Polight ASA — Investor Presentation 2021

Oct 29, 2021

Third quarter 2021 - Earnings presentation 29th October 2021

Disclaimer

This presentation (the "Presentation") has been produced by poLight ASA (the "Company") exclusively for information purposes. This Presentation has not been approved, reviewed or registered with any public authority or stock exchange. Further to the aforementioned, this presentation is the result of an effort of the Company to present certain information which the Company has deemed relevant in accessible format. This Presentation is not intended to contain an exhaustive overview of the Company's present or future financial condition and there are

² Third quarter 2021 - Earnings presentation several other facts and circumstances relevant to the Company and its present and future financial condition that not been included in this Presentation. This Presentation may not be disclosed, in whole or in part, or summarized or otherwise reproduced, distributed or referred to, in whole or in part, without prior written consent of the Company. This Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates or intends to operate. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or any of its subsidiary undertakings or any such person's officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company assumes no obligation to update any forward-looking statements or to conform these forward-looking statements to our actual results. Furthermore, information about past performance given in this Presentation is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither the Company nor any of its parent or subsidiary undertakings or any such person's officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. By reviewing this Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the businesses of the Company. This Presentation must be read in conjunction with the recent financial reports of the Company and the disclosures therein. The distribution of this Presentation in certain jurisdictions may be restricted by law. Persons in possession of this Presentation are required to inform themselves about, and to observe, any such restrictions. No action has been taken or will be taken in any jurisdiction by the Company that would permit the possession or distribution of this Presentation in any country or jurisdiction where specific action for that purpose is required. No shares or other securities are being offered pursuant to this Presentation. This Presentation does not constitute an offer to sell or form part of, and should not be construed as, an offer or invitation for the sale or subscription of, or a solicitation of an offer to buy or subscribe for, any shares or other securities in any jurisdiction, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any offer, contract, commitment or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of the Company. By reviewing this Presentation you agree to be bound by the foregoing limitations. This Presentation speaks as of 29 October 2021. Neither the delivery of this Presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. The Company does not intend, and does not assume any obligation, to update or correct any information included in this Presentation. This Presentation shall be governed by Norwegian law, and any disputes relating to hereto is subject to the sole and exclusive jurisdiction of Norwegian courts, with Nordre Vestfold District Court as legal venue.

Today's agenda

• Key events

• Introduction to poLight
• Operations and markets review
• Financial review
• Outlook
• Q&A

Dr. Øyvind Isaksen Chief Executive Officer

Presenting

Dr. Isaksen has been CEO of poLight since August 2014. He has previously held several CEO positions, most recently in the publicly listed company Q-Free ASA, which he left in January 2014, after 7 years as CEO. Øyvind Isaksen holds a PhD in Applied Physics.

Alf Henning Bekkevik Chief Financial Officer

³ Third quarter 2021 - Earnings presentation Bekkevik is a senior executive with a background from Arthur Andersen (E&Y), Wallendahl, Fjord Line, Grenland Group and lately from Wood Group Mustang as VP Finance. He holds a Master in Business & Economics (Siviløkonom) degree from NHH and is a state certified public accountant.

Key events in the quarter

• Follow-up purchase order for barcode scan engine product, worth approximately NOK 1,450,000 (Q2 rep.)
• Two purchase orders received related to a surgical device, worth a combined total of NOK 4,000,000
• Private placement successfully raised net NOK 130,300,000 (including sub-sequent offering of net NOK 11,800,000 raised in October-21)
• Good progress on most customer cases

poLight at a glance

• applications in mobile, web cam, industrial, augmented reality, medical and others
• Founded in 2005 and has since build stateof-the-art expertise in tunable optics, polymers MEMS technology and image applications and processing
• 15 worldwide patents families, 11 pending applications and 3 registered trademarks
• 32 employees (incl. long term consultants)
• Headquartered in Horten, Norway, with offices in Finland and China, and representation in France, UK, USA, Taiwan, Korea and Japan

poLight enables unique use cases

poLight products & technology well-suited for several applications

Smartphone & wearable	Barcode/industrial	Augmented Reality (AR)	Other
• Large addressable market, billions of cameras produced for the each year • 1,5 billion phones/year (1 front cam + 3 (in average) back cam) -> 6 billion cam/year • Potential addressable market for TLens/poLight technology : 1 front cam + 1 back cam –> 3 billion/year • Focus on camera functionality increasing	• Evolving from 1D laser to 2D imaging barcode readers • Lasers replaced by camera systems. Autofocus will improve efficiency in scanning and portfolio • Barcode technology spreading to new industries • OEM scan engine vendors today are increasingly looking towards enabling machine vision capabilities on current offerings	• Augmented reality expected to be "the next big thing" • AR glasses will be firstly be deployed for professional use cases and gradually become a consumer device	• New opportunities emerging and may represent significant potential • Video conferencing and endoscope are some recent examples of new opportunities for poLight technology
7	Third quarter 2021 -	Earnings presentation

Operations and market review

Barcode / Industrial

• Follow-up order for EX30 good feedback • Accumulated order intake has so far been approx. NOK 4.7 millions, - supplies of TLens goes well • Release of EX30 has generated more appetite among other • 3 design-in´s, 2 PoC´s and 3 OEM´s planning PoC
• potential customers
• Design-win potential for 1st half 2022

Examples of EX30 use cases

Barcode

Fast auto-focus MEMS-based technology	Ultra compact and lightweight design
combined with wide aperture f/4.85 lens	20 x 20 x 16.63 mm, 3.7g
Featuring an advanced full HD,	MIPI CSI-2 output
global shutter, low noise CMOS sensor	with selectable 1, 2 or 4 lanes

AR: TLens considered for next generation glasses by several OEM´s • AR market is still at an early stage, with low volumes • 3 design-in´s, 6 ongoing PoC´s and 4 OEM´s planning PoC

• TLens offers several advantages related to power consumption, speed, compactness and no gravity sensitivity
• Two use cases : world facing camera & tuning for laser display
• poLight is well positioned for market entry at an early stage
• 3 potential design-win´s within first half next year/Q3 (professional use case)
• ¹⁰ Third quarter 2021 Earnings presentation • Of the ongoing PoC´s 3 are related to consumer • Potentially long term the most important consumer segment for poLight

Smartphone: Interest in TLens® remains high

• Add-in TLens design, is attracting good interest
• Potential to become a widely used solution for selfie cameras and may represent a route to the main camera (back camera) for TLens
• Progress on several Proof of Concept (PoC) projects, with OEMs and camera module (CM) vendors during the quarter
• Improvement activities at OEMs, CM vendors and poLight have been ongoing to optimize performance at the camera module level
• This includes dimensions, optical performance, yield and reliability
• The closer the TLens comes to a real smartphone application, the more detailed testing is being carried out, and new improvement areas normally surface • 7 ongoing PoC´s and 3 design-in possibilities 1st half 2022
• Potentially start shipping TLens end Q2-21 and phone release 2nd half 2022

Other cases

Web camera / Video conferencing

• The pandemic has forced us to cooperate more and more virtual, and video conferring has increased in use
• poLight technology will be potential good fit for web camera application due to constant field of view and speed
• Longer term volumetric video conferencing based on dual camera and light field imaging will benefit from TLens speed and constant field view
• 1 design-win (Maxhub), good feedback from customers

Healthcare

• Starting to see some good interest related to compact surgical equipment
• 1 design-in, 4 ongoing PoC, and 4 planning to start PoC
• Two purchase orders received, worth a combined total of NOK 4,000,000
• The design-in may be converted to design-win 1st half 2022

• Scientific paper about a miniaturized two-photon microscope
• "The improved cell yield was achieved through a new optical system design featuring an enlarged field of view (FOV) and a new micro-tunable lens with increased zscanning range and speed that allowed for fast and stable imaging of multiple, interleaved planes as well as 3D functional imaging"
• Based on four TLens units, stacked to achieve the optical power need for this application
• Other research teams/companies around the world have been in contact with poLight
• Key arguments why they use TLens;
  • Small size in XYZ
  • Focus range
  • Focus speed
  • Low weight
  • Thermal stability

https://www.biorxiv.org/content/10.1101/2021.09.20.461015v

Good progress in most customer cases

				Good progress in most customer cases
		Ongoing supply	Project	Completed PoC	Ongoing PoC	Planning PoC
Consumer		3 (3)	0 (0)	17 (16)	9 (12)	2 (2)
Augmented Reality			3 (3)	6 (6)	6 (3)	4 (0)
Industrial		2 (2)	3 (1)	14 (12)	3 (4)	8 (6)
Other (e.g. medical)			1 (1)	2 (1)	3 (4)	4 (1)
(x) last quarter	(x): last quarter number	5 (5)	7 (5)	39 (35)	21 (23)	18 (9)
14		Third quarter 2021 -	Earnings presentation

Financial review

Key financials

Key financials
Income statement				Balance sheet summary
(in NOK million)	Q3 2021	Q3 2020	FY 2020
Revenue	1.7	0.6	3.0
Cost of sales	-0.9	-0.1	-0.7
Research and development expenses	-2.0	-5.6	-20.4
Sales and marketing expenses	-1.3	-0.1	-5.4
Operational / supply chain expenses	-1.4	-1.5	-8.0
Administrative expenses	0.9	4.0	-7.7
EBITDA	-2.9	-2.7	-39.2
• Revenue reflects sales of TLens and ASICs for commercial use and sample deliveries for customer development projects • EBITDA loss of NOK 2.9 million vs. loss of NOK 2.7 million in Q3 2020 • Reversed NOK 5.0 million in accrued employer's national insurance contributions (NICs) relating to the share option plan due to the share price decline in the quarter • In Q3 2020, VAT receivables of NOK 8.2 million were recognised after re-register in the VAT Register with effect 3 years back in time				79.4 million at Q3 2020 (including sub-sequent offering of net NOK 11,800,000 raised in October-21)
16			Third quarter 2021 -	Earnings presentation

• Revenue reflects sales of TLens and ASICs for commercial use and sample deliveries for customer development projects
• EBITDA loss of NOK 2.9 million vs. loss of NOK 2.7 million in Q3 2020
  • Reversed NOK 5.0 million in accrued employer's national insurance contributions (NICs) relating to the share option plan due to the share price decline in the quarter
  • In Q3 2020, VAT receivables of NOK 8.2 million were recognised after re-register in the VAT Register with effect 3 years back in time

Key financials
Income statement				Balance sheet summary
(in NOK million) Revenue	Q3 2021 1.7	Q3 2020 0.6	FY 2020 3.0	(in NOK million) Intangible assets	Q3 2021 35.9	Q3 2020 46.2	FY 2020 43.6
Cost of sales	-0.9	-0.1	-0.7	Inventories	12.2	9.5	9.2
Research and development expenses	-2.0	-5.6	-20.4	Cash and cash equivalents	164.1	79.4	77.2
Sales and marketing expenses	-1.3	-0.1	-5.4
Operational / supply chain expenses	-1.4	-1.5	-8.0	Total equity	207.7	140.5	128.8
Administrative expenses	0.9	4.0	-7.7	Total current liabilities	16.9	13.5	12.9

• Cash position of NOK 164.1 million, compared with NOK 79.4 million at Q3 2020
• Private placement successfully raised net NOK 130,300,000 (including sub-sequent offering of net NOK 11,800,000 raised in October-21)

Cash Flow

• Q3 cash used in operating activities was NOK 9.2 million, compared with NOK 10.3 million in Q3 2020
• Q3 cash received from financing activities was NOK 118.1 million
  • net proceeds from the private placement of NOK 118.5 million
• Q3 net increase in cash was NOK 108.4 million

Q3 2021 cash flow development

Outlook

Outlook

• Overall, progress has been good during the quarter in all market segments
• Smartphone customer cases are still at Proof of Concept level, challenges need to be solved, but the possibility of a real phone project in the second half of 2022 remains in place
• In the Augmented Reality (AR) segment, the company is starting to build an impressive and promising pipeline
• In the longer-term, AR is a potentially high-volume market
• Furthermore, progress continues in the barcode segment, although it is a slow-moving market
• Medical applications can further enhance the company's involvement in high-value market segments
• To be able to execute on current plans, the company will need to gradually employ more people and continue to invest in its supply chain capability and capacity

Next event:

Appendix

•Appendix

Management Team

Dr. Øyvind Isaksen

Chief Executive Officer

Dr. Isaksen has been CEO of poLight since August 2014. He has previously held several CEO positions, most recently in the publicly listed company Q-Free ASA, which he left in January 2014, after 7 years as CEO. Øyvind Isaksen holds a PhD in Applied Physics.

Alf Henning Bekkevik

Chief Financial Officer

Bekkevik is a senior executive with a background from Arthur Andersen (E&Y), Wallendahl, Fjord Line, Grenland Group, and, most recently, as VP Finance for Wood Group Norway AS. He holds a master's degree in business & economics (Siviløkonom) from NHH, and is a certified public accountant.

Pierre Craen

Chief Technology Officer

²² Third quarter 2021 - Earnings presentation Craen is a senior executive with more than 20 years' experience in opto-mechanical systems engineering. Prior to joining poLight, he managed product development teams at Varioptic, Barco and Motorola/Symbol. Mr Craen holds an MSc in Optical Engineering from Sup-Optic, as well as an MSc in Applied Physics. from Norwegian School of Management (BI). She has been responsible for world wide operations for more than 15 years.

Marianne Sandal

Chief Operating Officer

Sandal is a senior executive with background from Tele-communications (Nera) and Road User Charging (Q-Free). She holds a BSc in Mechanical Engineering in addition to courses

Board of Directors

Ann-Tove Kongsnes - Chairman

Ms. Kongsnes is an Investment Director at Investinor AS. Kongsnes has over her career gained extensive experience from investments, development, M&A, IPO's and exits of technology companies. Prior to this, she worked 7 years with international marketing, and was formerly a Director of Marketing and Operations. Kongsnes has extensive board experience, and currently serves on the boards of 6 of Investinor's portfolio companies in addition to 4 Chair/member seats in Nomination Committees. She holds an MSc in Economics and Business Administration from HIB and took the Advanced Program in Corporate Finance at NHH.

Grethe Viksaas - Board member, independent

Thomas Görling is a Senior Investment Director at Stiftelsen Industrifonden (Sweden) with a comprehensive involvement in building successful technology companies. Representing Industrifonden, he has been engaged in a number of portfolio company boards, at present Medtentia International Ltd Oy (Finland) and eBuilder AB (Sweden). Before joining Industrifonden Stockholm, and studied business economics at Stockholm University. Juha Alakarhu is the VP of Imaging at Axon in Tampere, Finland. He runs the Axon R&D office in Finland and is responsible for the imaging system for Axon camera products. Dr Alakarhu's international experience in the semiconductor business, previously as Director for the Nordic region for Xilinx Inc. He has also been working at Philips Semiconductor. Grethe Viksaas has a long career from the Northern European managed service provider Basefarm AS. First as founder and CEO, and later as executive chair and member of the board of directors. Prior to Basefarm, Ms Viksaas served as CEO for SOL System AS and in several management positions in IT companies. She has experience from numerous board positions, including Telenor ASA. She is currently a non-executive director on the boards of Link Mobility Group Holding ASA and Crayon Group Holding ASA. She also serves as Chair of the Board in No Isolation AS and Farmforce AS. Ms Viksaas has a master's degree in computer science from the University of Oslo.

Dr. Juha Alakarhu - Board member, independent

entire career has been devoted to developing cameras. Before joining Axon in 2018, he worked for Nokia and Microsoft, where he developed several pioneering camera solutions, such as oversampling (the 41-megapixel camera), optical image stabiliser, and virtual reality technology. Juha Alakarhu holds a PhD from Tampere University of Technology.

Svenn-Tore Larsen - Board member, independent

Mr. Larsen is an Electronic Engineer from the University of Strathclyde, UK. He was appointed Chief Executive Officer of Nordic Semiconductor in February 2002. Mr. Larsen has broad

Thomas Görling - Board member

²³ Third quarter 2021 - Earnings presentation in 1998, Mr. Görling held management positions within the European optical instrument and systems industry. Thomas holds a Master of Science from the Royal Institute of Technology in

Statement of income

NOK 000	Note	Q3 2021	Q3 2020	YTD 2021	YTD 2020	FY 2020
Sale of goods		1 696	526	4 777	1 534	2 590
Rendering of services		0	91	1 350	241	429
Revenue		1 696	617	6 126	1 775	3 019
Cost of sales		-930	-122	-2 540	-316	-698
Gross profit		766	495	3 587	1 459	2 321
Research and development expenses net of
governmental grants	7,8	-1 967	-5 568	-18 808	-15 095	-20 432
Sales and marketing expenses		-1 270	-136	-3 933	-4 309	-5 419
Operational / supply chain expenses		-1 366	-1 544	-6 410	-6 639	-7 972
Administrative expenses	12	950	4 045	-11 179	-4 696	-7 734
Operating result before depreciation and amortisation (EBITDA)		-2 886	-2 709	-36 743	-29 279	-39 237
Depreciation and amortisation	9	-3 080	-3 012	-8 973	-9 121	-12 132
Operating result (EBIT)		-5 967	-5 721	-45 716	-38 400	-51 369
Net financial items	6	-49	138	184	79	417
Loss before tax		-6 016	-5 583	-45 532	-38 321	-50 952
Income tax expense		-61	-4	-106	-21	-203
Loss for the period		-6 076	-5 587	-45 638	-38 343	-51 155

Balance sheet	NOK 000	Note	Q3 2021	Q3 2020	FY 2020
	ASSETS
	Property, plant and equipment		1 393	983	839
	Intangible assets	9	35 944	46 217	43 646
	Right-of-use assets		5 025	1 510	964
	Total non-current assets		42 363	48 711	45 448
	Inventories		12 236	9 547	9 166
	Trade and other receivables	8	8 662	16 563	6 040
	Prepayments		1 354	327	3 897
	Cash and cash equivalents		164 067	79 364	77 209
	Total current assets		186 318	105 801	96 312
	Total assets		228 681	154 512	141 761
	EQUITY AND LIABILITIES
	Share capital		2 053	1 810	1 810
	Share premium		801 739	680 229	680 229
	Reserves		1 036	1 121	1 040
	Retained earnings		-597 092	-542 699	-554 239
	Equity attributable to equity holders of the parent		207 736	140 461	128 840
	Non-controlling interests		0	0	0
	Total equity		207 736	140 461	128 840
	Lease liabilities		4 013	522	0
	Total non-current liabilities		4 013	522	0
	Trade and other payables	10	14 660	11 279	10 684
	Current lease liabilities		1 083	1 061	1 048
	Provisions	12	1 189	1 189	1 189
	Total current liabilities		16 932	13 529	12 921
	Total liabilities		20 945	14 051	12 921
	Total equity and liabilities		228 681	154 512	141 761
25	Third quarter 2021 - Earnings presentation

Cash flow

	Note	Q3 2021	Q3 2020	YTD 2021	YTD 2020	FY 2020
Operating activities
Profit / loss (-) for the period		-6 016	-5 583	-45 532	-38 321	-50 952
Adjustments for:
Depreciation and impairment of property, plant and equipment and right-of-use assets		513	439	1 272	1 402	1 842
Amortisation and impairment of intangible assets	9	2 567	2 573	7 701	7 719	10 290
Net finance income		49	-138	-184	-79	-417
Equity-settled share-based payment transactions		894	483	2 785	2 399	3 672
Other items related to operating activities		138	112	349	-111	-473
Changes in unrealised net foreign exchange rate differences/fluctuations		-3	-98	5	128	221
Changes in working capital:
	Increase (-) in trade and other receivables and prepayments	-737	-10 105	634	-9 386	-2 902
Increase (-) in inventories		-3 665	-293	-3 070	-1 819	-1 439
Decrease (-) in trade and other payables
Changes in provisions and government grants	10	-5 314	1 861	3 976	-657	1 655
		2 581	461	-712	-2 279	-4 718
Interest received		6 0	41	28	337	851
Interest paid Income tax paid		6 -96 -61	-16 -52	-110 -106	-55 -160	-68 -196
Net cash flows used in operating activities		-9 150	-10 315	-32 964	-40 884	-42 633
Investing activities
Purchase of property, plant and equipment		-550	-23	-900	-226	-226
Net cash flows used in investing activities		-550	-23	-900	-226	-226
Financing activities
Proceeds from issue of ordinary shares		125 000	0	125 000	50 000	50 000
Proceeds from exercise of share options		0	53	3 204	738	738
Transaction costs on issue of shares		-6 431	-148	-6 437	-3 005	-3 005
Payment of lease liabilities		-441	-275	-1 038	-888	-1 119
	Net cash flows from/(used in) financing activities	118 128	-370	120 729	46 845	46 614
Net increase in cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	108 428 7	-10 708 127	86 865 -8	5 735 166	3 755 -9
Cash and cash equivalents at the start of the period		55 631	89 945	77 209	73 463	73 463