we don't do massive, but we do enough to reduce the risk seen by the coming OEMs.
Okay.
Okay. That's it.
That was it.
Okay. Okay. Thanks a lot for you participating this webcast. And as I said before, there are so many people who take the time to follow us closely, giving us a lot of questions. We really appreciate that. And there is a high competence out in the shareholder community of poLight -- in this technology and poLight. They are very clever in helping us to follow different patterns and news flows. And so, we really appreciate that. And this Q&A session, I think, illustrates that dynamic and that interest in poLight and we love that. Thank you a lot. And next time, Q4 '21, 18th of February 2022. Hope to see you then. Thanks.
Okay. Thanks.